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Understanding Entrepreneurship

Nyamweya is a Kenyan scholar who has done many years of research on a diversity of topics

all-about-entrepreneurship

Introduction

Entrepreneurship is largely the process of finding out opportunities and strengths which assist in realizing one’s dream for developing, designing and operating a new business venture by effectively facing risks and threats. In their endeavor to create businesses, entrepreneurs have to go various challenges including working at odd and long hours, going through financial risks and other hardships just to sustain and establish their businesses. However, there are a number of motivations that makes people to go through these experiences among these include money, flexibility, control and legacy. Nonetheless, the major goal of entrepreneurs is to create new, profitable business to enhance their wealth.

Discussion

Starting new businesses is the most common example of entrepreneurship. It also entails the study of creating new businesses and also the process of commencing new business. An entrepreneur is a person with a specific idea and puts the idea into use in order to create a service or product that will be bought and used by people, subsequently building the firm to support sales (Nielsen, et al, 2014). In this regard, entrepreneurs create business through the ideas they have. However, for these businesses to be sustained, the products/services they generate have to be bought for the company to generate revenue (Zoltan and Audretsch, 2011). Bannock (2005) explains that starting a business can be a risky endeavor. According to this author, the younger and smaller a firm is, the more its likelihood of closing down. About two thirds of these businesses close down few years of starting up. Still, people get interested to initiate and run their own businesses out of the hope of innovation and eventually growing into large firms. As earlier observed, a part from the desire for self expression and achieving independence, the entrepreneur has also the opportunity to make wealth. Bannock (2005) explains that if the firm is unable to make money, then chances of it closing are high. According to this author, there is evidence on the city streets of hopeful entrepreneurs spending a lot of money to fit their various businesses but which end up closing due to exhaustion of capital. This position is supported by the theory of Innovation Theory by Schumpeter (1934). In this theory, the author argues that an entrepreneur and the innovations introduced by him/her plays a critical role in the economic development and wealth creation. Schumpeter opines that while embarking on the process of production/innovation, an entrepreneur has to combine both immaterial and material productive forces in these processes. The material forces consists of original production factors such as labor, land, capital etc while immaterial forces consist of social organization facts and technical facts. The author argues that if more productive forces, technology plus a conducive socio-cultural environment are employed, then more output will be realized. Schumpeter asserts that when a business generates profits, then they lead to savings and eventually accumulations as well as wealth. However, the author observes that profits can only be realized when new products are launched or when innovations such as novel production techniques are employed. Simply stated, Schumpeter’s argument is that among the crucial features making an entrepreneur is being creative and having a goal to achieve. For instance, introducing a new product constitutes one of the things done by an entrepreneur. Furthermore, in the endeavor to generate more profits and achieve growth, an entrepreneur ends up investing new production methods.

Indeed, the major motivation for entrepreneurs in creating new businesses is to exploit the potential long term economic viability. In this respect, the entrepreneur has to evaluate the opportunity and determine whether the idea he or she intends to initiate creates value in the market and hence; can be regarded as a feasible, strong and real option (Neck, et al, 2017). Nielsen et al (2017) argues that not all ideas could be opportunities; rather, the idea should represent an option that is economically viable. This implies that the major goal of initiating the idea in the first place is to benefit economically. When starting off a given business venture, an entrepreneur has to assess whether investing resources and organizing the activities will lead to value creation. According to the Need for Achievement Theory developed by McClelland (1953), the entrepreneur’s main concern is the need for achievement. This need for achievement is essentially the desire to do well in live, not necessarily for prestige or social recognition, but for the same of inner feelings of individual accomplishments. McClelland (1953) argues that it is this motive for achievement that directs the actions of entrepreneurs. In this respect, people who harbor a higher need for achievement behave in an entrepreneurial way. Furthermore, individuals with high level achievement have a potential of scaling economic development. The implication of these observations is that entrepreneurs are motivated by the desire to achieve and in the process end up creating economic viability for themselves, for the society and the nation at large.

As much as one would be driven by passion and philanthropy in starting out a given venture, no business can possibly be sustained without money. A good example is the reknown Ben Walace who started out his musical and guitar lessons out of passion. At a tender age of 15, Wallace already knew what he wanted to be in life: a composer and musician. It can be said that at this stage, the musician had not thought about making money or wealth but to use his talent for the good of those who needed the services. His career started out as with a dream of building a successful career through music. However, he also hoped that the career could be able to sustain his life. In this regard, as much as Wallace had talent and passion in his career, he was also focused at earning a living and probably creating wealth from this business. This may explain why Wallace charged $29 per hour for lessons he conducted at his place and $45 per hour for lessons conducted at the client’s home (McMullan, 2011).

The answers to the questions, what is the goal of venturing in business, and why venture into business in the first place? have always been to make profits. People go into business with the goal of making as much profit as possible. As much as the business person would be struggling to keep the business afloat, he or she has to control it by putting the profit first (Hlupic, 2017). Hart, Bonner, and Levie (2016), supports this assumption by arguing that nobody goes into the business with a focus of achieving bankruptcy or failure. In this sense, entrepreneurship can be differentiated from other means of achieving success in life by two types of things; methods and motives. According to Yetsen et al (2015) although each person can have different motivations for venturing into entrepreneurship, common forms of motivations include a desire for human advancement, self-challenge, flexibility, independence, and maximum benefits from ones efforts. The method that each person uses in entrepreneurship also differs but consist of most things done by companies. The difference is that the entrepreneur is required to be above what others are doing. For example, he or she may not be limited on time aspect, and in some instances, he/she may need to work for longer houses without being compensated owing to the vision that he or she have. He or she must strive to beat all odds and challenges including when the venture is not showing signs of good performance.


Conclusion

From this discussion, it is agreeable that entrepreneurship is all about creating new, profitable businesses or the purpose of enhancing wealth. The theory of Innovation by Schumpeter 1934 attests among the crucial features making an entrepreneur is being creative and having a goal to achieve. This creativity enables them to produce new products using new methods. These products/services are then sold the users/customers, ultimately generating profits for the entrepreneur. Schumpeter asserts that when a business generates profits, then they lead to savings and eventually accumulations as well as wealth. Similarly, the Need for Achievement Theory by McClelland claims that entrepreneurs are motivated by the need to achieve and essentially the desire to do well in life. Accordingly, people who have a higher achievement need harbor entrepreneurial tendencies and behaviors which give them a potential to scale economic developments through the profits, savings and wealth accumulated. In the process, entrepreneurs end up creating economic viability for themselves, for the society and the nation at large. In this regard, since entrepreneurs are creative people with a higher desire to achieve, they are risk takers who will do everything possible to produce new goods/services with the goal of benefiting from the economic opportunity and eventually accumulate savings/wealth for themselves.


References

Bannock, G (2005) The Economics and Management of Small Business, an international perspective.Routledge, Tailore and Francis Group.

Hart, M., Bonner, K., Levie, J (2016) GEM 2015/2016 UK report. Global Entrepreneurship Research Association.

Hlupic, V (2017) Developing an entrepreneurial mindset. Available at: https://hrmagazine.co.uk/article-details/developing-an-entrepreneurial-mindset (accessed on 4th January, 2020)

Nielsen, S., Klyver, K., Evald, M., Bager, T., Gartner, W., Sarasvathy, S., Fayolle, A., Honig, B (2017) Entrepreneurship in theory and practice: paradoxes in play.

McClelland, D (1953) The achievement motive, New York: Appleton-Century-Crofts.

McMullan, E (2011) The Recording Room: Ben Wallace's musical ventures, Aston: Prentice Hall

Nielsen, L., Klyver, S., Rostgaard, K., Evald, M. & Bager, T (2014) Entrepreneurship in Theory and Practice. Pradoxes in Play. Cheltenham: Edward Elgar.

Neck, H., Neck, C., and Murray, E (2017) Entrepreneurship: the practice and mindset. London: Sage.

Schumpeter, J. A (1934) The Theory of Economic Development, London: Transaction Publishers, p.128-136 (version in library published 1961)

Yetisen; A., Volpatti, L., Coskun, A., Kamrani, E., Butt; H., Khademhosseini, A., Yun, S (2015) Entrepreneurship. Lab Chip. 15 (18), pp. 3638–3660.

Zoltan, J., and Audretsch, D (2011) Handbook of entepreneural research: an interdisciplinary survey and introduction. Springer: Verlag New York

Comments

Silas Nyamweya (author) from Nairobi, Kenya on December 25, 2020:

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