Importance of Entrepreneurship in a Modern Economy.
The statistics reveal that in USA economy nearly half a million small enterprise is established every year. Our country is not an exception in this regard.
Entrepreneurship and entrepreneurs are gift to any country. And no profession impacts the economy of a nation as much as entrepreneurship does. Today we shall look at the importance of entrepreneurship to modern economy.
7 IMPORTANCE OF ENTREPRENEURSHIP
1. Importance of Entrepreneurship – Creation of Job Opportunities
The number one importance of entrepreneurship I like to talk about is the issue of job creation. In fact, on a personal note that is one of my motivation for going into entrepreneurship. I wanted to contribute to ending graduate unemployment in Africa. As an undergraduate in Nigeria I read about the high unemployment rate and made a decision that not only will I never be unemployed, but also that I must take some persons out of the unemployment zone.
So entrepreneurship firms contributed a large share of new jobs all over the world. It provides entry-level jobs so necessary fur training or gaining experience for unskilled workers.
SMEs for example generates a large portion of total employment every year. In America for instance small companies create more than 1.5 million jobs annually. That figure translates to 64% of total new job growth.
Moreover, entrepreneurial ventures prepare and supply experienced labor to large corporations.
2. Importance of Entrepreneurship – Wealth Creation
The second importance of entrepreneurship is its role in the creation of national wealth.
Entrepreneurship usually play a key part in contributing to the country’s national economy by generating wealth and paying taxes, which generally adds to a country’s gross domestic product (GDP).
According to a world bank report, formal SMEs contribute up to 40% of national income (GDP) in emerging economies. These numbers are significantly higher when informal SMEs are included. In fact in some economies it is as high as 70%.
These entrepreneurs invest a good percentage of their own money into driving the nation’s economy. But that is not just all, they also force others to pull out their own money by the comparing offers, products and services they put out. Sometimes they even develop unique products or services that opens up new markets, which in turn leads to economic growth. This increase in revenue can significantly improve the national income of a country.
3. Importance of Entrepreneurship – It Brings About Innovation
What is entrepreneurship without innovation? In fact, entrepreneurs are innovators. They have this uncommon ability to innovate. But guess what? The innovation that entrepreneurs bring is not only in starting up a new business. Even when they work for other established organizations they still bring their innovative minds to bear and those are the people we refer to as intrapreneurs.
Whether in a new or existing business, it is this process of innovation that either generates new wealth-producing resources or enhances the potential of existing resources to create more revenue. It also creates new product lines and improves product quality, ideas, technologies and markets.
In fact, entrepreneurs see it as their responsibility to solve problems that existing products and technology have not yet solved. And it is this mindset that drives them to innovate more and more.
4. Importance of Entrepreneurship – Enhances the Standard of Living
Another importance of entrepreneurship is that it enhances the standard of living of the people. And this is a direct consequence of the first 2 points discussed above.
Standard of living is the level of wealth, income, comfort, material goods, and necessities available to a society or a group of people within a given geographic area.
The availability of jobs (oftentimes created through entrepreneurship) makes for better income for the people.Entrepreneurship makes wealth to circulate, it makes for variety of products in the market. And it makes for options of the way people choose to live.
So invariably, entrepreneurship improves the standard of living of the people in any country.
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5. Importance of Entrepreneurship – It Gives Birth to Corporations
Sometimes when we talk of entrepreneurship, most peoples’ minds only go to SMEs or startups. But the truth is that almost all the big corporations we know are products of entrepreneurship. And this is one of the greatest importance of entrepreneurship and also a reason government should take it very serious.
Whether it is Google, Amazon, Microsoft, Tesla, Facebook or even Walmart, they all started as small enterprises. But today each of them have grown into major corporation contributing so much to the economy of the countries where they exist. In 2011, Elon Musk alone paid $11 billion in tax to US government. Such can be the importance and contribution of entrepreneurship.
6. Importance of Entrepreneurship – Promotes Research & Development
Entrepreneurship is innovation and innovation will not be possible without research. In fact, research and development is an integral part of entrepreneurship.
Therefore, entrepreneurship provides funds for research and development with universities and research institutions. This promotes the general development, research, and development in the economy. To underscore the importance of research and development in entrepreneurship a total of $210.7 billion was spent on research by companies in the US in 2022 alone.
Entrepreneurs are simply a special kind of people. They can work on a particular idea for years before it eventually makes it to the market. They cultivate them, shape them into a new form, and finally turn them into a successful businesses.
But entrepreneurs don’t necessarily have to be the ones to carry out these researches. Sometimes they employ scientists across different fields and pay them heavily to engage on such a journey. But the idea and overall coordination still falls on the entrepreneur.
The truth is that entrepreneurship is the brain box that drives civilization in any society. Actually we owe almost every thing at our disposal today to entrepreneurship.
7. Importance of Entrepreneurship – It Promotes Social Changes Community Development
Have you heard about social entrepreneurship? It is the process by which individuals, startups and entrepreneurs develop and fund solutions that directly address social issues. It is another vital importance of entrepreneurship. Usually social entrepreneurs are not driven by profits but impact.
Social entrepreneurship can help bring unity and build goodwill among individuals who have common goals and interests. Their goods and services often lead to the social and economic well-being of communities. This usually brings positive changes like fewer slums, better sanitation, a skilled workforce and better infrastructure. Generally social entrepreneurship makes life better for people especially those in the lower echelon of the economic ladder.
A good example of a social entrepreneurship is Bombas. The company offers a pair of socks free for each pair sold.
Though different people have different reasons for choosing entrepreneurship, but whatever the reason the importance of entrepreneurship in modern economy is just too numerous. Almost every thing we see and use today are products of entrepreneurship. Entrepreneurship produces businesses and businesses drives the economy of nations.
Entrepreneurs sacrifice a lot to make the world a better place for all of us and I think they deserve to be celebrated. The good news is that you too can become an entrepreneur,check if you have the necessary qualities of successful entrepreneurs.