4.1. Elements of Entrepreneurship

Key learning outcomes

• To provide insights on the basics of entrepreneurship 

• To introduce the importance of innovation, risk management and networking in business practices

The central element of any business is the entrepreneur. The entrepreneur is the person who decides to market an often innovative and visionary idea for creating new products or services, bearing the risk associated with the process. Entrepreneurship refers to the process of activities that an entrepreneur carries out in an organisation set up for that purpose.

The process of entrepreneurship is based on the identification and evaluation of new business ideas and leads to their implementation. The process includes the creation of new business firms and management of organisations and the associated creation of employment opportunities.

Entrepreneurship combines two approaches: data-driven, proven business planning and management processes, and intuitively driven visionary thinking that enables the realisation of ideas and business development.

Business does not exist in isolation, it is part of the economy and society, interacting with the environment and political framework, touching different groups of people (stakeholders), using different resources, and having an impact in different areas.

Vision

The way an entrepreneur envisions his business in the coming years is the way the business moves forward and achieves profitability. With a vision in mind, tasks are identified and accomplished, risks are taken, and an organisational culture is created. It is important to set long-term and short-term goals for the business so that the business strategy and its success metrics are recognised and could be evaluated during the process.

The entrepreneurs with a clear vision of what they want to achieve, drive their strategic decisions and inspire others involved in the venture. A strong vision also helps galvanise and motivate teams, stakeholders, and investors toward a common goal.

A strong commitment to their entrepreneurship vision and goals drives entrepreneurs to keep moving forward despite setbacks and increasing their resilience which helps them push through business obstacles, including financial setbacks, market competition or operational challenges.

 Innovations

Innovation is considered to be a key factor of the business concept. Innovation must meet the demand of society and the market, for example bringing a solution to a problem, an increase in comfort or a significant reduction in the price of a service or product.

Entrepreneurs think imaginatively and uniquely about the available situations and try to create something new, be it a new product, production technique, technology, service, marketing strategy, etc. which must continually adapt and innovate to meet changing market demands and consumer preferences.

Organisation

Within a business, it is essential to maintain a decent organisational structure that determines who will perform a particular task and how that task will be performed. This includes management of production and its quality, finances, people including employees, suppliers, customers and other affected stakeholders and more. Effective organisation skills are the key for managing resources, timelines, and tasks to ensure smooth operations. A well-thought-out business plan is important to outline the vision, goals, target market, financial projections, and strategies for growth.

Risk

All business involves risk. Without risk-taking, a business cannot prosper, but on the other hand, too much risk-taking can lead to large losses. Risk-taking allows the entrepreneur to seize advantage of opportunities and gain a competitive advantage over others operating in the same market. In other words, we need to know the weak parts of our business, possible risks that might affect it and have a well-prepared plan (even plan B or C) to lower the risk of the business failing.

Entrepreneurs should be willing to take risks, but they have to do it based on thorough analysis and strategic planning to evaluate potential rewards against possible downsides and also understand that failure is often a part of the entrepreneurial journey and use setbacks as learning experiences.

Entrepreneurs need to be also knowledgeable about legal and regulatory requirements relevant to their industry, including permits, licences, and labour laws. Understanding potential legal risks and taking steps to mitigate them is crucial for business sustainability.

Successful entrepreneurs prioritise understanding their target customers' preferences and pain points and actively seek customer feedback and remain flexible to adapt their products or services based on that input to lower the potential risk of business success.

Business & management

Understanding financial management, budgeting, and fundraising is critical for running a successful business. Entrepreneurs also need to follow keen insights into market trends, customer behaviour, and competitive dynamics to make informed decisions (including investments decisions) as well as effectively market their products or services to attract their target audiences and drive sales. Entrepreneurs need to identify, recruit, and retain skilled individuals who align with the company's mission and values. Strong leadership is essential for building a positive organisational culture, fostering collaboration, and motivating team members.

Networking and relationships

Successful entrepreneurs cultivate relationships with industry peers, investors, mentors, and customers, creating valuable networks for collaboration and support. Active networking can open doors to funding opportunities, partnerships, and market insights.