Importance of Entrepreneurship: Types, Benefits, and Styles
- Economic growth: The success of the products and services created and sold by entrepreneurs cascades to other businesses and markets.
- Wealth generation: Entrepreneurs frequently target new markets and tap audiences outside the focus of established firms. This creates new sources of revenue and profits.
- Social change: The innovative goods and services entrepreneurs offer reduce dependence on outdated processes and technologies. One example is the way smartphones have affected how businesses communicate with customers, employees, and partners.
- Community development: Entrepreneurs foster a sense of community among people with common goals and interests, whether in a single neighborhood or across continents. Their products and services contribute to the communities’ social and economic well-being.
Types of Entrepreneurship
Matching Entrepreneurship Approach to Personality
- Innovators have the potential to transform entire industries with novel ideas. Inventor Thomas Edison was the prototype for the modern innovative entrepreneur. These entrepreneurs possess extensive knowledge of their industry, including its customers’ needs. They also know how to develop and market their innovative products.
- Managers are often considered the antithesis of entrepreneurs, but management skills are paramount in bringing a great idea to fruition as a commercial product or service. Manager entrepreneurs understand the importance of choosing and nurturing a good team of workers, and ensuring that they have the tools and resources to succeed.
- Opportunists identify an important business or technical problem, devise a winning solution to the problem, and plot a course to bring that solution to market in the form of a commercial product. Opportunity entrepreneurs tend to have a business background rather than a technical one, so they may focus too much on short-term goals and lose sight of the larger picture.
- Revolutionaries are in many ways the antithesis of manager and opportunity entrepreneurs because they typically have technical backgrounds and may show disdain for established business practices. While revolutionary entrepreneurs such as Apple founder Steve Jobs leave a legacy that is both broad and deep, they often need the help of nontechnical business people to realize their world-changing vision.
Entrepreneurs Whose Businesses Match Their Personalities
- John D. Rockefeller was “the richest man in history,” according to Investopedia, after founding Standard Oil in the late 19th century. Rockefeller’s fortune was due in large part to his focus on running the company as efficiently as possible by creating vertical and horizontal integrations for its operations. However, Rockefeller’s ruthless quest for efficiency bordered on unethical business practices. The social backlash to the Standard Oil monopoly ultimately led to the company’s breakup.
- Walt Disney is famous as a pioneering animator and entertainment mogul, but his greatest innovation may have been in recognizing the potential of merchandising his creations in the form of toys, clothing, and other items. The Disney Company remains one of the largest and most successful entertainment enterprises in the world.
- Jeff Bezos founded Amazon out of a garage in Seattle in the 1990s. Less than 25 years later, the company is one of the most valuable in the world, and Bezos is a billionaire many times over. Since his school days, Bezos has had a vision that extends beyond our planet, but he also has a practical side that realized the potential of the internet long before the rest of the world did. As Amazon achieved record-breaking growth early this century, Bezos simultaneously invested in a variety of endeavors outside online retail, including the commercial space project Blue Origin.
Entrepreneurs Arise from Diverse Backgrounds
- They are independent thinkers.
- They are optimistic and confident about their chances for success.
- They are creative problem solvers.
- They are tenacious, visionary, and focused.
- They are more likely to act than to wait, and they attack challenges rather than avoid them.
- Leadership: Entrepreneurs demonstrate their zeal for the enterprise in all of their interactions with investors, employees, and outside parties. They are confident in themselves and in the business, and they are decisive yet adaptable. They listen to and respect the opinions of others, and are always taking advantage of opportunities to study and learn.
- Interpersonal communication: Entrepreneurs understand that the lines of communication in an organization must run both ways. Communication is particularly important to entrepreneurs because it makes all their other skills more effective. Communication skills are used to close sales, boost employee morale, resolve conflicts, and negotiate contracts.
- Organizational behavior: Technology is a vital part of any new business venture, but the ability to manage people will ultimately determine a company’s success. People management takes many forms, but the key is to match the organizational approach with the characteristics of the business and its employees.
- Business strategy: The importance of having a clear business focus and being optimistic and driven to achieve the company’s goals is balanced by the need to be adaptable and acknowledge when industries, markets, and customer preferences change. Entrepreneurs are decisive and passionate, but they are also ready and willing to make changes when necessary to keep the company on a path forward.
- Collaboration and project management: Entrepreneurs understand the importance of being a good team member as well as serving as a team leader. They establish relationships with managers, investors, partners, and stakeholders as peers who all have important roles to play rather than as a hierarchy.
Benefits of Entrepreneurship
- Entrepreneurs’ rewards for taking on the risks entailed in transforming an idea into a business include the earnings their investment generates, as well as the ability to set their own schedule. However, entrepreneurs also gain the satisfaction of seeing their idea transformed into a thriving enterprise, and of knowing their skills and leadership helped to make it happen.
- Communities reap the benefit of entrepreneurship because businesses help to foster innovation, promote economic development, and create jobs. A successful company is likely to expand, which generates taxes, jobs, and other benefits for the area. Thriving businesses tend to attract other ventures in the same or related fields, and they often invest in community projects and support local charities.
- Entrepreneurs play an important role in growing and sustaining the U.S. economy. The technologies pioneered by entrepreneurs have created entire industries, including smartphones, wireless products, online retail, social media, and streaming entertainment.