Advantages of Entrepreneurship

To keep with the list theme, I shall do it again! According to a nice man from Wikipedia these are the advantages of entrepreneurship. Note: I agree with each one, thus, I have posted them all.

1. Enormous personal financial gain
2. Self-employment, offering more job satisfaction and flexibility of the work force
3. Employment for others, often in better jobs
4. Development of more industries, especially in rural areas or regions disadvantaged by economic changes, for example due to globalisation effects
5. Encouragement of the processing of local materials into finished goods for domestic consumption as well as for export
6. Income generation and increased economic growth
7. Healthy competition thus encourages higher quality products
8. More goods and services available
9. Development of new markets
10. Promotion of the use of modern technology in small-scale manufacturing to enhance higher productivity
11. Encouragement of more researches/ studies and development of modern machines and equipment for domestic consumption
12. Development of entrepreneurial qualities and attitudes among potential entrepreneurs to bring about significant changes in the rural areas
13. Freedom from the dependency on the jobs offered by others
14. The ability to have great accomplishments
15. Reduction of the informal economy
16. Emigration of talent may be stopped by a better domestic entrepreneurship climate

Are You an Entrepreneur?

While I am not an expert psychologist, I have an idea of what type of people make good entrepreneurs. I have compiled a list of attributes:

Analytical, Passionate, Energetic, Outgoing, Persistent, Creative, Responsible, Dedicated.

Uncertainty

Economist Frank Knight does a good job discussing risk in a theoretical way: “The behavior of the entrepreneur reflects a kind of person willing to put his or her career and financial security on the line and take risks in the name of an idea, spending much time as well as capital on an uncertain venture.” Knight classified three types of uncertainty:

• Risk, which is measurable statistically (such as the probability of drawing a red color ball from a jar containing 5 red balls and 5 white balls).
• Ambiguity, which is hard to measure statistically (such as the probability of drawing a red ball from a jar containing 5 red balls but with an unknown number of white balls).
• True Uncertainty or Knightian Uncertainty, which is impossible to estimate or predict statistically (such as the probability of drawing a red ball from a jar whose number of red balls is unknown as well as the number of other colored balls).

The Fourteen Steps to Starting a Business

As taught to me in my collegiate Managerial Economics class:

1. Devise idea 2. Kitchen Table talk 3. Get commitment from founders 4. Quit your job 5. Write business plan 6. Seed capital 7. Hire first worker 8. Find home 9. Startup 10. Second round of capital 11. Incorporate 12. Sell first product 13. Third round of capital 14. Initial Public Offering

These steps do not have to be done in this exact order. Some things to note: #3 Kitchen table talk refers to talking to one’s close friends and family about the business plan. This is important to ensure one’s business idea is not stolen. #4 Quitting your job is important because the company you work for might claim ownership over the idea otherwise. Also starting a business is time consuming. Quitting your job allows you ample time to hone the business.