Thursday, February 28, 2013
The entrepreneur who is a business leader looks for ideas and puts them into effect in fostering economic growth and development. Entrepreneurship is one of the most important input in the economic development of a country. The entrepreneur acts as a trigger head to give spark to economic activities by his entrepreneurial decisions. He plays a pivotal role not only in the development of industrial sector of a country but also in the development of farm and service sector. The major roles played by an entrepreneur in the economic development of an economy is discussed in a systematic and orderly manner as follows.
(1) Promotes Capital Formation:
Entrepreneurs promote capital formation by mobilising the idle savings of public. They employ their own as well as borrowed resources for setting up their enterprises. Such type of entrepreneurial activities lead to value addition and creation of wealth, which is very essential for the industrial and economic development of the country.
(2) Creates Large-Scale Employment Opportunities:
Entrepreneurs provide immediate large-scale employment to the unemployed which is a chronic problem of underdeveloped nations. With the setting up.of more and more units by entrepreneurs, both on small and large-scale numerous job opportunities are created for others. As time passes, these enterprises grow, providing direct and indirect employment opportunities to many more. In this way, entrepreneurs play an effective role in reducing the problem of unemployment in the country which in turn clears the path towards economic development of the nation.
(3) Promotes Balanced Regional Development:
Entrepreneurs help to remove regional disparities through setting up of industries in less developed and backward areas. The growth of industries and business in these areas lead to a large number of public benefits like road transport, health, education, entertainment, etc. Setting up of more industries lead to more development of backward regions and thereby promotes balanced regional development.
(4) Reduces Concentration of Economic Power:
Economic power is the natural outcome of industrial and business activity. Industrial development normally lead to concentration of economic power in the hands of a few individuals which results in the growth of monopolies. In order to redress this problem a large number of entrepreneurs need to be developed, which will help reduce the concentration of economic power amongst the population.
(5) Wealth Creation and Distribution:
If you are an entrepreneur, you probably have a lot of things on your mind. You are under-resourced – strapped for time, money, and people to help you achieve the goals of your startup. You need more of everything to grow and succeed, and that list of necessities includes diversity. There are lots of reasons why diversity is important, but quite simply, diversity is good for your business.
Study after study has confirmed that diverse corporate boards lead to higher profits. For example, McKinsey’s study found that companies who ranked in the top quartile of executive-board diversity had returns on equity that were 53% higher. In addition, these same diverse companies had earnings margins that were 14% higher than the least diverse companies. A Catalyst study shows that boards that are more diverse also have a higher return on equity, higher return on sales, and higher return on invested capital.
Think all this doesn’t matter to startups? It does. If everyone on your startup team is alike, you limit the experiences, network, and perspective that your startup has to draw from when running and growing the business.
A diverse team brings different ideas and perspectives to the table, which improves your chances of being able to come up with more creative plans for your startup and with more creative solutions to problems as they arise (and they will arise…). A diverse team might be able to identify and solve a problem that a homogenous team wouldn’t even realize was a problem until the damage was done.
Diversity can also improve the culture of your startup. As you grow, it can allow you to attract and retain a broader group of talented individuals.
More diverse teams will typically have more diverse networks, which means expanded access to a broader pool of potential investors, customers, and talent for you to draw from.
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In my experience, I’ve found three different kinds of entrepreneurs everywhere I’ve went, from investment banking to the vending machine industry, from the technology industry to the nonprofit world, from Hong Kong to Las Vegas, from poker tables to a seminary, from multi-million dollar valuations to bankrupt and back. (I’ve practically been writing an entrepreneurial “Divine Comedy.”)
But the three entrepreneurial types I’ve encountered have endured — and only recently have I realized that it’s a fourth, lesser-known type that’s the most intriguing.
#1: The pragmatic entrepreneur
One kind of entrepreneur discovers a niche in the market – by finding a consumer “pain” or by creating it – and provides a solution for the pain. It isn’t terribly important if that pain is an addiction to tobacco or a starving child’s hunger; what matters the most is the return, the enterprise, the accomplishment. The return is usually financial, but sometimes it’s recognition, respect, prestige, or a warm fuzzy feeling. This is the pragmatic entrepreneur.
#2: The passionate entrepreneur
Another kind of entrepreneur starts with what he is passionate about and builds a business around it. It doesn’t necessarily matter whether or not there is consumer demand or sufficient resources. The venture could be quite selfish or quite noble, quite feasible or quite crazy, for a good passion or a bad passion. One thing is certain – he will tackle it with passion. This is the passionate entrepreneur.
#3: The social entrepreneur
Then there are the entrepreneurs who are out to do good. They’re willing to accept a lower return (or sometimes no return at all) in order to help other people or advance a cause. Today, these entrepreneurs come in many varieties. Some simply donate 10 percent off the top, while others dedicate their entire lives and businesses to helping others. Some of them operate nonprofits, and others operate normal companies while vowing not to prioritize profit. These are social entrepreneurs.
Why we urgently need a fourth kind of entrepreneur
Venture capitalists look for very specific items when determining whether to invest in a business. Use these tips to make sure you have a leg up on securing their funding.
A funny thing occurs when your business makes the Inc. 500 list a few years in a row–you become very popular as a potential target for venture capitalists. Although we at The Trademark Company are always flattered by the attention, we have traditionally steered away from outside investment in our company.
However, without exception every time a potential investor calls we graciously listened to what they have to say. To that end, over the years we have learned what venture capitalists are looking for in target investments, or at least those that we have spoken with. As such, if you run a start-up and are looking to attract venture capital here are four tips to peak their interests in your company:
1. Your products or services must be proprietary or unique.
Do you have a proprietary or unique product that creates barriers to entry and/or precludes copying by the competition? Such interests could be protected, if you have a product, by patent rights (venture capitalists love investing in products that are protected by a registered patent). In the alternative, if you have a service model, is there something so unique to that model that makes it difficult for the competition to easily copy?
For instance, our business is a service model and, accordingly, cannot avail itself to the protection of the patent system. However, our proprietary trade secret systems developed over the course of a decade give us a unique advantage in the marketplace in the field in which we exist. This is the type of uniqueness or proprietary nature, outside of patent rights for a product, you should try to emphasize whenever speaking about your own business model.
As such, when attempting to attract venture capitalists to invest in your business always be prepared to discuss how your product or service could not be easily replicated by a competitor and, as such, the market for said product or service will remain exclusively yours for the foreseeable future.
2. Use existing sales as evidence of consumer demand.
Proprietary or not, venture capitalists want to see that your product or service is being received well by the relevant consuming public. In this regard, what better proof of this is there than sales? For instance, you may have a patent on the latest version of the iconic widget. But if you have been open for business for two years and have only sold 20 units for $50 this is a big red flag that a market for your product, even if proprietary, simply does not exist.
As my old coach use to explain to us every day at practice, "Potential doesn't mean sh&%t!" Real sales, proof of consumer demand, this is what venture capitalists are looking for. So be prepared to discuss how your goods or services have hit the ground running and offer proof of consumer interest and validation in the form of hard sales numbers.
3. Be able to answer the question how their money will increase your sales.
Whether I'm out on the speaking circuit, working with startups, back in Ann Arbor teaching MBAs, or just socializing in a coffee shop, I'd say there's one question I'm hit with more than any other.
It comes in different forms, but the essence of the question is the same: "What does it take to be a successful entrepreneur?”
Over the years, my answer has evolved. But I’ve found myself settling on ten traits that are shared in common by virtually every truly successful entrepreneur I’ve met, observed or studied. The true rock stars are all:
You need to be driven by a clear sense of purpose and passion. Typically, that passion comes from one of two sources: the topic of the business, or the game of business-building itself.
Why do you need passion? Simply because you’re likely to be working too hard, for too long, for too little pay with no guarantee that it’ll work out… so you need to be motivated by something intrinsic and not money-related.
If you’re going to build a startup, you’ll need a spirit of determination coupled with a high pain tolerance. You’ll need to be willing and able to learn from your mistakes – to get knocked down repeatedly, get up, dust yourself off, and move forward with renewed motivation.
People will constantly tell you your baby’s ugly, that your business won’t work. Now, you should listen carefully and be open to constructive criticism. But after a while, having the door slammed in your face repeatedly can be withering, and the best entrepreneurs learn to feed off the negativity and actually gain strength from it.
You need a strong sense of self. You can’t be threatened by being surrounded by talented, driven people. To truly succeed, you’ll need the self-confidence to surround yourself with people “who don’t look like you”… that is, people with skills, background and domain knowledge that complement your own. And check your ego at the door: you shouldn’t be too proud to make coffee for the team, empty the waste baskets, or do the bank runs.
You’ll need to develop a comfort-level with uncertainly and ambiguity. Entrepreneurs gather as much information as they can in a short period of time, and then MOVE, MOVE, MOVE!! The attitude is that it’s not going to be perfect… We only have 9% or so of the data from which to base our decision… but if we wait to have all the information, we’ll never get moving… and be mired in indecision. (Big organizations are really good at this – the mired thing – saying, We don’t have enough information, so let’s continue to study… form a committee or a task force)
On the sliding scale from “risk-averse” to “risk-seeking,” it shouldn't surprise anyone that entrepreneurs tend to be closer to the latter. But you don’t need to be a nut-case, the sort who bungee-jumps without a helmet. Smart entrepreneurs develop an intuitive ability to sniff out and mitigate startup business risk. But you know you’re going to fall down, and feel comfortable with that fact and that you’re going to learn from your failures and adjust as you go.
6. Financially Prepared