Advantages and Disadvantages of Entrepreneurship14/09/2022 1 By indiafreenotes
An entrepreneur is an individual who creates a new business, bearing most of the risks and enjoying most of the rewards. The process of setting up a business is known as entrepreneurship. The entrepreneur is commonly seen as an innovator, a source of new ideas, goods, services, and business/or procedures.
Entrepreneurs play a key role in any economy, using the skills and initiative necessary to anticipate needs and bring good new ideas to market. Entrepreneurship that proves to be successful in taking on the risks of creating a startup is rewarded with profits, fame, and continued growth opportunities. Entrepreneurship that fails results in losses and less prevalence in the markets for those involved.
Advantages of Entrepreneurship
- Motivating: As entrepreneurs start making decisions and get successful results, they become more motivated and engaged to work hard to ensure success in their business.
- Autonomy: People enjoy more autonomy or freedom in entrepreneurship as they invest their time, money, and efforts into the business to make it successful. They are more involved and self-driven as there is no one to interfere or ask for explanations of their decisions.
- Flexibility: Entrepreneurship allows working without a fixed routine time that helps to organize other works with better control and flexibility. This can improve mental and physical well-being.
- Develop skills: Entrepreneurship involves overcoming challenges that develop the growth mindset and professional abilities. It gives first-hand knowledge and experience that helps to develop leadership skills and managerial techniques.
- Career orientation: Entrepreneurship allows someone to align his desire and passion into the work and incorporate his values and beliefs into the business. This can help him to move in a career path of his choice.
- Economic development: A successful venture gives a lot of scope to improve earnings by own efforts and involvement that is not possible in any jobs. There are various opportunities and ways that can be explored to gain a competitive advantage and profitability.
- Meeting people: When a new business is started, there are possibilities to connect with people having exposure and experience in that particular field. Interaction with like-minded people helps to focus on the work more strategically and ambitiously.
- Building your own team: Entrepreneurs have the freedom to choose their team to work with, select their clients and partners. He has the sole decision-making power about the functioning of his company, its policies, and its culture.
- New experiences: Entrepreneurship gives new experiences and challenges that are often unexpected. This helps to gain new lessons and develop problem-solving and decision-making abilities that are useful for the further growth of the business.
- Get full rewards: In an entrepreneurship journey, the success of a business is enjoyed by the entrepreneur with no one else to claim. One can enjoy the profit and re-invest it into the business towards further growth.
Disadvantages of Entrepreneurship
- Financial instability: In the initial stages of entrepreneurship, there can be more outflow of money as an investment as compared to the return from business. As a self-employed person, it becomes a big challenge for financial security.
- Need to devote more time: As an entrepreneur, one needs to devote a lot of time to establishing the business without having the luxury of fixed working hours.
- Risk of failure: The initial stages of the entrepreneur journey may be very challenging and there are risks that the business strategies may not work resulting in losses in business.
- Uncertain income: Entrepreneurship doesn’t ensure a steady and certain income as in jobs. When in the job, there is a fixed monthly income but in entrepreneurship, the income flow is uncertain and not guaranteed especially in the early stage of a business venture.
- Create new customers: Customers often prefer established businesses for purchasing products and availing services. Some customers often rely on public reviews and personal references. As a startup business, it is difficult to build a customer base and takes time to develop brand awareness.
- Greater competition: As an entrepreneur, it becomes difficult to compete with established businesses in the same field due to a lack of resources in terms of knowledge, experience, and customer support.
- Lack of investors/partners: Some ventures require a lot of investment but it is difficult to find investors or partners to work with due to the absence of a history of financial success. Sometimes entrepreneurs start a business in debt and have to work very hard to recover in course of time.
- More responsibilities: As an entrepreneur, one has to look after a lot of things related to business and take care of finances, legal issues, manpower, sales, customer support, and many other things to keep the company functioning systematically.