The Importance Of Entrepreneurship: Features And Types

By Indeed Editorial Team

Updated 14 September 2022 | Published 6 December 2021

Updated 14 September 2022

Published 6 December 2021

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

Entrepreneurship is the process of turning a concept into a developed product. You might dream of becoming an entrepreneur or getting a job in the corporate sector. Understanding the significance it has can help you decide your career path. In this article, we explore what entrepreneurship means, the different types, the importance of entrepreneurship, the types and features of entrepreneurs.

What Is The Importance Of Entrepreneurship?

To understand the importance of entrepreneurship, recognising what an entrepreneur does is necessary. The term itself comes from the French 'entreprendre', which means 'to undertake.' An entrepreneur is someone who undertakes or plans for all the risks and responsibilities that come with the formation of a new business to earn profits. Entrepreneurship is important because it has the following benefits:

Creation of job opportunities

Entrepreneurs start new firms, which may mean more job prospects for individuals. People who start a new business typically have the opportunity of working for themselves and support other businesses while expanding their own. Entrepreneurs can both earn cash for themselves and employ others in their business activities. As a result, entrepreneurship usually creates new jobs at every level.

Creation of new businesses

Entrepreneurship is essentially the ownership of a business by a single person. The entrepreneurs can run the vast majority of these enterprises entirely by themselves. They assemble and coordinate their operational processes that support other business ventures. It is a sector in which a person might start a business idea that could grow into a large corporation. All big industrial organisations usually begin as small business initiatives. In every economy, entrepreneurship typically offers a diverse range of initiatives that lead to the creation of new businesses.

Innovation

Entrepreneurship is the ability to innovate, whether in an established company, a government agency or a new business. It is the process that either generates new wealth-producing resources or enhances the potential of existing resources to create more revenue. It creates new product lines and improves product quality, ideas, technologies and markets and usually makes life easier for both the entrepreneurs and the consumers.

Leads to better standards of living

'Standard of living' is a term or theory which involves higher consumption of a variety of products and services over a period. It usually depends on the items found in the market. Entrepreneurship, by its innovative nature, can create a wide range of commodities in different areas. An entrepreneur can develop products and services to suit customer demands, even if they cater to a comparatively smaller market. They can meet even the most specific needs. Since entrepreneurship usually creates new jobs and generates income for a family, entrepreneurship can help improve your standard of living.

Supports research and development

Before introducing a new product or service in the market, an in-depth investigation and testing of the product is typically necessary. As a result, an entrepreneur works with research organisations and institutions and provides funding for research and development. This often helps boost research and development, which may make discoveries possible.

Promotes community development

Entrepreneurs can help bring unity and build goodwill among individuals who have common goals and interests. Entrepreneurs may also help finance charities. Their goods and services often lead to the social and economic well-being of communities. This usually brings positive changes like fewer slums, better sanitation, a skilled workforce and better infrastructure. Entrepreneurship generally promotes community stability and improves the quality of life.

Leads to increased productivity

Entrepreneurs can make current businesses more competitive by offering lower pricing and a wider range of products. Existing firms may rethink their strategies, increase the quality of their products, lower expenses and become more efficient. This competitiveness often encourages businesses and individuals to seek new solutions to enhance their services and, therefore, offers more value for the customer's money. Thus, entrepreneurship may help established companies in the market boost their productivity and performance.

Creation of national wealth

Entrepreneurship usually plays a key part in contributing to the country's national economy by generating wealth and paying taxes, which generally adds to a country's gross domestic product (GDP). Entrepreneurs not only invest their own money, but they also draw money from the market. They take advantage of these resources to develop unique products or services and open up new markets, which in turn leads to economic growth. This increase in revenue can significantly improve the national income of a country.

Contributes to social welfare

Entrepreneurship also brings about social integration and reforms by connecting and helping people. It helps provide income to poor and marginalised sections of the society and allows them to fulfil their basic needs. By being inclusive of all people regardless of their differences, entrepreneurship can often create a sense of connectedness.

Skills And Duties Of An Entrepreneur

Here are some skills and duties of an entrepreneur:

  • Optimum utilisation of resources: To ensure the maximisation of profits, an entrepreneur may optimally use their resources available, be it human resources, capital, or raw materials.

  • Ability to take risks: Entrepreneurship is the ability and willingness to take risks in creating new services and items if necessary.

  • Creation of goals: An entrepreneur usually sets objectives to fulfil and is clear in their vision.

  • Leadership quality: To fulfil their objectives and manage different tasks, possessing leadership qualities is necessary.

  • Open-mindedness: An entrepreneur typically welcomes new ideas and adapts to situations to reach their potential.

  • Knowledge of product: An entrepreneur often knows every aspect of the product they are trying to sell.

  • Problem-solving skills: An entrepreneur may have to work in a fast-paced environment and handle situations that require quick thinking and problem-solving skills.

Read More: 10 Common Leadership Styles

Types Of Entrepreneurship

Given below are four different types of entrepreneurships:

1. Small business entrepreneurship

Small enterprises usually account for the vast majority of business ventures. Entrepreneurs who start small businesses often produce enough income to meet their family's needs. These individuals typically fund their ventures themselves or borrow money from friends and relatives. Employees are typically locals or relatives, for example, neighbourhood grocers, hairdressers and shoe stores.

2. Large company entrepreneurship

Large-scale entrepreneurship often begins with the startup phase and progresses through rapid development, maturity and growth. During this stage, the company is usually prosperous and profitable. This type of business typically grows because of the ability to innovate. These businesses may offer a variety of products based on their core offering.

3. Scalable entrepreneurship

These companies usually start with a unique idea. They develop a distinctive product or service that helps the firm expand and progress with time. Scalable entrepreneurship often recognises a gap in the market and develops a solution. Typically, venture capitalists grant investment for such businesses based on the newness of the idea. Several companies began as start-ups and have grown since then, like food delivery apps or educational technology companies, which are examples of scalable entrepreneurship.

4. Social entrepreneurship

Social entrepreneurship's purpose is usually to benefit society and humanity. They often use their products and services to assist communities or the environment. These companies employ ethical methods to succeed, such as mindful consumerism and corporate social responsibility. Non-profit organisations are examples of social entrepreneurship.

Read More: 12 Different Types Of Entrepreneurship

Types Of Entrepreneurs

Depending on their styles of entrepreneurship, there are five different types of entrepreneurs. Given below are 5 types of entrepreneurs and brief explanations for each:

1. Innovator entrepreneurs

Innovator entrepreneurs often think of unique ideas and develop them into profitable ventures. These entrepreneurs usually reshape people's behaviour and actions. Innovators' new and exciting offerings, goods or technology may enable the growth of new markets and allow for new ways of earning a livelihood. These entrepreneurs are typically corporate leaders who make a considerable contribution to the economy.

2. Hustler entrepreneurs

Hustlers generally start with their resources and focus on work rather than raising funds to finance their company. These entrepreneurs concentrate on starting small to grow larger in the future. They are typically self-disciplined and are more likely to handle important situations, from launching their company to marketing their products.

3. Imitator entrepreneurs

These are entrepreneurs who follow in the footsteps of innovative entrepreneurs. Imitators are entrepreneurs who borrow and improve on other people's business ideas. They are constantly searching for ways to improve a product to gain a competitive advantage in the market. Imitators are often a mix of innovators and hustlers.

4. Researcher entrepreneurs

Researcher entrepreneurs are business owners who usually begin a business after they have done extensive research in all related fields. These entrepreneurs typically take a long time to develop goods and decide what is best for their business, since they require a solid foundation in all aspects of the product. They rely more on market research and product development rather than experiments or impulses.

Related: 10 Entrepreneur Characteristics That Lead To Success

5. Buyers

Buyer entrepreneurs generally find a startup and determine its potential. They often buy it and select the best individual to manage and expand it. These entrepreneurs are usually experts at purchasing businesses that may have a better chance of succeeding.


Related:

  • 12 Different Types of Entrepreneurship

  • Innovative Entrepreneurship: Definition and Skills

  • What Is A Social Entrepreneur? (Definition And Examples)

  • Different Strategies For Acquiring Funding For Startups

  • What Is The Private Sector? (With Roles And Examples)

  • What Is The Importance Of Planning? (With Advantages)




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