What’s the Importance of Entrepreneurship to the Economy?

What’s the Importance of Entrepreneurship to the Economy?

Importance of Entrepreneurship: India is now developing to become a full-fledged startup hub, with budding entrepreneurs planning on owning a startup. This comes with a wave of local dependency when it comes to the manufacturing of goods and services.

This further took traction after multiple companies decided to pull away from China and focus on India post-Covid-19. 

Entrepreneurs in today’s age are idolized on par with sportspersons, movie stars, and political figures. With that comes a fan following and an urge to enter into this space and become self-made millionaires themselves.

Some of the best-selling books and courses in the non-fiction section relate to starting a business and being an entrepreneur. So what makes entrepreneurship so important and what does it mean to a country’s economy? Let’s dive into the article and try to explore the Importance of Entrepreneurship to the economy. Keep Reading!

What Is Entrepreneurship?

Importance of Entrepreneurship cover image

By definition, entrepreneurship is the combination of capital, production, labor, and efficiency that, put together, creates a valuable venture or business. The individual who creates this system from the ground up is what we define as an entrepreneur. 

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Some challenges faced by new venture are –

Getting Financing options

As an investor and a customer, it is challenging to allocate trust and loyalty towards a new venture compared to an established company. The concern from an investor’s point of view is that the business should be able to compete with well-funded competitors in an already competitive environment.

Even financing options available to new businesses come at steep interest rates which would make the entire venture a cash incinerator if it were not successful. Additionally, firms need a steady cash flow daily to keep operations running to support this. 

Hiring Talent

While it varies from the sector, it is no secret that attrition is one of the biggest expenses in a firm’s budget. This combined with competing with MNCs makes it more difficult for new firms to retain as well as hire talent. 

Documentation and Registration formalities

A majority of state governments have to change policies that startups must comply with and are difficult to adapt to, especially for new entrepreneurs. 

The first step of entrepreneurship is a solid business plan, combined with the proper resources, labor, and capital. The purpose of setting up an enterprise can be many and differ from one founder to another. 

the Importance of Entrepreneurship to the Economy?

Today’s entrepreneurial ventures focus more on the societal good as opposed to solely running a business. Most new ventures in India today are focused on bringing solutions to obstacles. For example, BYJU took learning to a new level and solved the traditional limits of a physical classroom.

This allowed the EdTech startup to reach the entire country’s student population, widely expanding its business potential. This is a perfect example of “necessity entrepreneurship”. 

Opportunistic entrepreneurship is the setting up of a business in an unexplored potential opportunity. 

Reasons why entrepreneurship is important to India 

Increased Government Support

While the Government of India is supportive of setting up industries in India itself over outsourcing it abroad, it is the state government support that matters to firms large and small.

Both central and state governments provide incentives and subsidies to these MSME companies as well, providing them a necessary advantage over larger competitors. 

Innovations

Technology has laid the foundation upon which a majority of today’s unicorns have built themselves. When Jio brought every telecom operator to lower prices or lose active users, the price of internet per GB in India came down to one of the lowest rates in the world.

With that, came access to the internet and also a faster adaptation to the newly introduced 4G network, which has laid the foundation of application-based services today. 

Untapped Potential and Emerging Markets

Due to the sheer scale of potential in India, every product and service that serves a solution has the potential to grow, making India both an emerging market and one of the fastest-growing economies in the world. This also means that we have a larger population of working-class professionals with disposable income.

Changing Perception

Previously, a business is a risk that few were willing to take and limited to the elite and rich of society. Most individuals were hesitant to take the risk and the ones that did were competing with legacy companies with the capital and connections to drown out any competition.

Now, a majority of twenty-somethings are taking India’s startup storm headfirst, with some of them even making it to the Forbes Thirty Under Thirty.  

What Are The Three Importance of Entrepreneurship To Students?

Entrepreneurship education encourages students from all socioeconomic backgrounds to think uniquely and helps them develop their unconventional talents and skills young children who are exposed to entrepreneurship grow in the initiative, become more creative and self-assured in all that they do, and act in a socially responsible manner. This is the importance of entrepreneurship to students

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In Closing

As long as innovators and entrepreneurs are actively pursuing new ideas and constantly adapting to change, there will always be an open mind toward starting a business.

Want to begin your own new venture that nobody has thought about? That’s all for the article on the Importance of Entrepreneurship to the Economy. Start Investing in Yourself!

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