Definition: Entrepreneurial management is the concept of utilizing the creative and innovative abilities, skills and expertise to efficiently open and manage a startup organization. It is a means of solving a mass problem through a unique and profitable business solution.
An entrepreneur is always seen as a problem-solver. He/she considers a macro problem and finds out an innovative solution to it.
Well, as we know that people would pay fairly if the business idea provides a solution to their crucial issues, entrepreneurial management is highly fruitful.
Elements of Entrepreneurial Management
Entrepreneurial management is a means creatively finding a solution to a specific problem. It stands over the following four pillars:
- Pain or Problem: Without a problem, no innovation is possible. Thus, the entrepreneur identifies an unsolved issue for which the consumers are ready to pay a certain amount.
- Idea: To resolve the consumers’ pain, the entrepreneur develops a suitable, profitable, feasible and enviable plan.
- Experiment: The idea so worked out needs to be tested first, thus experiment is another crucial element of entrepreneurial management.
- Solution: If the experiment succeeds, then it becomes the solution and a profitable business idea for the entrepreneur.
Housing.com is an outstanding example of entrepreneurial management.
When the two IITians from Mumbai, Rahul Yadav and Advitiya Sharma, after their graduation, struggled to search for a suitable house, they came up with this problem-solving idea of an online housing portal.
This idea was widely accepted by internet users. It not only simplified their search of an appropriate and affordable house but also provided an option to select their preferred locality, price and number of rooms.
Entrepreneurial Management Process
A business can be identical to many others. However, its effective management makes it stand apart from the rest.
Let us now discuss the various steps involved in successful entrepreneurial management:
- Empathize: Envisioning the whole concept from the consumers’ perspective, helps the entrepreneur to determine whether it fulfils the customer demand optimally or not.
- Define: Next step is to identify and articulate the consumer’s problem which the entrepreneur intends to resolve through a business solution.
- Ideate: Now comes the part of contemplating the possible solutions to this problem. Thus, several business ideas emerge at this stage of entrepreneurial management.
- Prototype: Out of these multiple ideas, the most unique and workable solution is chosen. At this step, the business idea formulates and takes a shape.
- Test: Lastly, the prototype or the business idea is ready to experiment on a group of selected people. This a crucial step to determine whether the product meets the consumer expectations or not.
Importance of Entrepreneurial Management
Entrepreneurial management is a mantra behind every successful startup. Given below are the various benefits of adopting such a technique:
Startup Success: With the application of a systematic and well-planned entrepreneurial management, a startup can shape into a profitable venture.
Innovation and Creativity: Following a prototype set by others is easy. But when it comes to entrepreneurial management, a sense of uniqueness and innovation can take the business to another level.
Optimum Resource Utilization: An organization employ many different types of resources like finance, raw material, manpower, technology, etc. All these can be excellently utilized through entrepreneurial management.
Regional Development: When startups grow, the whole locality tends to move towards betterment. Therefore, entrepreneurial management provides opportunities for industrialization, technological advancement and employment.
Better Employment Opportunities: As we have already discussed in the previous point, with the increasing number of companies, job opportunities also multiply.
Thus, entrepreneurial management paves the way towards employment of skilled, semi-skilled and unskilled labour in the region.
Higher Per Capita Income: The rising employment opportunities contribute to a higher national income. Thus, the per capita income of the country also enhances.
Capital Formation: Moreover, entrepreneurial management strengthens the whole capital structure of a country by promoting activities like transportation, trade, commerce, etc.
Also, the formation of various capital goods such as tools, vehicles, machinery and other equipment, escalates.
Entrepreneurial Risk Management
When business is itself big challenge, an entrepreneur should never overlook even the smallest concerns of uncertainties.
Following are some of the major forms of risk which an entrepreneur needs to take care of:
Strategic Risk: The entrepreneur needs to ascertain the risk involved in the business strategy. It includes competition, public relations, alliances, etc.
Economic Risk: Being aware of the economic ups and downs, such as recession, inflation, interest rate variations, economic cycles and government policies, is equally important for an entrepreneur.
Financial Risk: Finance acquisition is a major challenge for any entrepreneur. Therefore, the fund requirement and its sources should be pre-planned for every stage of the business cycle.
Market Risk: Determining the product’s acceptability, competitiveness and sustainability in the market are essential for mitigating the risk of failure.
People Risk: Forming a team of suitable personnel for goal accomplishment seems easy. But analyzing the team composition, roles and spirit from time to time is a complex task.
Personal Risk: An entrepreneur’s life balance along with the business entity is itself a great challenge. Commitment towards family, natives and peers, when managed well with the new venture, leads to success.
Technical Risk: Technology is a game-changer in any business. Thus, an entrepreneur needs to keep a track of the technological advancement in the business cycle to maintain the worthiness of its products.
Entrepreneurial management emphasizes on application of business principles to conceptualize a unique idea in the form of a startup.
Disciplined and hierarchical management of any business provides it with a new dimension and paves the way towards progress.