Characteristics of entrepreneurship refer to the qualities and attributes that are typically associated with entrepreneurs and entrepreneurship. These characteristics can include a willingness to take risks, an ability to spot opportunities, a drive to turn ideas into reality, a focus on growth and expansion, and the ability to adapt to change and uncertainty.
Characteristics of Entrepreneurship
The main characteristics of entrepreneurship may be outlined as below:
1. Economic Activity:
Considering all entrepreneurs engage themselves in creation and operation of a business enterprise, the nature of the activity becomes necessarily economic. The primary task performed by every entrepreneur includes production and distribution of goods and services. Hence, entrepreneurial activities result in creation of value or wealth.
2. Purposeful Activity:
In order to earn profits, every entrepreneur charters himself or the group of individuals involved in production and distribution of goods and services in a systematic, step-by-step way. Hence, each entrepreneur undertakes a goal-oriented, purposeful activity.
3. Creative Activity:
Each entrepreneur provides a creative or innovative solution to available business opportunities. Hence, we may also characterize an entrepreneur as an agent to bring about change in the market.
4. Risk Taking:
There is an element of uncertainty involved in entrepreneurship. Therefore, risk is an inherent and inseparable aspect of entrepreneurship. Each enterprise is established to earn profits, but there are equal chances of incurring losses as well.
5. Dynamic Function:
Entrepreneurs thrive on the changing environment which brings in new opportunities for business. Flexibility is the hallmark of a successful entrepreneur.
6. Organizing Function:
Each entrepreneur not only conceives a business idea but also arranges for all the factors of production and distribution required i.e., land, labor and capital. Other facets of entrepreneurship are managerial skills and leadership.
7. Gap-Filling Function:
Entrepreneur takes up the job of meeting human needs with that of products and services required to satisfy them. He is the one responsible to understand and identify this gap or business opportunity and bridge them by taking requisite steps. He introduces new products and services, new methods of production or distribution, new sources of inputs and new markets.
Hence, entrepreneurship can be regarded as a multi-dimensional concept and may be understood as both science as well as art. There are very few principles that apply to the creation and running of business enterprises. The environment in which entrepreneurs operate is very heterogeneous and dynamic. Success of an entrepreneur depends upon its ability to visualize the future correctly to take effective measures to exploit the environmental changes.
Explain the Characteristics of Entrepreneurship
The characteristics of entrepreneurship are explained below:
The process of commercializing an invention is innovation. For example- Steam as an alternative source of energy was invented as early as AD 100. Later, in 1712, when it was used to run engines then the process was called innovative.
Innovation is a critical aspect of entrepreneurship. Entrepreneurs always try to create new and different values and get satisfaction in doing so. They try to convert a material into a resource or combine the existing resources in a new and more productive manner. The act of innovation thus provides resources with a new capacity to create wealth.
In simple words, in business activity, novelty may take any one or a combination of the following:
- New products.
- New methods of production.
- New markets.
- New sources of raw material.
- New forms of organization.
It is the need to achieve that motivates a person. Entrepreneurs generally are highly active. They struggle constantly to achieve something better than what-they already have. They like to be different from others and are ready to work hard to reach their goal.
Persons experiencing constant need to achieve always try to understand their strengths and weaknesses. This enables them to seek external help whenever needed. Entrepreneurial persons seek rewards or returns earned through their own efforts and do not depend upon ‘luck’.
3. Risk Taking:
Risk-taking implies taking decisions under conditions where the reward on a certain action is known, but the occurrence of the event is uncertain. While doing so, an entrepreneur becomes responsible for the result of the decision. This responsibility however cannot be insured against failure.
4. Organisation Building:
Organization building ability is the most critical skill required for industrial development. This skill means the ability to multiply oneself by effectively delegating responsibility to others. Entrepreneurs need not necessarily be the men with ideas or men who try new combinations of resources but they may simply be good leaders and excellent administrators.
5. Managerial-Skills and Leadership:
According to Hoselitz- managerial skills and leadership are the most important facets of entrepreneurship. Financial skills are only of secondary importance.
Only a strong desire to make profit is not enough to succeed in entrepreneurship. Entrepreneurship can develop in a society where its culture permits a variety of choices and where social processes are not rigid.
The social conditions should encourage the development of enterprise. There are innumerable cases, in entrepreneurial history, of firms, which failed because their founders could not function as managers or feared to enlist the services of managers when required.
State Three Characteristics of Entrepreneurship
The three characteristics of entrepreneurship are:
Innovation is an intrinsic characteristic of entrepreneurship. Innovation enables entrepreneurs to thrive. The innovation increases the prospects of the entrepreneurs to flourish and also contributes in improving the lives of customers.
2. Bearing Risk:
Entrepreneurship involves risk bearing. The business environment is filled with uncertainties. The process of entrepreneurship is intricately associated with risk bearing.
3. Goal-oriented process:
The process of entrepreneurship emphasizes outcomes, accomplishments and target achievements. The entrepreneur works in order to convert the vision into reality.
List any Four Characteristics of Entrepreneurship
1. Economic and commercial activity:
The entire process of entrepreneurship has economic implications. Entrepreneurship involves the establishment of enterprises which helps in better utilization of resources and contributes to the process of economic growth of an economy.
Entrepreneurship as a process is active amidst the business environment which is very dynamic and filled with uncertainties. Hence, entrepreneurship should be dynamic.
3. Accepts challenges:
Entrepreneurship involves taking up challenges. The entire process involves numerous challenges owing to the uncertainty of the ever changing business environment.
4. Decision making:
Every step in the process of entrepreneurship involves decision making. The entrepreneur has to choose the best alternative available at each step. Correct decision making is inevitable for success.
Basic Characteristics of Entrepreneurship
Entrepreneurship compels an individual to continuously evaluate the existing modes of business operations so that more efficient and effective systems can be evolved and adopted.
If an entrepreneur does not have the willingness to assume risk, entrepreneurship would never succeed. Entrepreneurs assume the risk factor involved and have the patience to bear the risk to enjoy the rewards.
Profit potential is the level of return to the entrepreneur for bearing the risks. Higher the risk involved, higher will be the profit level.
Entrepreneurship is a dynamic activity because it operates in the business environment which is always changing due to various internal and external factors.
5. Economic Activity:
Entrepreneurship involves creation of an enterprise which, in turn, creates wealth and value for the entrepreneur.
6. Mobilization of the factors of production:
The crux of entrepreneurship involves resource mobilization. The process of entrepreneurship is involved in bringing all the factors of production into a single platform to start an enterprise.
7. Skillful management:
The process of entrepreneurship requires skillful management of events and resources. Entrepreneurship involves various activities and processes which require skillful management.
8. Creation of value:
Entrepreneurship involves creation of new products, new services, and employment opportunities which directly and indirectly create some value to a community or the economy at large.
Characteristics and Traits of an Entrepreneur
Several research studies have been carried out to identify the characteristics and traits of a true entrepreneur. Although there are no specific, universally accepted characteristics that have been found to be possessed by all entrepreneurs, yet there are few traits that most successful entrepreneurs possess.
Characteristics of a Entrepreneur:
Entrepreneurs are passionate, buoyant and highly self-motivated. They have high energy levels and are always willing to take initiatives. They always keep thinking about their business and how to increase the market share, how to improve their existing processes.
2. Risk Tolerance:
Establishment of any entrepreneurial venture is risky and the entrepreneur has to assume risk. As risk and rewards are inseparable, in order to grow, the entrepreneur should have a large appetite for assuming risk.
One of the major responsibilities of an entrepreneur, as founder and head of the company, is deciding where the business should go. That requires a strong vision on the part of an entrepreneur.
4. Mental Ability and Creativity:
The entrepreneur should anticipate changes and must be able to study the various situations under which decisions have to be made. Successful entrepreneurs have the creative ability to recognize and pursue opportunities. They are always on a look out for new ways of doing things, launching new products, providing new services etc.
5. Clear Objectives:
An entrepreneur has clarity about the objectives to be achieved in the business, the nature of goods to be produced and subsidiary activities to be undertaken. This clarity in objectives helps them to translate their business idea into reality.
6. Good Communication Skills:
This basically pertains to communicating effectively. An entrepreneur who can effectively communicate with customers, employees, suppliers and creditors will be more likely to succeed than the entrepreneur who does not.
7. Human Skills:
The most important personality factors contributing to the success of any entrepreneur include emotional stability, good inter- personal relations, consideration and tactfulness. An entrepreneur has to maintain good relations with his customers so as to encourage them to continue to patronize his business. He must also maintain good relations with his employees so as to motivate them to perform their jobs with a high level of efficiency
Traits of Successful Entrepreneurs:
1. Ability to Plan:
Entrepreneurs must be able to develop business plans to meet goals in a variety of areas, including finance, marketing, production, sales and personnel.
2. Communication Skills:
Entrepreneurs should be able to explain, discuss, sell and market their goods or services.
3. Marketing Skills:
Good marketing skills, which result in people wanting to buy goods or services, are critical to entrepreneurial success.
4. Interpersonal Skills:
The ability to establish and maintain positive relationships with customers and clients, employees, financial lenders, investors, lawyers and accountants, among others, is crucial to the success of the entrepreneur’s business venture.
5. Basic Management Skills:
Even if entrepreneurs hire others to deal with the day-to-day tasks of the business, entrepreneurs need to know whether their company has the correct resources.
6. Leadership Skills:
The ability to develop a vision for the company and to inspire employees to pursue it is imperative for success.