Reviewed by Aug 27, 2020| Updated on
Who is an entrepreneur?
An entrepreneur is a person who creates a new company, assumes most of the risks, and receives most of the rewards. The entrepreneur is generally perceived as an innovator, a source of new ideas, products, services, and/or business procedures.
Entrepreneurs play a crucial role in any economy, making use of the necessary skills and effort to identify needs and bring good new ideas to market. Entrepreneurs who continue to be successful in taking on a startup's risks will be rewarded with revenues, recognition, and opportunities for continued growth. Those who struggle to suffer losses in the markets become less prevalent.
How entrepreneurs work
Entrepreneurship is one of the tools that economists categorise as being essential to production; the other three are land/natural resources, manpower, and capital. The first three of these are combined by an entrepreneur to produce goods or provide services. Usually, they develop a business plan, recruit staff, obtain capital and finance, and provide the company leadership and management.
It is common for entrepreneurs to face many hurdles when building their businesses. The three most common challenges cited among many are as follows:
- Arranging finances
- Talent workforce acquisition
- Overcoming bureaucracy
How entrepreneurs impact the economy
An entrepreneur in a capitalist economy acts as a coordinating agent. Such teamwork takes the form of resources being channelled into new potential opportunities for profit. The entrepreneur moves diverse capital, both tangible and intangible, enabling the creation of wealth.
It is the entrepreneur who can potentially help clear up uncertainty in a market full of uncertainty when he makes decisions or assumes the risk. To the degree that capitalism is a complex profit-and-loss system, entrepreneurs are pushing productive innovation and sharing information regularly.
Established companies face increased competition and creative pressures, which often drive them towards research and development efforts. The capitalist, in scientific-economic terms, disrupts the course toward the equilibrium of the stable states.