Understanding Entrepreneurship: Functions, Risks, and Rewards

Posted on May 5, 2024 in Economy

Agro Tourism

What is Agro Tourism?

Agro tourism is the concept of bringing urban residents to rural areas for leisure travel and spending. It is a commercial enterprise at a working farm, ranch, or agricultural plant conducted for the enjoyment of visitors, generating supplemental income for the owner. Activities include picking fruits, tending bees, milking cows, and other educational pursuits. In short, agro tourism provides tourists a chance to reconnect with the land and offers a ‘hands-on experience’ with local foods. It can support the agricultural economy when local producers can no longer compete economically.

Start-ups in India

Government Initiative for Economic Growth

A start-up is defined as an entity headquartered in India, opened less than 10 years ago, and with an annual turnover of less than Rs 100 crores. The Start-up India initiative, launched in 2016, aims to build an ecosystem that nurtures start-ups in the country, generating sustainable economic growth and large-scale employment opportunities. The Indian Government’s objective is to make India a nation of job creators instead of job seekers.

Entrepreneurs: Driving Innovation and Economic Progress

Definition and Characteristics

An entrepreneur is a person who starts a business and is willing to risk loss to make money. Entrepreneurs are passionate about inventing, innovating, leading, or pioneering with disruptive products or technologies. They strive to make the market a better place where consumer needs are met. They have the courage to offer and share an idea, product, or service with the world. Examples of entrepreneurs include small business owners, founders of multi-billion dollar companies, and even freelance carpenters.

Banking: Central and Commercial Banks

Understanding the Roles of Different Banks

The term ‘Bank’ is derived from the French word ‘Banco’, meaning a ‘bench’. In the past, moneylenders displayed coins and currencies on tables or benches for lending or exchanging. Today, a bank is an organization that deals with money, offering financial services such as safekeeping money and lending money to those in need.

Defining Entrepreneurs and Their Functions

Definition

According to Webster’s dictionary, “An entrepreneur is a person who starts a business and is willing to risk loss in order to make money.” Entrepreneurs are passionate about innovating, lending, inventing, or pioneering with disruptive products or technologies. Examples include small business owners, plumbers, and founders of large companies.

Functions

The functions of an entrepreneur are:

1. **Innovation:** Entrepreneurs typically have innovative minds, introducing new combinations of means of production or something different to gain a competitive advantage. Innovation often involves problem-solving, and entrepreneurs find satisfaction in using their talents to solve problems.
2. **Determination of Objectives:** Entrepreneurs decide the aims and objectives of their business enterprises, adapting them to changing conditions or market situations.
3. **Market Development:** Entrepreneurs find innovative ways to market their products and services, conducting surveys and research to understand customer demand in constantly evolving markets.
4. **New Technology:** Entrepreneurs implement new, advanced, and efficient technology, machinery, and production methods to save costs and improve production.
5. **Good Relations:** The success of an enterprise depends on cordial and efficient relationships among superiors, subordinates, and all employees. Coordination among employees plays a significant role in making a business successful.

Entrepreneurship as a Source of Self-employment

Entrepreneurship is an excellent source of self-employment due to the following reasons:

1. **Innovation:** Entrepreneurs need to be innovative. The essence of entrepreneurship is innovation, which may involve introducing new products, installing new production technology, entering specific product markets, or discovering new raw material sources. Entrepreneurs undertake research and development to manufacture products that satisfy changing consumer needs and preferences.
2. **Economic Activity:** Entrepreneurs manufacture new products or modify existing ones to satisfy human wants and earn a livelihood. They undertake systematic planning activities using their skills, knowledge, and experience, making entrepreneurship an economic activity.
3. **Creative Activity:** Innovation is a process of creating something new, and creativity is crucial for innovation. Introducing creativity in the production process is a challenging task for entrepreneurs, making it an essential element of entrepreneurship.
4. **Risk-bearing:** Entrepreneurs undertake various risks, including price fluctuations, changes in fashion, and natural disasters. These risks cannot always be insured, leading to uncertainty. Entrepreneurs purchase factors of production at certain prices to combine their contributions into products and then sell those products at uncertain prices in the future. Thus, entrepreneurs are risk-bearing agents of production.

Successful Businessmen and Calculated Risks

Successful businessmen take calculated risks. They carefully assess potential risks and rewards before making decisions, considering factors such as market conditions, competition, and their own resources and capabilities. This approach allows them to minimize potential losses while maximizing potential gains.

Additional Functions of Entrepreneurs

In addition to the functions mentioned earlier, successful entrepreneurs also perform the following:

1. **Organizing Funds:** Entrepreneurs must raise adequate financial resources to meet the working capital and fixed capital needs of their businesses. Maintaining good relationships with existing and potential investors is crucial.
2. **Taking Decisions:** Timely, correct, and wise decisions are essential for running a successful business. Entrepreneurs must evaluate the pros and cons of every business decision.

Central Bank vs. Commercial Bank

The table below highlights the key differences between a central bank and a commercial bank: