An entrepreneur is defined as someone who has the ability to take risks and organise the factors of production. When starting a new business the entrepreneur faces a number of problems before they can start up. They need an idea and a will to succeed, but these are not enough on their own to be successful.
A business needs:
- Finance – to fund the other elements listed below: finance is usually the hardest thing to obtain in a start-up business.
- Labour – to help develop a product or service and then to produce/deliver it.
- Customers – without them, the business will fail. Obtaining customers means the business must undertake marketing.
- Suppliers – provide many of the “inputs”, such as raw materials.
- Premises and equipment – maybe a simple office, or possibly a large, modern factory; depending on what the business activity is.
- Management organisation & structure – this is often very simple at the start-up stage (e.g. a sole trader!).
- Designed, researched and tested product or service – a successful business is about more than just having a good idea – the product needs to be brought to the marketplace in its best format. Dyson spent many years completing his first vacuum cleaner before being able to sell it.
A business may also need to protect its idea or products.
It can do this through:
- Copyright and patents make it illegal for other firms to copy directly the business idea or invention.
- Keep new products and services secret until they are ready for launch.
- Focus on retaining key staff that would be otherwise valuable for competitors to poach!
Entrepreneurs
An entrepreneur needs several skills to succeed:
- Have ideas
- Ability to take risks
- Ability to persuade others to join the business or lend the business money
- Energy to keep the business going under tough circumstances – it is often said that the best entrepreneurs are the most persistent
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