The role of entrepreneurial activity in economic development is well documented in Schumpeterian Economics, which is an essential part of contemporary thinking for the vibrant operation of a market economy. In economic terms, an entrepreneur is a change agent necessary to bring about improvements in the existing economic structure through creative destruction. In lay terms, an entrepreneur may be defined as a person willing to take risks to make profits out of the pursuit of a business opportunity he has identified involving an innovative product/service idea.
The marketplace for entrepreneurs is ever changing in a highly competitive and globalised operating environment. Entrepreneurial activity involves taking a higher level of risk in the sense that it involves marketing a new or existing product/service idea in a more innovative way than before. As a result it is a fact that about 90% of business start-ups fail.
The primary characteristic for entrepreneurial success is often considered to be passion, but passion alone may not be sufficient. Risks in start-ups, arise at several stages: running short of the requisite finance for investment, developing suitable customers, cash management for day to day expenses, managing debtors and creditors, finding and retaining appropriate key personnel, competition from more able competitors. Some risks can be managed by adopting suitable legal forms or insurance while other risks cannot.
This is where an MBA degree comes in useful: A prospective entrepreneur by acquiring the skills of research, marketing, finance, organisational planning and strategy taught in an MBA program can adopt a more structured approach to the recognition and mitigation of risks. The business opportunity needs to be identified through rigorous market research and developed into a viable Business Proposal around customer needs with proper inputs from Marketing, Finance, Organisational Planning and an evaluation of Resources and Capabilities to identify the appropriate Strategy and Business Model for success. The informed entrepreneur also realises that intangible value is generated by a well-managed business and pays great attention to marketing, developing a customer base, customer care, organisational capabilities and good financial management.
Undertaking an MBA program is thus a vital necessity for entrepreneurs to improve the chances of success and enhance the value of the enterprise they create.