Entrepreneurship is very much a state of mind, always striving to do new things in innovative and better ways. The meaning of entrepreneurship is derived from the 17th-century French term for someone who "undertakes" and, more specifically, someone who undertakes a specific project or activity. In the 19th century, the French economist Jean Baptiste Say refined the meaning of entrepreneurship for people who create value by transferring resources from low-value activities to higher-value activities. Higher value activities can be activities that add value to both individuals and society.
It is the 20th-century thinking on entrepreneurship of Joseph Schumpeter, an Austrian-born, then Harvard-based economist and sociologist, that has most influenced contemporary thinking on entrepreneurship. According to Schumpeter, entrepreneurs are innovators who lead the process of "creative destruction", reforming or revolutionizing the model of production. In many ways, sustainable businesses dramatically change, if not revolutionize, ways of producing and delivering services, transforming business practices in ways that benefit the environment and society.
21st-century management expert Peter Drucker provides another useful insight into entrepreneurship. Drucker suggests that entrepreneurs always look for change, react to it, and seize it as an opportunity. Entrepreneurs take risks when starting new businesses and take on significant personal responsibility. Many sustainability entrepreneurs see opportunities arising from growing public concern about the environment and climate change and are responding to this opportunity with for-profit ventures that address these concerns.
By bringing these perspectives together, entrepreneurship can be seen as
recognize change
take the chance,
assume risks and responsibilities,
innovative,
make better use (higher value) of resources,
create significant new value for customers,
do it again and again.
And entrepreneurship is an attitude and a willingness to seek out opportunities and create something new and valuable.
Business opportunities
Many different social conditions can create business opportunities for new goods and services. Opportunity conditions come from a variety of sources. On a broader societal level, they are present due to forces, such as changes in knowledge and understanding, development of new technologies, demographic changes, political changes, or changes in attitudes and norms, which give rise to new preferences and concerns. . These forces constantly open up new opportunities for entrepreneurs. Related to sustainability concerns, certain demographic changes and pollution challenges create opportunities. For example, with 50% of the world's population now living in urban areas for the first time in history, improving urban air quality presents opportunities for entrepreneurs.
Professional opportunities
The entrepreneur must first recognize the opportunity and then innovate by offering a business solution that offers an attractive alternative to customers. A solution is only the first step in the process, the entrepreneur must also study the economic value and the business proposal that emanates from this opportunity. They must research the market to understand how their potential product or service provides value to a customer and whether the amount a customer is willing to pay, which reflects the value of the product or service to the customer, exceeds the cost of delivering that value. product or customer service. In this way, the entrepreneur contributes to economic growth and society by providing his customers with goods and services whose supply costs are less than their value to consumers.
An entrepreneur may devise a new approach that meets a customer's needs or wants, but if there are not enough customers who are willing or able to pay more than the cost of that product or service, it will not be financially viable. Therefore, the opportunity becomes a true business opportunity when it has sufficient scale and value, that is, the revenues will cover costs and promise to generate net income above operating costs after reimbursement of the initial capital expenditure.
Business Resources
Successful entrepreneurial endeavours require the rapid and effective mobilization of a wide range of resources. All entrepreneurial businesses must have resources such as capital, talent and knowledge (for example, accounting and finance, operations, management, legal and regulatory), equipment and facilities. Breaking down the resources a business needs provides a picture of what components are required and when they are needed. Resource requirements change during the growth stages of a business; At each stage, the entrepreneur must be clear about the priority resources that will allow him to move on to the next stage of the company's development.
While leadership teams need to be recruited relatively quickly, there are usually one or two people who initially drive the business process through hard work and a determination to succeed. As the business grows, the commercial team becomes the key factor. The skills, education and abilities of the contractor must be augmented and complemented by the skills of other team members.
It is essential to have adequate financial resources when starting any new business activity; it is no different for sustainable businesses. Financing can come from a variety of sources, including personal savings, lines of credit from employers, family, friends, and other sources. Depending on the type of business, venture capital or other investors may be an option. Typically, a company can acquire investors if there are high growth expectations in the industry. Clean technology is an industry sector that can potentially attract investors for this reason.
All the resources mentioned above in the entrepreneurial process are important, but the most important factor is the individual entrepreneur, i.e. his ability to identify a market opportunity and develop a creative response to this opportunity. with market potential, to obtain a product or provide a service, sell to customers, build an organizational team and gain the trust of potential investors. Entrepreneurs must have passion, drive, enthusiasm and unique abilities to do what they do.
Entrepreneurship is more than just starting a private, for-profit business. While the definition of entrepreneurship is generally assumed to be that of individuals creating for-profit start-ups and pursuing private gain, entrepreneurship and entrepreneurial innovation can occur in a variety of contexts, including small or large businesses, non-profit organizations and government agencies. . And entrepreneurship can be focused on a local, national or global market. The Simply Green case in this handbook focuses on a sustainability entrepreneur serving a local market. Chapter 13, “Case: Sustainable Business Driven by a Strategic Mission: Stonyfield Yogurt,” tells the story of Gary Hirshberg, the successful Stonyfield Yogurt entrepreneur who competes in a global market with a mission of sustainability. An entrepreneurship focused on adding value to society is often referred to as social entrepreneurship, while entrepreneurship focused on individual and private enhancement is simply referred to as entrepreneurship.
Why do entrepreneurs do it?
The only factor consistently associated with becoming an entrepreneur is that one or both of your parents were entrepreneurs. [quote redacted at the request of the editor]. This suggests that if the entrepreneurial path is familiar to you, you are more likely to follow that path yourself.
Beyond having the common trait of having entrepreneurial parents, there are many personal reasons why people decide to start a business. Becoming an entrepreneur can be driven by personal interests and values, prospects for financial rewards, or lifestyle preferences. It is also sometimes motivated by "need" when there are few opportunities for employment or income.
Motivations to be an entrepreneur include the ability to pursue a passionate interest or passion that is close to our hearts. This can include the opportunity to create something new, enhance personal reputation, and make an impact or difference in the lives of customers and employees and in society at large. These are all motivations for many sustainability entrepreneurs.
The motivation to become an entrepreneur can also be driven by the desire to be independent, to be your own boss, to make your own decisions, and to set your own hours. This ties in with the so-called lifestyle motivations for being an entrepreneur: having a more flexible work schedule that leaves time for other activities, including more time for family and recreational and creative pursuits.
Intrapreneurship
While entrepreneurship is generally thought of as starting a new business, it applies to the application of innovation in existing organizations. Often, this type of entrepreneurship is referred to as intrapreneurship (that is, entrepreneurship from within). Intrapreneurship applies the entrepreneurial spirit characterized by innovation, risk-taking and flexibility to an established business. The goal is to improve an established company's ability to react to market opportunities quickly and efficiently, much as start-ups do. Large, established companies like General Electric (GE) often encourage internal entrepreneurship to foster innovation and accelerate new product development, seize a new opportunity, or assess the feasibility of a new processor design.
Business risk and the importance of resilience and perseverance
Being a successful entrepreneur is not easy and there are no guarantees of success. This requires broad competence in a variety of functional areas including finance, accounting, strategy, marketing, management, and operations, as well as strong interpersonal skills. There are also significant risks and a significant probability of failure. According to the US Small Business Administration, more new businesses fail before four years than make it to year five. Risks and failures can come from internal factors, such as limited access to financing, poor planning and decision making, or the idea that it's just a bad idea for a business. Failure can also be the result of external factors beyond the influence of the entrepreneur, such as weak economic conditions and changing public policies, which can have profound market implications. Additionally, with entrepreneurship, ownership, independence, and decision-making power, comes significant responsibility and the potential for high personal stress and burnout.
Although this chapter presents several business success stories, it is important to understand that not all business ideas are good business opportunities. Potential customers must perceive that the product has value to them (beyond its cost and better than products or services provided by the competition) and have the means and desire to purchase it. In addition, pricing options must cover expenses and funds must be available to finance the start-up of the business before sales revenues cover expenses. These different dimensions must be rigorously explored before launching a business. Although business plans can serve many purposes, the first and foremost reason to write a business plan is to test whether an idea really is a financially promising market opportunity.