Entrepreneurship has many definitions: “one who undertakes innovations, finance and business acumen in an effort to transform innovations into economic goods”, “one who organizes, manages, and assumes the risks of a business or enterprise” but the godfather of entrepreneurship studies at HBS Professor Howard H. Stevenson coined: “Entrepreneurship is the pursuit of opportunity beyond resources controlled”.
This definition brings the true experiences of any entrepreneur. It’s a pursuit of opportunity which needs to be perceived in the short window of existence of opportunity. In this period, considerable amount of time and energy needs to be devoted such that there is quantitative result in order to attract necessary resources. Delayed results from the actions performed may seize the opportunity and also the consumption of cash balances available for the opportunity allocated.
The opportunity that may be available can be either of the following: 1.
Creating a new product or business model
Creating a better or cheaper version of the existing product or business model
Though, many profit improvement opportunities are not novel--and thus are not entrepreneurial--for example, raising a product's price or, once a firm has a scalable sales strategy, hiring more reps, etc. But given an opportunity is available, it can be classified as two types: 1.
Entry Opportunity implies the existence of a market. But some entrepreneurial opportunity and thus initiatives create fundamentally new markets. For these, there's no market to enter until the entrepreneur acts. Also, the Entry Opportunity is more applicable for large organizations with ample resources rather as compared to Entrepreneurship Opportunities. Thus, the more that the firm/individual entering a new market lacks relevant resources, the more entrepreneurial the entry would be.
Thus a real entrepreneur may encash mostly the entrepreneur opportunity rather than entry opportunity.
At a new venture's start, the entrepreneur control their own human, social, and financial capital. Many entrepreneurs bootstrap - they keep expenditures to a bare minimum while investing only their own time and as necessary, their personal funds. In some cases, this is adequate to bring a new venture to the point where it becomes self-sustaining from internally generated cash flow. But, with most high-potential ventures founders must generate more resources than they control personally. The venture eventually will require production facilities, distribution channels, working capital, and so forth. Because they are pursuing an entrepreneur opportunity while lacking access to required resources, entrepreneurs face considerable risk, which comes in four main types:
Demand risk – It relates to prospective customers' willingness to adopt the solution envisioned by the entrepreneur.
Technology risk – This relates when engineering or scientific breakthroughs are required to bring to the solution.
Execution risk – This relates to the entrepreneur's ability to attract future stakeholders who can implement the venture's plans.
Financing risk – It relates to whether external capital will be available on reasonable terms. The entrepreneur's task is to manage this uncertainty.
Self-belief risk – It relates to the risk of losing self-determination, will and confidence with self.
Thus, there can be a challenging situation for the entrepreneur to minimize risk without the necessary resources. This is also called Catch-22 position. For example, outside capital may be required to develop and market a product and thereby demonstrate that technical and market risks are limited. On the other hand, it can be difficult to persuade resource owners to commit to a venture when risk is still high. It is important to point out that many ideas fail in this vicious circle as the risk is high with lack or unavailability of...
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