Entrepreneurship is the process of identifying opportunities, marshalling the resources needed to take advantage of the opportunities, and creating a new venture for the purposes of providing needed products/services to customers and achieving a profit. The word "entrepreneurship" is taken from the French word "entreprendre," which means "to undertake." A person who engages in entrepreneurship is called an entrepreneur. Entrepreneurship occurs all over the world, but it is a particular characteristic of free-market economies. Countries with the highest rates of entrepreneurship include the United States, Canada, Israel, Italy, and Great Britain.
Entrepreneurship involves considerable risk, as the failure rate for new ventures is very high. Thus, to be successful, an entrepreneur must be able to tolerate and even thrive under conditions of risk and uncertainty. Successful entrepreneurship also requires innovativeness and creativity, as well as self-confidence, high levels of energy, and a strong need for achievement. Interest in entrepreneurship is at an all-time high. Most colleges and universities offer courses or even entire programs of study in entrepreneurship.
The process of entrepreneurship is complex and requires the aspiring entrepreneur to make many decisions. It begins with recognizing an opportunity and applying innovativeness and creativity to exploit the opportunity. The entrepreneur must engage in strategic thinking and identify a competitive advantage that will set the small business apart and provide customers a unique reason to patronize the business.
The outcomes of this strategic thinking should be a business plan, which is a written statement that provides a comprehensive blueprint for the new venture. Although every business plan should reflect the unique characteristics of the entrepreneur and the proposed new business, there are common elements that exist in most business plans. Typically, the business plan includes some or all of the following components:
The executive summary provides a concise one to two page overview of the entire business plan. The description of the product or service should identify the key features and benefits of the product or service. The business strategy is the most detailed part of the business plan. Here, the plan provides the entrepreneur's vision and what he or she sees as the mission of the new venture. This section must also lay out key strategies in the areas of operations, marketing, and finance. The forecasted financial statements should include monthly and/or quarterly projected cash budgets, income statements, balance sheets, and capital expenditures. The loan or investment proposal should identify the type of financing required and a plan for repayment.
Entrepreneurship is an important, if not the most important, component of a successful market-based economy. Free economies require individuals who are willing to take risks by creating, organizing, and successfully running new businesses. Most entrepreneurs operate in the areas of small business and/or family-owned business. These are the engines of economic growth. If small businesses are defined as those having fewer than 100 employees, 99 percent of businesses in the U.S. are small. Ninety percent of these small businesses employ fewer than 20 employees. Yet, it is estimated that small businesses have created 85 percent of the new jobs in the U.S. since the early 1990s. Further, most of these small businesses are family-owned. Family-owned businesses employ more than 50 million people and generate more than 50 percent of the nation's GDP. Thus, much emphasis is placed on public policies that will encourage entrepreneurial activity and nurture and sustain new ventures, small businesses, and family-owned businesses.
As a way of life, entrepreneurship has several advantages. It offers individuals the chance to be their own boss and to enjoy an independent lifestyle. It provides individuals the opportunity to develop and grow a new business that makes an impact on their community. And, of course, successful new ventures offer the tantalizing prospect of almost unlimited profit potential. However, as a lifestyle, entrepreneurship also has its downside. It requires a tremendous amount of personal commitment and long work hours, particularly in the early stages of new business startup. Uncertainty of income and the potential for financial loss are also potential negatives.
"Global Entrepreneurship Monitor." Available from < http://www.gemconsortium.org >.
Zimmerer, T.W., and N.M. Scarborough. Essentials of Entrepreneurship ond Small Business Management. Upper Saddle River, NJ: Prentice-Hall, 2002.