1.4 CHARACTERISTICS OF AN ENTREPRENEUR
An entrepreneur should possess all such characteristics with the help of which he can perform various responsibilities successfully. The following characteristics are :-
1. Innovator
Schumpeter differentiates between an inventor and innovator. An inventor discovers new methods and new materials and an innovator is the one who utilizes those discoveries and inventions. Not only this, the entrepreneur further exploits the inventions commercially and thus produces newer and better goods which give him profit and satisfaction.
Innovation may occur in the following forms :
(i) The introduction of new goods.
(ii) The introduction of new methods of production.
(iii) The opening of a new market.
(iv) The conquest of a new source of supply of raw-material.
(v) The carrying out of the new form of organization of any industry.
The entrepreneur locates ideas and puts them into effect in the process of economic development. According to Baumol, an entrepreneur is a Schumpetarian innovator and something more than a leader.
2. Risk-taker
Risk means the condition of not knowing the outcome of an activity or decision. A risk situation occurs when one is required to make a choice between two or more alternatives whose potential outcomes are not known and must be subjectively evaluated. A risk situation involves potential gain or loss. The greater the possible loss, the greater is the risk involved.
An entrepreneur is a calculated risk-tasker. He enjoys the excitement of a challenge but he does not gamble. An entrepreneur avoids low-risk situation because there is a lack of challenge and he avoids high-risk situation because he wants to succeed. He likes achievable challenges.
An entrepreneur likes to take realistic risks because he wants to be successful. He gets greater satisfaction in accomplishing difficult but realistic tasks by applying his own skills. Hence, low-risk situation and high-risk situation both are avoided because these do not satisfy the entrepreneur.
3. Organiser
An entrepreneur has to bring together various factors of production, minimize losses and reduce the cost of production. Initially, he may take all the decisions but as the enterprise grows, he starts delegating the authority. He produces that best results as an organizer. Not only this, it is the entrepreneur who has to pick or select the right piece of land, choose the right person and opt for the finance. He must be able to inspire loyalty and hard work amongst the workers to raise productivity and efficiency. In order to expand the business, he must have willingness to delegate authority and trust his sub-ordinates and managers although shaping of long-run policies of the enterprise would remain in his hands.
4. Creative
Creatively, as field knowledge, seeks to explain how humans, either individually or collectively, reach solutions that are both novel and useful. Innovation means the effort to create purposeful ventures.
Harry Nystrom states that innovation may be defined as radical discontinuous change and creativity is the ability to devise and successfully implement such changes. Successful innovations depend on creativity and one of the most important requirements of an entrepreneur is to be creative as creativity may be taken as the cause and successful innovation as the effect.
5. Motivator
McClelland explicitly introduces the need for achievement motivation as a psychological motive and implicitly emphasised the need for achievement as the most directly relevant factor for explaining economic behaviour.
Achievement motivation is a drive to overcome challenges, to advance and to grow. An entrepreneur is an achievement-oriented person, not ‘money hungry’. He works for his desire for challenge, accomplishment and service to others.
Achievement concerns refers to the accomplishment of excellent, innovative and risk involving tasks. The organizational goal of an entrepreneur can be boosted by inculcating in him the need for achievement.
6. Technical Competent
Success of an entrepreneur depends largely upon his ability to adopt latest technology. Technical knowledge implies the ability to devise and use new and better ways of producing and marketing goods and services. An entrepreneur must have a reasonable level of technical knowledge. Technical knowledge is the ability that people can acquire with hard work.
An entrepreneur who has a high level of administrative ability, mental ability,
communication ability, human relations ability and technical knowledge can be more successful than a person with low level of these abilities. A dynamic entrepreneur must also be interested in changing the pattern of production to suit the requirements.
7. Self-confident
It is necessary for an entrepreneur to be self-confident. He should have faith in himself only then he can trust others.
In an expanded business, delegation of authority is a must and only a self-confident entrepreneur can delegate his authority. He can seek cooperation of his staff and inculcate a sense of team work in them.
8. Socially Responsible
The changing environment calls for a socially conscious entrepreneur who is not threatened by progress of others. On the contrary, he acts in full awareness of social repercussions of his actions. His entrepreneurial ability may create jobs for others. He may invent new products and new manufacturing methods. He may innovate new ways of doing things. All these have social consequences. An entrepreneur should think of projects of social significance and of importance to others. He should expand his entrepreneurial activities, in order to help in creating conditions for social change and for development of business which benefit the society. Such an attitude for others raises the level of entrepreneurship from that of an individual activity to a meaningful social endeavour.
9. Optimistic
An entrepreneur should approach his task with a hope of success and optimistic attitude. He attempts any task with the hope that he will succeed rather than with a fear of failure. Such a hope of success enhances his confidence and drives him towards success.
10. Equipped with Capability to Drive
Drive is a person’s motivation towards a task. It comprises of such personality traits as responsibility, vigour, initiative, persistence and ambition. An entrepreneur must exert considerable effort in establishing and managing his business. Those entrepreneurs who work hard in planning, organizing, co-ordinating and controlling their business are more likely to have a successful business than the entrepreneur who is lost and haphazard.
11. Blessed with Mental Ability
Mental ability that contributes to the success of an entrepreneur consists of overall intelligence, i.e. IQ, creative thinking ability and analytical thinking ability. An entrepreneur must be intelligent, adaptable, creative and he must be able to engage in analysis of various problems and situations in order to deal with them.
12. Human Relations Ability
Personality factors such as emotional stability, personal relations, sociability, consideration and tactfulness are important contributors to entrepreneur’s success. One of the most important facets of human relations ability is one’s ability to “put himself in someone else’s place” and to know how the other person feels. This is the ability to practice empathy.
The entrepreneur must have good relations with his employees, customers etc. He must be aware of the needs and motivations of customers if he is to adequately train his employees to maintain good customer relations.
13. Communication Ability
An entrepreneur must possess the quality of communicating effectively in written and oral communications. Good communication also means that both the sender and the receiver understand and are being understood.
14. Decision-Making
An entrepreneur must be clear and creative when it comes to decision-making. He must believe in himself and should be possessing ability to take decisions effectively. Decisions taken should be based on quantitative facts. Decisions which effect organisaton’s future and are likely to be irreversible must be taken with great care.
Here are some tips to become a good decision-maker
(1) Define the problem,
(2) Collect information and relevant data,
(3) Begin with a brain storming session and discuss the problem with each other,
(4) Never criticize or reject any solution suggested during the brain storming session,
(5) Encourage group members to come up with potential solutions,
(6) Reduce the number of alternatives to three or four after discussion,
(7) Consider each alternative extensively and determine the best to meet your needs and
(8) Implement decisions.
Decision-making is an art; the more one practices it, better expert he/she becomes.
15. Business Planning
The decision to become an entrepreneur is the first step followed by the choice of the product. As the business venture is undertaken, need for planning arises. It is the rigor and thoroughness of the business plan which could be behind the successful entrepreneur throughout his venture’s life.
Planning is really nothing more than decision-making, that is, deciding what to do, how to do and when to do. It is vital for the success of a business. As a business person puts it:
“Planning is so important today that it occupies a major part of the time of the most respective men in business. Planning allows us to master change. It forces us to organize our expectations and develop programs to bring them about. Planning is the most effective way to draw out the best in all of us-our best thinking, out best interests and aims and to enable us to develop the most efficient way of achieving our maximum goals”.
16. A Venture Capital
A David Silver, a successful capitalist described an entrepreneur as “Energetic”, single- minded’, having ‘a mission and a clear vision”. He or she intends to create out of this vision a product or service in a field which many have determined is important to improve the lives of millions”. Silver also suggests that entrepreneurs venture out on their own from a sense of dissatisfaction with their organization, but they are not necessarily unhappy with their existing career fields.
17. Visionary
Entrepreneurs are visionaries like J.R.D. Tata, Dhirubhai Ambani, Narayanamurthy, Aziz Premji etc. Entrepreneurs have a vision for growth, commitment to constructive change, persistence to gather necessary resources and energy to achieve results. An Entrepreneur is distinguished from a small business person. A person who leaves his job to start an independent business is not an entrepreneur. Constructive change is an essential feature of a visionary. For example, Gulshan Kumar (T-Series) was a venture capitalist and a visionary as well. He has left behind an unequalled legacy of music innovations. Henry Ford created the manufacturing miracle that launched a modern era in industry.
An effective visionary performs two key roles : (i) A charismatic role which involves establishing support for a vision and direction. He inspires and empowers his employees for support. Secondly, he plays an architectural role in order to build an appropriate organization structure. He has to look after various functions of management and discharge them effectively.
18. Entrepreneurs make Significant Differences
The differences made by the entrepreneurs are significant. They have their own style of dealing with various problems, set backs and uncertainties. They tend to change the existing state of affairs and get the work done without bothering about obstructions and barrers.
19. Ability to Spot and Exploit Opportunities
A story is told of a Jeweller who many years ago sent two of his marketing graduates to a remote village to see if they could come up with new product ideas for underdeveloped jewellery market. The first one after exploring the market said, “There is no business here, the residents of the village don’t wear jewellery of any type!” The second one was enthusiastic about the prospects and he said, “This is a great opportunity; the people here haven’t discovered Jewellery yet.”
This is how entrepreneurs spot the opportunities which others miss. Mc Grath states that the entrepreneurs are comfortable with ambiguity and they can bring clarity by piecing together previous unrelated messages and signals.
The entrepreneurs craft or carve out opportunities for themselves. Their perceptions differ from non-entrepreneurs. There are very few persons who are inventors and entrepreneurs at the same time. Such persons have an edge over those who are only inventors or entrepreneurs.
20. Courage to Face Adversities
Entrepreneurs face the adversities boldly and bravely. They refuse to be beaten and become tougher during adverse situations. They have faith in themselves and attempt to solve the problems even under pressure. Every unpredictable situation is a challenge before them which they overcome and survive through.
21. Leadership – An essential trait of the entrepreneur
Leadership is the process of influencing and supporting others to work enthusiastically towards achieving objectives. It is a critical factor that not only helps an entrepreneur to identify his goals but also motivates and assists him in achieving the stated goals. Without leadership, an organisation would be only a confusion of people and machines, just as an orchestra without a conductor would be only musicians and instruments. Leadership is one of the primary traits of an entrepreneur by which he can influence others to voluntarily seek defined objectives. Leadership, thus, is the catalyst that transforms potential into reality, problems into opportunities, heading towards the achievement of objectives. This role is often seen dramatically when a small scale unit transforms itself into medium-scale and finally it turns into a giant organization. Leadership is equally important in all sizes of organization – be it small, medium or large Wrarren Bennis, the leadership guru, says that effective leadership can’t exist without the full inclusion, initiatives, and the co-operation of employees. Since a small industry is as labour-intensive industry, the entrepreneur must have leadership qualities to influence his workers or employees.
Traits of Leadership :- The path to leadership that one takes differs from individual to individual.
However, there are a few key traits we can focus on :
- High level of personal drive
- The desire to lead
- Personal integrity
- Self-confidence
- Cognitive (Analytical) ability
- Business Knowledge
- Charishma
- Creativity
- Personal Warmth
The traits between leaders and non-leaders may differ at the physical level, intellectual level or personality features could be different as well.
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