Employment vs Entrepreneur. Choosing The Right Path


Essay, 2015

6 Pages, Grade: 5.00


Excerpt

“EMPLOYMENT VS ENTREPRENEUR”: CHOOSING THE RIGHT PATH

Introduction

As a rule, the role of the active entrepreneur is to create companies, trade, and services, as well as new jobs that in turn will generate part of the gross national product and contribute to the social development of the society. In terms of the present social and economic crisis, characterized by low growth in the industrial production and high unemployment it is extremely important to support and stimulate entrepreneurship and small business in order to reform our economy and to strengthen the foundations of the modern society.

Probably here, at the very beginning of this essay is extremely important to highlight and define the concept of entrepreneurship as a career option. That kind of professional road is has been chosen recently by many young people, or by those who are aged approximately 35-55 and decide to start a business venture after a period of work as an employee (Zbilgin, 2009). Having in mind all of the above mentioned in the lines below I will discuss broadly the concept of the entrepreneurship, not only as concept and role but also as risk and uncertainty-bearing.

Main body

Entrepreneur - Concepts and Definitions

The comprehensive definition of the term entrepreneur will have to be based on the following main points:

- The entrepreneur creates or provokes the creation of something new and use it as an opportunity for making a profit;
- The entrepreneur creates a new utility or finds a new use of an already known old product;
- The entrepreneur mobilizes and organizes all the necessary resources for the implementation of a certain type of activity;
- The entrepreneur takes the risk with its consequences – bankruptcy, ruin, moral depression and etc as negative ones and positive ones such as moral satisfaction from the achievement and positive financial result for the next risk ventures.
- Last, but not least the entrepreneur creates and applies pressure ( usually by financial means such as the cost of credit, the price of a product and many more) on the competitive environment thus giving the initial impetus for the change in the economic system (Kent et al, 1982).

According to Jean Batiste Say, the entrepreneur is the agent, who unites all the factors of production and who finds in value of the products the re-establishment of the entire capital he employs, the value of the wages, the interest and the rent which he pays as well as the profits belonging to himself (Schoorl, 2012). McClelland defines the entrepreneur as someone who exercises some control over the means of production and produces more than he consumes in order to sell, or exchange it for individual or household income (McClelland, 1987).

Entrepreneurship – definition

On the other hand, the entrepreneurship as defined by Robert Ronstadt is regarded as a dynamic process that creates wealth, which in turn is created by people who undertake risks through the usage of money, time or career so as to create new products or services. These products and services may be new and unique, but their value must be mastered by the entrepreneur through the provision and deployment of the necessary knowledge, skills, and resources (Krueger,2002). Said, or more precisely defined in this way the entrepreneurship resembles an attractive activity for every young and enthusiastic college graduate, who wants to stay aside of the common notion for the “ sheep”. Yet, just the opposite is true when we take a closer look at the industry.

Difference between Entrepreneur and Employee

A lot of surveys in the area have established the fact that the people that possess a wide range of skills and interests are more likely to be prone to the entrepreneurship.

On the other hand, the qualities that are connected to the contrary are the desire to secure employment and income, as well as the pursuit of mastering certain skills and specialty. For example, in his theory “of one person for everything” Edward Lazear claims that the MBA students who attend a wide range of classes and lectures and pass through various occupations are more likely to become entrepreneurs themselves (Lazear, 2005). The reverse might as well be true.

Backes-Geller and Petra Moog attain to another fact. People, who are more likely to start their own business, have not the only wide range of skills, but also a wide and diverse range of contacts (Backes, 2008).

In this way, the scientists reach one very simple formula for entrepreneurship: extensive experience plus a wide range of contacts. Therefore to start something that is entirely yours being a good specialist is not enough. However, the differences between the two categories of people are enormous and I won’t be able to cover them within the volume of this essay.

Role of Entrepreneurship for Economic Development

A lot of studies have been conducted on the role of entrepreneurship for the economic development of the society. Most of the state one and the same – small business provides jobs for a significant portion of the population. In fact, this is the most flexible part of the labor market and being the main source of income not only for entrepreneurs and employees in enterprises but also for members of their families, small business is an important factor for the growth of the national wealth. Often it proves to be the only employment opportunity for women, young people, students, and people lacking higher education thus contributing for the creation of working habits, training and social integration of a significant portion of the population. Small business is regarded as one of the main channels for social mobility and for the development of dynamic individuals.

It also develops business and entrepreneurial skills in people, generates inventions and new organizational practices that contribute to increasing the productivity and competitiveness of the economy. Entrepreneurs working in smaller scale adapt and react more quickly to changes in demand and relatively painfully may change the subject of their activities in accordance with the market needs.

The entrepreneurship in small scale also improves the territorial structure and overall integration of the economy by creating economic activity, occupation, jobs and wealth in areas that are distant or cut off from administrative centers and areas of big business. It also creates the economic independence of the middle class - the social layer, the most directly interested in the development of democracy and economic freedom.

Moreover, linking entrepreneurship to economic growth and development is not a new idea. Schumpeter proposed that entrepreneurs starting new business provided the engine for economic growth (Audretsch, 2006). Followers of him were Romano Prodi and the policy of the European Union that he introduced.

To sum it up, the role of the entrepreneurship is giving the initial impetus, the spark for the creation of something new and innovative and for its usage for the better of the society as a whole.

Risk and Uncertainty bearing in entrepreneurship

Every activity, entrepreneurship as well bears certain risks. Before starting one’s own business, a person must part with his current job and in some cases even with his career. Of course, there are some people who have a backup plan in order to return to their previous job, if the thing in their own business is not working up well. However, for most of the young entrepreneurs, the risk to split with their own career is high. In the first few months or even a year, they will lack secure and steady income.

The fact that he ends the year with a good profit is not enough and the person may experience serious financial difficulties if the costs exceed the income for a month. The bills have the ability to pile up quickly and if he does not have sufficient financial resources he might end up not being able to pay the salaries of his employees.

No matter what kind of research one does in the area in which he will develop his business he will never be able to predict with greater accuracy the interest in it. People’s behavior and decisions are highly unpredictable and this might prove to be detrimental to one’s business.

Not to mention the choice of the right employees for the right working position, or the idea that the entrepreneur will have to be ready to invest a greater part of his personal time.

Traits of the successful entrepreneur

Here comes the most important part the traits of the successful entrepreneur; Most people do not even ask themselves did they possess them, before starting a new business. First, one must vision from start-up all the way to exit strategy; in fact, one successful entrepreneur must know what business he wants to build, even if he does not know how to do it.

[...]

Excerpt out of 6 pages

Details

Title
Employment vs Entrepreneur. Choosing The Right Path
College
New Bulgarian University  (New Bulgarian University)
Grade
5.00
Author
Year
2015
Pages
6
Catalog Number
V437369
ISBN (eBook)
9783668790421
Language
English
Tags
Entrepreneur, Entrepreneurship, employee, difference, Role of Entrepreneurship, Economic Development, risk, uncertainty, bearing, traits
Quote paper
Silviya Stamenova (Translationmind) (Author), 2015, Employment vs Entrepreneur. Choosing The Right Path, Munich, GRIN Verlag, https://www.grin.com/document/437369

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