Entrepreneurship = Pursuing Opportunity Beyond Resources Controlled*
What is Entrepreneurship?
You probably think that the answer is obvious.
Entrepreneurship is an elusive concept to pin down. For the longest of time period, people have not been able to build consensus on the concept of entrepreneurship.
Who is actually an entrepreneur? What are the traits and qualities of an entrepreneur? Can a small business owner be considered an entrepreneur? Is entrepreneurship a way of life, a theoretical concept or a specific mindset.
Origin Of The Term
‘Entrepreneur’ is an English derivation of the French word ‘entreprendre’ (to undertake),And this derivation leaves wide latitude of interpretation and application.
As per Stanford Online (link)
At its most basic level, entrepreneurship refers to an individual or a small group of partners who strike out on an original path to create a new business.
An aspiring entrepreneur actively seeks a particular business venture and it is the entrepreneur who assumes the greatest amount of risk associated with the project.
Because they assume the greatest amount of risk, the entrepreneurs also stands to benefit most if the project is a success.
Joseph Alois Schumpeter
“Schumpeterian” dynamic view, or the creation of something new or improved to seize on a commercial opportunity – especially those innovations of product or process that are substantially different, and the growth-oriented businesses that are organised around them.
The function of entrepreneurs is to reform or revolutionise the pattern of production by exploiting an invention, or more generally, an untried technological possibility for producing a new commodity or producing an old one in a new way. To undertake such new things is difficult and constitutes a distinct economic function, first because they lie outside of the routine tasks which everybody understand, and secondly, because the environment resists in many ways.
”Entrepreneurs identify opportunities, assemble required resources, implement a practical action plan, and harvest the reward in a timely, flexible way.
Schumpeter pointed out that entrepreneurs innovate not just by figuring out how to use inventions, but also by introducing new means of production, new products, and new forms of organisation.
StartUp USA Website (link)
In sum, entrepreneurship is the process of starting and developing a company, with the aim of delivering something new or improved to the market, or by organizing the means of production in a superior way.
This process is principally organised through the formation of a start-up company, is managed by entrepreneurs, often under considerable personal and financial risk, and is temporary in duration, as a phase in a business’s lifecycle.
A key distinction between start-ups and other small or young businesses is an aspiration (realized or not) to substantially grow.
Harvard Business Review Definition (link)
And the best definition i have found resides in Harvard Business School Lectures.
It was formulated by Professor Howard Stevenson, the godfather of entrepreneurship studies at HBS.
According to Stevenson,
Entrepreneurship is The Pursuing Opportunity Beyond Resources Controlled.
“Pursuit” implies a singular, relentless focus. Entrepreneurs often perceive a short window of opportunity. They need to show tangible progress to attract resources, and the mere passage of time consumes limited cash balances. Consequently, entrepreneurs have a sense of urgency that is seldom seen in established companies, where any opportunity is part of a portfolio and resources are more readily available.
“Opportunity” implies an offering that is novel in one or more of four ways. The opportunity may entail :
1) pioneering a truly innovative product;
2) devising a new business model
3) creating a better or cheaper version of an existing product
4) targeting an existing product to new sets of customers.
These opportunity types are not mutually exclusive. For example, a new venture might employ a new business model for an innovative product. Likewise, the list above is not the collectively exhaustive set of opportunities available to organizations.
Many profit improvement opportunities are not novel–and thus are not entrepreneurial–for example, raising a product’s price or, once a firm has a scalable sales strategy, hiring more reps.
“Beyond resources controlled” implies resource constraints.
At a new venture’s outset, its founders control only their own human, social, and financial capital. Many entrepreneurs bootstrap: they keep expenditures to a bare minimum while investing only their own time and, as necessary, their personal funds. In some cases, this is adequate to bring a new venture to the point where it becomes self-sustaining from internally generated cash flow.
With most high-potential ventures, however, founders must mobilize more resources than they control personally: the venture eventually will require production facilities, distribution channels, working capital, and so forth.
UNDERSTANDING RISKS
Because they are pursuing a novel opportunity while lacking access to required resources, entrepreneurs face considerable risk, which comes in four main types.
Demand risk relates to prospective customers’ willingness to adopt the solution envisioned by the entrepreneur.
Technology risk is high when engineering or scientific breakthroughs are required to bring a solution to fruition.
Execution risk relates to the entrepreneur’s ability to attract employees and partners who can implement the venture’s plans.
Financing risk relates to whether external capital will be available on reasonable terms.
The entrepreneur’s task is to manage this uncertainty, while recognising that certain risks cannot be influenced by their actions.
Closing Note
The above literary review was done to figure out the most appropriate definition of Entrepreneurship? The essence of Entrepreneurship lies in innovation and perserverance. No matter what type of venture a small business entrepreneur is involved in, it’s vital that they prioritize innovation and perseverance.
Share this newsletter with someone who may find this useful https://www.linkedin.com/build-relation/newsletter-follow?entityUrn=7187390463388127233
Cheers
Useful References
(1) https://online.stanford.edu/what-is-entrepreneurship