Four Key Elements of Entrepreneurship

Concept of Entrepreneurship

As far as business performance and organizations are concerned, the concept of entrepreneurship is the oldest in practice. Different concepts of entrepreneurship and their origins can be dated back to as early as the 1700s. With the advancement of time, these different concepts of entrepreneurship have evolved a lot to adjust to the changing trends. In this article, we will be discussing the elements of entrepreneurship along with the concepts. 

What is the Concept of Entrepreneurship?

In simple terms, the concept of entrepreneurship is centered on the idea of earning profits from a business. Delving deeper for finding the answer to what is the concept of entrepreneurship, you will find that it involves developing a business enterprise, managing and running the same. Starting a new business and offering a product or service is the most common example of entrepreneurship. 

Explain the Concept of Entrepreneurship

Before we inform you about the elements of entrepreneurship, we feel we must clear your doubts about the different concepts of entrepreneurship. You may ask what is the key concept of entrepreneurship. It is being the sole owner of the business one decides to run. As we explain the concept of entrepreneurship economically, it is clear that the risks and uncertainties associated with a business are borne by the entrepreneur only. The profits earned are also solely his own. The entrepreneurs introduce new products, technologies and services to the existing market. 

What are the Elements of Entrepreneurship?

There are four main elements of entrepreneurship- innovation, organization, risk and vision. In the following section, all these elements have been discussed as we explain the concept of entrepreneurship. 

1. Innovation

What is the key concept of entrepreneurship? The entrepreneurs contribute to the economy in terms of variation and innovation and the extent of these ensure success. They implement innovative ideas on the available opportunities and bring out something new. The new idea can be a product, technology, service, manufacturing technique, marketing strategies etc. Thus innovation is the answer to the question. 

2. Organization 

Organizational skills are extremely important in developing the concept of entrepreneurship. Though it is all about “the one who undertakes” (the meaning of entrepreneurship in French), there are other employees associated also. An entrepreneur needs to control all these people and the process singlehandedly. Thus the organization is the next element of entrepreneurship. 

3. Risk

All businesses involve risks and in entrepreneurship, it is the sole responsibility of the entrepreneur only as it is a “one-man-show”. Without taking risks, a business cannot flourish but on the other hand, indulgence in excessive risk-taking may lead to severe losses. Risk-taking is another word for exploiting opportunities and gaining a competitive edge over others performing in the same market. This way, the business and the economy both are facilitated. 

4. Vision 

An entrepreneur must have a strong vision if he wants to succeed in the business. The foresight of the entrepreneur determines how the business and other business policies will run. The way the entrepreneur visualises his business in the coming years is how the business moves forward and the profitability is earned. Keeping the vision in the head, the tasks are identified, performed, risks are taken and organisational culture is brought forth. It is important to set long term and short term goals for a business so that the organisational objectives are learnt. 

That’s almost all there is to explain the concept of entrepreneurship and the basic elements of it. An entrepreneur needs to control the whole business performance, tackle the workforce, monitor the market trend and modify business policies to meet customer demand. Thus he/she needs to master all the four elements of entrepreneurship to reach new heights of success with the business.

FAQs (Frequently Asked Questions)

1. What are the types of Entrepreneurship?

Ans. There are four major types of entrepreneurship. These are:

1. Small Business Entrepreneurship: Small businesses like grocery, travel agency, hairdressing, carpentry etc fall in this group. Family members or local employees run this entrepreneurship. These are less likely to take over other businesses and they often take small business loans from known friends or other acquaintances. 

2. Scalable Startup Entrepreneurship: It involves scalable business and recruits employees based on their experience and merit. These are often capable of changing the world. They require bigger loans and capital. 

3. Large Company Entrepreneurship: These go by specific life cycles and modify business policies according to the customer choice, market competition, technology, etc. and put in more innovative ideas in developing products or services.

4. Social Entrepreneurship: These are oriented towards social problems and needs. Earning profit is not primary here. Doing good for society is the main focus.

2. What are the characteristics of an Entrepreneur?

Ans. To be successful in an entrepreneurship venture, a person needs to possess certain qualities. These are:

  • Risk-taking Ability- Without this, as we explained earlier, the market cannot be evaluated and new ventures cannot be taken up. 

  • Leadership Quality- The entrepreneurs need to guide their employees or the whole business for that matter single-handedly.

  • Open-mindedness- The market is always changing and the opportunities need to be readily opted for so that the most out of the circumstance can be made. 

  • Flexibility- Customer preference and market trends are not static and thus the product or service should also be flexible to meet the demands

  • Knowledge about the Product- Without in-depth knowledge about what is being offered, entrepreneurs cannot withstand the competition. 

  • Perseverance- Entrepreneurs must be strong-willed and never give up in adverse situations. They must possess a rock-solid determination to survive and grow. 

3. Why is Entrepreneurship important?

Ans. The importance of entrepreneurship are:

  • Employment and income generation. 

  • Implementation of innovation in the development of products, services, technologies etc

  • Diversification of society. 

  • Social needs are met. 

  • Standard of living is improved as income increases. 

  • Continuous research and development are promoted as the concept are all about bringing new items to the customers. 

  • The overall economy is developed.