Entrepreneurship: The Key to Sustainable Growth..!!

Entrepreneurs are major drivers of economic growth, social progress and job creation.

How can skills and capital be ensured to promote entrepreneurship in tough economic times?

Key Points
• Though associated with boom times, entrepreneurs’ real value emerges during recessions and eras of economic turmoil
• Entrepreneurs are born, not made; all humans are born entrepreneurs
• Nations can cultivate conditions that help unlock the potential of entrepreneurs
• All entrepreneurs take some voluntary risks, but successful ones calculate carefully to minimize their asset’s exposure to the potential downside
• Governments can help tip the scales through spending or privatization

Synopsis
One Beggar walks into a bank. He has no training, no skills, no contacts, no plan and no dignity. The banker looks him in the eye and decides to extend a low-interest loan of low-value, non-monetary assets to sell while making his daily door-to-door rounds. Within months, the beggar knows which shops and houses will buy the stuff, and who will give him coins in pity. With no business school degree, he masters the art of market segmentation; within four years, one in five such bank customers stop begging to become full-time, self-employed sales professionals. The lender creates 18,000 jobs with little exposure to capital risk, and loan repayment rates that Wall Street might envy.

This true turnaround story of a seemingly hopeless underclass unlocks secrets about the mystery of capital. It illustrates what dinner participants concluded: that all humans are entrepreneurs. And yet certain conditions can go a long way to cultivate a supportive atmosphere of entrepreneurship in a society, whether a local community or national economy.

First, you need well-trained human capital, someone with good ideas who knows how to grow and administer a business. Next, you need the networks and role models of social capital. Third, you need financial risk capital, either with labour-intensive microfinance or involving the lower transaction costs of large transactions. Finally, you need institutional capital of law and order with predictable rules and respect for property rights.

The trouble with economic downturns is they have a chilling effect on all four kinds of capital because they erode the trust that in each case provides the transactional glue. In a global survey of 180,000 entrepreneurs, most respondents said it was harder to start a business in 2009 than in 2008. And those who did start a business were driven less by the pull of opportunity than the push of necessity.

To build – or rebuild – entrepreneurial confidence, education should start early and often. You do not learn everything you need to know by kindergarten; start talking to your child about money and entrepreneurship, ownership and risk taking.

Then, in college and after graduation, keep up the mentorship programmes and peer support mechanisms that encourage entrepreneurs to dream big, never give up and treat people with respect.

To speed economic recovery, entrepreneurship is essential. It is well known that small business creates the most jobs. More significantly, young businesses – less than five years old – are the biggest engines of labour-intensive growth.

Sometimes a culture entrepreneurship and the social capital of networks are catalysed by default. When one entrepreneur tried to finance an idea, he was turned away by 32 venture capital firms. Failure was dreaded. Years after the start-up did succeed, and the entrepreneur sold the company for US$ 750 million, the investors who turned him down and missed an opportunity formed their own networks with a strategic plan to ensure they did not miss the next big thing.

If indeed every human is an entrepreneur, and the benefits of unlocking the four kinds of capital are so immense and pervasive throughout society, then some participants argued that access to credit should be a human right.

Others drew the conclusion that all too often business schools had failed society by narrowing the scope of lessons about the nature of the firm, and it was time to bring poetry back into the equation. A company is more than the sum of assembled parts and people to maximize an abstract number. People seek value beyond prosperity for their immediate family. Whether driven by profit or non-profit, entrepreneurial business gives meaning to life.

Happy Reading...!!!