We explain what an entrepreneurship is and its characteristics. Also, what are triple impact ventures and more.
What is an entrepreneurship?
A entrepreneurship is a independently started and developed business. The project may be run by one or more people who consider themselves entrepreneurs.
The entrepreneur can outsource some tasks or hire employees and, eventually, a business It can grow in sales and necessary resources, and become a company
the word entrepreneurship comes from French entrepreneur which, in turn, derives from Latin I will turn on and means “try” and refers to a person's ability to make extra efforts to achieve a goal. Currently it refers to a new company or project that a person or group starts of self-employed people.
An entrepreneur has the initiative and the ability to face the challenge of developing a new business from the beginning, facing the risks and assuming the achievements.
For example: An entrepreneur decides to start selling decorative products made by hand in ceramics and sells them through a virtual store. The same person who makes the ceramic pieces is in charge of advertising, devising the models and coordinating the deliveries of the orders with a logistics company.
An entrepreneur can become a businessman if his business keeps growing and achieves a complex small business structure, with more employees, more resources and more profits.
Characteristics of a business
A venture begins with a motivating idea, a need or an opportunity. The reasons why you can start a business are very diverse and the way to organize and manage the business depends on each entrepreneur.
However, there are some common characteristics for the management of any venture:
- It implies a challenge, with risks and achievements to achieve.
- It is a process in which there will be both frustrations and great satisfactions.
- It takes time for the business to gain momentum, be known by consumers and have permanence.
- It requires flexibility and creativity to learn from each experience, look for new solutions and constant improvements.
- It requires planning, administration and organization of resources.
Main challenges of a business
The main problems faced by a business have to do with the lack of structure to address certain issues. For this reason, it is common to find networks and alliances between entrepreneurs, to assume joint expenses, take advantage of benefits and share experiences and knowledge.
The so-called “entrepreneurial ecosystem” includes entrepreneurs in a particular area or sector.
Some internal challenges that a business may face are:
- Resource shortage. During the beginning it can be difficult to have all the resources necessary to produce. As long as the entrepreneur does not resolve this need, it is likely that he will not have the time and energy to think of innovative proposals that will expand the business.
- Multiplicity of tasks. Due to the small team that usually forms a venture in its initial stages, it is common to concentrate multiple tasks and responsibilities on a few people.
- Lack of financing. The lack of initial capital or access to bank credit due to the high costs of interest rates is an obstacle to investing in business growth.
Some external challenges that a business may face are:
- Inflationary economics. The loss of value of the local currency forces producers and entrepreneurs to constantly modify production costs, while sales and profit margins decrease.
- Price competitiveness. Products made by entrepreneurs must compete with other products in the same category that are often produced by large companies that, due to having a different production structure, can offer them at a lower price. The challenge of entrepreneurship will be to communicate the benefits of consuming a local, artisanal or sustainable product, for example.
- Drastic changes in economic policies. State regulations that modify market rules have a direct impact on a business, for example, the establishment of high customs taxes for imports of raw materials and inputs that are not produced locally.
- Exponential increase in taxes. These are expenses that the entrepreneur must absorb, both for raw materials, outsourced services and product logistics, and which end up impacting the final cost for the consumer.
Triple impact ventures
A triple impact venture is a type of independent business that, in addition to being for-profit, is characterized by being sustainable. The development of the activity can last over time due to its positive impact on three essential aspects: the environment, the economy and society.
The term “triple impact” refers to the need for a paradigm shift that the current consumer society is going through especially in the productive system. A company that is capable of generating profits is not considered successful but must also generate the least possible negative impact on the environment, contribute to economic development and improve people's quality of life.
In the desire to obtain the greatest possible profit, many companies finance the overexploitation of non-renewable natural resources and the exploitation of labor or working conditions that are not decent for employees.
The concept of triple impact refers to three aspects that must be considered to achieve success, both for a startup and a large company:
- Economic impact. It refers to the way of generating profits. For this, it is necessary to provide transparency and show the traceability of the products.
- Social impact. It refers to the recognition of the rights of people, both employees (and compliance with labor laws) and citizens of the community in which the venture is developed.
- Environmental impact. It refers to not only reducing the damage that commercial activity can generate in the ecosystem, but also proposing innovative solutions that generate long-term changes in habits in people and promote awareness regarding the care of natural resources and the planet.
Importance of entrepreneurship
Entrepreneurship tends to be a more sustainable alternative compared to large corporations that promote large-scale and excessive consumption, because prevent the overproduction of goods and damage to the environment, the exploitation of labor and the accumulation of waste in large quantities.
Entrepreneurship is important because it allows sectors of the population that are far from the labor market, by choice or by force majeure, to develop an independent way of earning money to live, to obtain profits, or to be part of the free market economy.
In countries with economic crises, startups face an ambivalent role: they contribute to activating the local economy which, consequently, has a positive impact on the national economy, but at the same time they are the businesses most affected by maintaining themselves over time and prospering in the face of contexts. economic inflation, high tax values and due to unforeseen changes in economic policies.
Businesses are more open or prepared to adapt to changes but at the same time they usually have less financial support to tolerate a business that did not prosper and closed, and reinvent themselves to start a new one.
A venture that incorporates triple impact strategies is more likely to last over time. In the case of large companies, the concept of triple impact is part of Corporate Social Responsibility (CSR), which is a type of management to implement in organizations, based on the balance between economic activity, social and environmental impact.
Continue with: Social entrepreneurship
References
- BBVA (2022). What is it to be an entrepreneur? https://www.bbva.com.ar/
- Carbone, F. (2021). Why is internationalization with triple impact the great key to income for the markets? https://tradenews.com.ar/
- Calvino, F. (2022). What is entrepreneurship and what does it take to succeed? https://www.shopify.com/
- Rodríguez Undurraga, S. (2017). Companies: why is the triple impact relevant? http://inversiondeimpacto.net/
