As a rule the role of the active entrepreneur is to create companies, trade and services, as well as new jobs that in turn will generate part of the gross national product and contribute to the social development of the society. In terms of the present social and economic crisis, characterized by low growth in the industrial production and high unemployment it is extremely important to support and stimulate entrepreneurship and small business in order to reform our economy and to strengthen the foundations of the modern society.
Probably here, at the very beginning of this essay is extremely important to highlight and define the concept of entrepreneurship as a career option. That kind of professional road is has been chosen recently by many young people, or by those who are aged approximately 35-55 and decide to start a business venture after a period of work as an employee. Having in mind all of the above mentioned in the lines below I will discuss broadly the concept of the entrepreneurship, not only as concept and role, but also as risk and uncertainty bearing.
Entrepreneur – Concepts and Definitions
The comprehensive definition of the term entrepreneur will have to be based on the following main points:
? The entrepreneur creates or provokes the creation of something new and use it as an opportunity for making profit;
? The entrepreneur creates a new utility or finds new use of an already known old product;
? The entrepreneur mobilizes and organizes all the necessary resources for the implementation of a certain type of activity;
? The entrepreneur takes the risk with its consequences – bankruptcy, ruin, moral depression and etc as negative ones and positive ones such as moral satisfaction from the achievement and positive financial result for the next risk ventures.
? Last, but not least the entrepreneur creates and applies pressure ( usually by financial means such as the cost of credit, the price of product and many more) on the competitive environment thus giving the initial impetus for the change in the economic system;
According to Jean Batiste Say, the entrepreneur is the agent, who unites all the factors of production and who finds in value of the products the re-establishment of the entire capital he employs, the value of the wages, the interest and the rent which he pays as well as the profits belonging to himself. McClelland defines the entrepreneur as someone who exercises some control over the means of production and produces more than he consumes in order to sell, or exchange it for individual or household income.
Entrepreneurship – definition
On the other hand, the entrepreneurship as defined by Robert Ronstadt is regarded as a dynamic process that creates wealth, which in turn is created by people who undertake risks through the usage of money, time or career so as to create new products or services. These products and services may be new and unique, but their value must be mastered by the entrepreneur through the provision and deployment of the necessary knowledge, skills and resources. Said, or more precisely defined in this way the entrepreneurship resembles an attractive activity for every young and enthusiastic college graduate, who wants to stay aside of the common notion for the ” sheep”. Yet, just the opposite is true when we take a closer look at the industry.
Difference between Entrepreneur and Employee
A lot of surveys in the area have established the fact that the people that possess wide range of skills and interests are more likely to be prone to the entrepreneurship.
On the other hand the qualities that are connected with the contrary are the desire to secure employment and income, as well as the pursuit of mastering certain skills and speciality. For example, in his theory “of one person for everything” Edward Lazear claims that the MBA students who attend wide range of classes and lectures and pass through various occupations are more likely to become entrepreneurs themselves. The reverse might as well be true.
Backes-Geller and Petra Moog attain to another fact. People, who are more likely to start their own business, have not only wide range of skills, but also wide and diverse range of contacts.
In this way the scientists reach one very simple formula for entrepreneurship: extensive experience plus wide range of contacts. Therefore to start something that is entirely yours being a good specialist is not enough. However, the differences between the two categories of people are enormous and I won’t be able to cover them within the volume of this essay.
Role of Entrepreneurship for Economic Development
A lot of studies have been conducted on the role of entrepreneurship for the economic development of the society. Most of them state one and the same – small business provides jobs for a significant portion of the population. In fact this is the most flexible part of the labor market and being the main source of income not only for entrepreneurs and employees in enterprises, but also for members of their families, small business is an important factor for the growth of the national wealth. Often it proves to be the only employment opportunity for women, young people, students, and people lacking higher education thus contributing for the creation of working habits, training and social integration of a significant portion of the population. Small business is regarded as one of the main channels for social mobility and for development of dynamic individuals.
It also develops business and entrepreneurial skills in people, generates inventions and new organizational practices that contribute to increasing the productivity and competitiveness of the economy. Entrepreneurs working in smaller scale adapt and react more quickly to changes in demand and relatively painfully may change the subject of their activities in accordance with the market needs.
The entrepreneurship in small scale also improves the territorial structure and overall integration of the economy by creating economic activity, occupation, jobs and wealth in areas that are distant or cut off from administrative centers and areas of big business. It also creates the economic independence of the middle class – the social layer, the most directly interested in the development of democracy and economic freedom.
Moreover, linking entrepreneurship to economic growth and development is not a new idea. Schumpeter proposed that entrepreneurs starting new business provided the engine for economic growth. Followers of him were Romano Prodi and the policy of the European Union that he introduced.
To sum it up, the role of the entrepreneurship is giving the initial impetus, the spark for the creation of something new and innovative and for its usage for the better of the society as a whole.
Risk and Uncertainty bearing in entrepreneurship
Every activity, entrepreneurship as well bears certain risks. Before starting one’s own business, a person must part with his current job and in some cases even with his career. Of course, there are some people who have a back-up plan in order to return to their previous job, if thing in their own business are not working up well. However, for most of the young entrepreneurs the risk to split with their own career is high. In the first few months, or even a year they will lack secure and steady income.
The fact that he ends the year with a good profit is not enough and the person may experience serious financial difficulties if the costs exceeds the income for a month. The bills have the ability to pile up quickly and if he does not have sufficient financial resources he might end up not being able to pay the salaries of his employees.
No matter what kind of research one does in the area in which he will develops his business he will never be able to predict with greater accuracy the interest in it. People’s behavior and decisions are highly unpredictable and this might prove to be detrimental to one’s business.
Not to mention the choice of the right employees for the right working position, or the idea that the entrepreneur will have to be ready to invest a greater part of his personal time.
Traits of the successful entrepreneur
Here comes the most important part the traits of the successful entrepreneur; Most of people do not even ask themselves did they possess them, before starting a new business. First, one must vision from start-up all the way to exit strategy; in fact one successful entrepreneur must know what business he wants to build, even if he does not know how to do it.
Second is the drive; he must be internally driven to make his vision a reality. Otherwise, all is pointless. Third, the unshakeable self-confidence is crucial for building one’s business no matter what kind of circumstances arise. That kind of confidence makes people respond positively, including customers, employees, even competitors.
Fourth is the decisiveness. An entrepreneur does not have time to wait all the facts come in before he decides. That is the reason why he must develop possible solutions and implement them.
Fifth comes the flexibility or the ability to be original, curious and analytical. A true entrepreneur needs to be good troubleshooter, generate many ideas, and be open to learning about and gaining expertise in areas related to his own field.
Simple tips but quite useful, if used or implemented in the right way. Unfortunately, too often the starting entrepreneurs do not use them.
Choosing the right path
Ultimately, the question is: to work for someone else or working for yourself? It is not necessary to choose once and for all one of the two, as in life many people “travel” between his office and private business, between the status of employee and that of the employer. Sometimes it is possible so quickly to become an employee again as you become an employer in a small business and vice versa.
Compared with the status of the employee, the entrepreneurship brings you independence and most probably higher income, a chance to implement one’s idea into business. However, an entrepreneur is also paying a price: irregular working hours, additional stress and risk of serious losses (as opposed to an employee, the entrepreneur losses not only his wage if the company goes bankrupt).
Is there a perfect moment to become an entrepreneur or to return to the status of an employee? The idea of having a small business is more tempting during the periods of economic prosperity. Then, the profit margin is higher, the desire for consumption and the demands of the customers are more diverse, the banks display greater tendency to finance you. While, in times of crisis, the status of an employee is greater advantage because you can count on a stable income.
Regardless of one’s choice at the moment it is important to stay active and informed, open to innovations and knowing how to deal with challenges, for example, how and when to retire from a loss-making business. Besides flexibility and adaptability, the entrepreneur must have knowledge and experience, economic and business culture, courage and not least intuition (the latter is acquired with experience).
Whatever happens posing the right question is always a must. However, being an entrepreneur or an employee depends on many factors such as the sphere of activity, or respective profession, from the innovativeness and adaptability of any person. For example, the sphere of the information technologies has a “constant rise” and the demand for specialists is higher than the supply. The same is the situation in the sphere of the client service, the so-called “call centers” and it is all about a combination of different factors.