Around the world, entrepreneurs help to drive the engines of the economy. Entrepreneurs use their fresh, new ideas as springboards to financial success. When entrepreneurs start a business, they have the advantage of starting out without any preconceptions or demands placed on them. They experience the pressure to do well, but they are able to forge their own paths in the world of business.
Amina Oyagbola, an entrepreneur and business expert, describes the ways in which entrepreneurship helps to drive economies around the world.
Impact of Small Businesses
While small businesses may not employ large numbers of people on an individual basis, they have a disproportionately large impact on the economy as a whole. According to Entrepreneur Magazine, small businesses are responsible for between 60 and 80 percent of all jobs in the country. Entrepreneurship helps bring these new companies into the business world.
Entrepreneurial businesses bring the spirit of invention to business as a whole. When entrepreneurs start a business, they are most likely doing so because they saw a unique need in the market that was not being filled.
Necessity Entrepreneurship Versus Opportunity Entrepreneurship
When people lose their jobs or fall on hard times, frequently they turn to entrepreneurship to reverse their misfortunes. These self-employed people provide a service or sell goods in a micro-business. In a study by the Global Entrepreneurship Monitor, necessity entrepreneurship is different from that which takes advantage of a fresh idea and an opportunity to prosper.
In disadvantaged areas, many people turn to necessity entrepreneurship to make ends meet. These businesses are not greatly beneficial to the local economy and may even lose money. Opportunity entrepreneurship, on the other hand, has greatly beneficial effects on the local economy.
In a paper by Zoltan Acs published in the journal Innovations in 2006, the statistics behind business growth and entrepreneurship are examined in detail. Acs found that the ratio of opportunity-based entrepreneurship to necessity-based entrepreneurship goes up steeply as the income per capita increases. This suggests that developed countries experience more economic benefit from entrepreneurship in terms of impact on the GDP. (Gross Domestic Product)
Economic Shifts and Entrepreneurship
The world climate has favored entrepreneurship since the 1970s. Technology-based businesses have greater freedom to choose their base of operations since communication between people and between businesses has been greatly increased by the advent of the Internet. Entrepreneurship takes on an important role in an economy after manufacturing has declined, and business services increased. Entrepreneurs can often take on the mantle of providing business services, given that their ideas are fresh and surprising.
In developing countries, it is important for lenders and microlenders to pay attention to the needs of middle-sized businesses, those which are too large for microlending and too small for commercial banks. Funding these businesses at a vulnerable stage can help to lift them to the position of self-sufficient companies.
Entrepreneurship and Startup Statistics
In the United States, 51 percent of small business owners are between the ages of 50 and 88. 69 percent of all entrepreneurship in the US begins at home. Unfortunately, the rate of success among small startup companies remains dismal from a statistical standpoint. More than 50 percent of all new businesses fail to succeed in the first four years of existence. Only 3 percent of all new businesses started in 2011 made it through 2015.
Most business failures are based on incompetence and inexperience. When entrepreneurs get started, it would be ideal for them to avail themselves of mentorship opportunities to head off these difficulties.
Amina Oyagbola encourages those with exciting business ideas to go out on their own as entrepreneurs. The financial rewards may come slowly, but they will be rewarded with time. Entrepreneurial businesses have a deep and lasting impact on the business world as a whole, both in the United States and around the world. Small business will continue to drive the economic engine, creating benefits for customers and employees alike.