Entrepreneurship is defined as the process of making money, earning profits and increasing the wealth while posing characteristics such as risk taking, management, leadership and innovation. The term Entrepreneurship is a complicated term and gives various meaning depending on the situation. Nevertheless there are certain characteristics of Entrepreneurs differentiate them and those characteristics are explained below.
Entrepreneurs need certain level of leadership skills to direct their employees to achieve goals and objectives to make money. But not all leaders are considered as Entrepreneurs. As an example. Mahathma Gandhi is a leader but not an Entrepreneur. His leadership can be seen as benevolent leadership which aimed at directing the society to make well being of the society. On the other hand the aim of leadership practiced by Entrepreneurs is to make wealth for themselves.
Entrepreneurs need managerial skills to run their business and make sure they create incremental wealth for themselves. On the other hand not all managers are Entrepreneurs. There are managers who manage businesses of others as employees of Entrepreneurs.
Entrepreneurs need to have innovating skills to identify market opportunities and find out a way to make money out of them. They need to be innovative to come up with solutions for problems in the market to make profits. This is called Entrepreneurial innovation. On the other hand, not all innovators can be called Entrepreneurs. As an example Thomas Alva Edison is the greatest innovator of the 20th century who invented the electric bulb and his innovations were purely based on scientific motives. He did not have the motive of profit/making money and therefore he can not be called as an Entrepreneur.
Entrepreneurs need to accept risk to exploit market opportunities to make money. They need to try different tactics which carries a risk component in it. But point to note is that Entrepreneurs always accept calculated risk which is directly linked/pegged to the return they receive. Entrepreneurs are based on fundamental of “Higher the risk higher the return” and vice versa. On the other hand not all risk taker are Entrepreneurs. As an example, the biggest risk takers are gamblers but the risk they accept is not calculable and not directly pegged to the return they earn. In other words gambles do no make consicious decision about risk and accept large risks. The risk accpeted by Entrepreneurs can be mitigated and absorbed by the Entrepreneur. (As opposed to gamblers, Entrepreneurs make conscious decision on risk where they know the limit of risk that they can absorb)
Note of Credits : This is article is based on a lecture done by Mr. Hasitha Wijesundara at APIIT-Sri Lanka on Strategic Entrepreneurship on 14/12/2010on 10/12/2010.