Starting a new business requires not just capital but also risk-taking abilities. Since setting up a new business can be risky and has to be calculative at each step, many people refrain from entering this field of economy.
Individuals who take the risk and invest capital in starting a new business are known as entrepreneurs. A business may be started under sole ownership or in partnership. Entrepreneurs are the people who are ready to take the most risks, and they also enjoy most of the rewards. The process involved in setting up the business is termed entrepreneurship.
Why Are Entrepreneurs Important?
Entrepreneurs are one of the essential economic pillars of a society. That's because it's the burden on economists to introduce new things in search of profit, as cited by Joseph Schumpeter. They are also the ones responsible for risk premiums in financial markets, as remarked by Frank Knight. Last but not least, another prominent economist, Israel Kirzner, remarked that entrepreneurs discover opportunities.
Entrepreneurs are quintessential to an economy because they produce goods and services vital for running an economy. This is one of the characteristics of entrepreneurs. Utilising three core elements, resources, labor, and capital, entrepreneurs build businesses. In the contemporary world, major challenges that entrepreneurs face are hiring talent, overcoming bureaucracy, and obtaining financing. Those who overcome these not only build businesses but also provide society with many benefits.
What Are Different Types of Entrepreneurs?
Now that you know “what is an entrepreneur”, let's understand its types. Broadly, there are four types of entrepreneurs; builders, innovators, opportunists, and specialists. Read on to learn more about these in detail:
Builders are types of entrepreneurs who tend to enter profit-making businesses within a short span of time. They find investors and the right talent for their ideas. For instance, builders may invest ₹3-₹5 crore in the beginning and gradually may take it as high as ₹30-50 crore or even higher. With time, they get more investors and the businesses flourish.
Opportunists may also be often termed as impulsive individuals. These are the types of entrepreneurs who focus on profit-making through the right opportunity. They may enter the business at the right opportunity and exit the same when their goals are met!
Innovators are one of the best gifts to the society. These are the people who have unparalleled ideas and may come up with certain ideas that can leave a lasting impact on society. For instance, Thomas Edison, Steve Jobs, etc. These people began their entrepreneurial journey with a great idea that no one had thought of so far!
However, one interesting part is innovators may not be the best at managing a business. They generate unique and meaningful ideas, but giving them the shape of a business and bringing them to the benefit of the masses is the task of professionals. So, innovators may hire expert business minds who can turn these ideas into businesses.
Specialists may have a slower growth pace than others. However, their forte lies in their expert speciality. They are specialist in certain fields, and they acquire mastery over it through education and experience. Using networking and referrals, they may end up creating large businesses.
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How Do Taxes Work for Entrepreneurs?
The structuring of the business can have a major impact on the taxation for entrepreneurs. In India, the taxation for entrepreneurs may be affected by the ownership percentage of the entrepreneurs, the overall turnover of the business, and the age of the entrepreneurs.
The old tax regime differentiates tax rates based on the age of the entrepreneurs. However, the new tax regime is the same for all age groups. Companies with entrepreneurs having sole proprietorship, partnership, or domestic companies may have different tax slabs.
A 4% cess is charged if total income exceeds Rs. 50 lakhs. Here is the table given below for more details on the tax slab under the old tax regime:
Income Range (Rs)
| Income tax rate
|
0 to 2,50,000
| NIL
|
2,50,001 to 5,00,000
| 5%
|
5,00,001 to 10,00,000
| 20%
|
10,00,001 and above
| 30%
|
These are individuals between 60 to 80 years of age.
Income Range (Rs)
| Income tax rate
|
0 to 3, 00,000
| NIL
|
3. 90,001 to 5,00,000
| 5%
|
5,00,001 to 10,00,000
| 20%
|
10,00,001 and above
| 30%
|
These are individuals above 80 years of age.
Income Range (Rs)
| Income tax rate
|
0 to 5,00,000
| NIL
|
5,00,001 to 10,00,000
| 20%
|
10,00,001 and above
| 30%
|
In the new tax regime, a 4% cess is charged if the total income exceeds Rs. 50 lakh. The table below explains the tax slab under the new tax regime. In the new tax regime, the age doesn't define the taxation:
Income Range (Rs)
| Income tax rate
|
0 to 2,50,000
| NIL
|
2,50,001 to 5,00,000
| 5%
|
5,00,001 to 7,50,000
| 10%
|
7,50,000 to 10,00,001
| 15%
|
10,00,001 to 12,50,000
| 20%
|
12,50,001 to 15,00,000
| 25%
|
15,00,001 and above
| 30%
|
4% cess is charged. Check out the tax slab details for domestic companies.
Conditions needed
| Income tax rate
|
If past year turnover exceeds Rs 400 crore
| 30%
|
If past year turnover does not exceed Rs 400 crore
| 25%
|
If opted for section 115BA
| 25%
|
If opted for section 115BAA
| 22%
|
If opted for section 115BAB
| 15%
|
Other domestic companies
| 30%
|
A flat rate is charged for partnership firms at 30% of the income. 12% cess is applicable upon exceeding Rs. 1 crore total income and 4% on health and education businesses.
Here is the table explaining the surcharge applicable to companies:
Conditions needed
| Surcharge rate
|
Net taxable income between Rs.1 crore to Rs.10 crore
| 7%
|
Above Rs.10 crore
| 12%
|
If opted for 115BAA and 115BAB
| 10%
|
What are the Four Types of Entrepreneurship?
Entrepreneurs also differ on the basis of the business idea they have. While some may establish a startup, some may enter large-scale businesses, there can be different types of entrepreneurs. Read on to learn more about these types:
The standalone shops, a restaurant in your city, a grocery shop, or an ice-cream parlour are some of the examples of small businesses. These are the business ideas that bring a good source of income to the founder but the business may not turn into a conglomerate or a chain business.
These are usually self-funded or loan-based businesses. Financial institutions or banks may be the source of funds and loans or government schemes. In some cases, even small businesses may see substantial growth and the founder may take the risk to expand it.
Scalable startups are the ideas of brilliant minds. These companies may start a business with limited funding and resources. The business begins based on these resources and the ideas of the individuals. Over time, upon the success of the business, many startups get funding and backing. These eventually may turn these ideas into large-scale businesses. Silicon Valley, Meta, etc. are some of the examples of startups. In India, government schemes may also aid startup ideas.
There are many examples of business expansion of an existing business. That means an established business venture may want to enter another sector and start a large business idea there. For instance, the expansion of Reliance Industries. They are not just present in telecommunications but also in jewellery, gadgets, etc.
Such companies that are already huge and established and when they start another venture with huge funding can be termed as large businesses. Even individuals with large funds and resources can establish a large business without having any existing businesses.
As the name may suggest, social entrepreneurship is the type of idea that aims at bringing social benefit to the majority of people. The purpose behind such entrepreneurial ideas is not to make a profit but to bring benefit to people.
How to Become an Entrepreneur?
Entrepreneurs emerge with an idea and end up turning it into scalable businesses. Have you read the entrepreneurial story of OYO Rooms? Founder Ritesh Agarwal started his entrepreneurial journey at the age of 19 with an investment of 82 lakhs. He started with Oravel Stays, an affordable stay room, and went on to receive the grant and further acceleration of the idea that laid the foundation of OYO Rooms in 2013. At the tender age of 18-19 years, Ritesh founded the largest hotel chains in the world and became the youngest billionaire in India.
It was during his travel zeal that he found that there was a huge market gap for affordable and quality hotel stays. This is when the idea clicked and he overcame challenges to become what he is today! OYO Rooms changed the way Indians perception towards budget hotels. This was the success story of Ritesh. There are many such brilliant names like JRD Tata, Dhirubhai Ambani, Falguni Nagar, Radha Vembu, etc. It takes courage, zeal, and a strong will to bring a change in society, stand apart, and impact a larger section of society.
What are the Characteristics of Entrepreneurship?
What makes an entrepreneurial mind so different? There are certain common characteristics that define entrepreneurs. Understanding the characteristics of entrepreneurs can help you understand what sets them apart:
An entrepreneur has to be versatile. That means, including sales and other business processes, one also has to indulge in direct customer interactions, especially in the initial days of the business setup. They also train their employees to foster customer relationships. Loyalty, services, human interactions, and compassionate solutions can give new businesses an edge even over existing ones.
Great ideas do not fear flexibility. Most entrepreneurial journeys start with slightly different ideas but turn out to be different over time. For instance, a business idea of a coffee space may emerge with a focus on good takeaway coffee. However, seeing the demand among people, seating spaces may also be incorporated. Many Indian brands have evolved over time incorporating new elements.
Money flow is crucial to businesses, be it a new or an established one. Entrepreneurs need to make swift and calculative decisions when it comes to finances to ensure a balanced workflow. It may take years for a business to turn profitable, and until then, it's money security that keeps a business going.
You need to keep going, even if things do not work out. Entrepreneurs are minds who never choose to give up, no matter what. No story of entrepreneurship is free of obstacles, difficult times, and failure. However, when you are resilient to such challenges, that's when great businesses are built!
Your mind may hit you with multiple doubts when you start a new journey, especially one of entrepreneurship. There can also come many obstacles in the path and you may find multiple reasons to drop the idea. However, staying focused is the key to achieving your goal! With the right approach, a positive outlook, sufficient resources, and strong willpower, it is possible to get over these challenges.
Communication has to be clear between an entrepreneur, partners, employees, and clients. It is the responsibility of the owner to maintain clarity of communication to ensure the smooth functioning of all the tasks.
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Conclusion
Entrepreneurship is all about taking risks and entering risky market ideas. There are many success stories that weren't a success story in the beginning. Sheer dedication and consistency make certain ideas special and large-scale. Whether you are planning for a small entrepreneurial, a large business, or a scalable startup, the attitude of fighting against the odds yet never giving up is what can set up apart from others! Take your step today to make a larger impact on society tomorrow.
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