Entrepreneurship: Definition and History

• Entrepreneurship comes from the French word "entreprendre," meaning "to undertake" or "to embark on a venture."
• It is the process by which individuals take advantage of an opportunity by launching a new good or significantly enhancing an existing one.
• This typically occurs in a new organization or start-up, but can also happen in established small corporations with a major shift in strategy/product.
• By the 16th century, it became a noun referring to someone who started a business.
• An entrepreneur arranges the means of production, often with financial risk and uncertainty.
• Richard Cantillon coined the term "entrepreneur" in 1730, recognizing their willingness to take personal financial risk.
• Entrepreneurs can co-found with others or jointly create firms with existing organizations.

Entrepreneurship vs. Business

• Although the distinction is limited, there are areas where entrepreneurs and businessmen differ.
• Merchants would be businessmen, while inventors would be entrepreneurs, creating innovations to enhance crops and earning cash from innovations.
• Businessmen primarily aim to make profits, whereas entrepreneurs also seek to address a problem and change the world.
• Businessmen may run businesses based on non-original concepts (e.g., franchising), whereas entrepreneurs invest in building original models.
• Businessmen take calculated risks based on analysis, while entrepreneurs are risk takers who act on risks to overcome them.
• Businessmen act fast for immediate aspirations, entrepreneurs have a long-term vision and work more deliberately.
• Entrepreneurs are inspirational, innovative, perseverant, and influential, while businessmen are adept planners and knowledgeable managers.

Roles of an Entrepreneur

• An entrepreneur's main responsibility is determining the manufacturing policy, including what to make, how much, and where.
• They make decisions on selling goods/services and acquiring productive factors.
• Entrepreneurs innovate by asking "What makes this different?" to create new services/products.
• Uncertainty-bearing refers to making decisions with unknown outcomes, managing unknowns, and making strategic choices despite uncertainty.
• Entrepreneurs generate jobs by creating opportunities for others and forming teams, serving as a "growth engine" for the economy.
• Entrepreneurs use management control to monitor, evaluate, and adjust activities, but this role has decreased with professional managers.

Key Characteristics of an Entrepreneur

• Successful entrepreneurs share passionate, visionary, innovative, self-confident, driven, goal-oriented, risk-tolerant, and willing-to-learn characteristics.
• Entrepreneurs feel committed to what they do, care more about the work than money, look to the future, and seek new solutions.
• Entrepreneurs believe in their ability to succeed, have drive and persistence, and can set short- and long-term goals.
• They accept challenges as opportunities, and learn valuable information from others to enhance their success.

Skills for Success

• Entrepreneurs need skills to succeed, including the ability to plan effectively, lead, communicate, market, have interpersonal skills, manage, be personally effective, and build teams.
• Since few entrepreneurs have all skills, they often seek experts in areas like strategic planning, accounting, and legal issues.

Entrepreneur's Dilemma

• Securing funds is a significant issue, as many entrepreneurs struggle to find investors or secure loans, especially without a track record or collateral.
• Building from the ground up can be difficult, as entrepreneurs face the challenge of building without established networks or financial stability.
• Motivation paralysis may occur when entrepreneurs face setbacks, leading to inaction or poor decisions.
• Market competition forces entrepreneurs to adapt and innovate to stay relevant.
• Entrepreneurs face a daily struggle to make many decisions, from minor to company-impacting ones.
• Balancing rules and growth involves navigating complex regulations and compliance, which can be time-consuming and costly.
• Workplace tension and client conflict can jeopardize relationships, reputation, and success.

Myths of Entrepreneurship

• The myth that entrepreneurs are born, not made is false; entrepreneurism can be learned.
• While some may make more money, it's not a universal truth; entrepreneurship comes with uncertainties, and not all ventures succeed.
• The myth that starting a venture requires a lot of money overlooks lean startup methodologies and available technologies to reduce costs.
• The idea that first-movers make the biggest profits is disproven by companies like Google and eBay; serving consumers well is crucial.

Benefits of Entrepreneurship

• Entrepreneurs have independence in making decisions, setting schedules, and shaping their vision.
• They have financial potential by targeting new markets and generating long-term wealth.
• Entrepreneurship leads to economic growth by creating employment opportunities and stimulating consumer spending.
• Entrepreneurs offer social change through innovative goods and services.
• They promote community development among people with common interests and contribute to social and economic well-being, often reinvesting in communities.

Explore the definition and historical roots of entrepreneurship, tracing its origins from the French word 'entreprendre' to Richard Cantillon's early definition. Understand how entrepreneurs seize opportunities by launching new products or significantly enhancing existing ones, and differentiate them from traditional businessmen.