why is entrepreneurship important, entrepreneurship, entrepreneur

Why is Entrepreneurship Important?

For the last couple of decades, there has been a lot of hype around entrepreneurship. But being an entrepreneur is not just a hip thing to do – it’s more than being clever and having impressive offices. 

Some serious money is involved that goes a long way to keeping economies going. Entrepreneurs and entrepreneurship contribute considerably to economic growth through increased production, innovation, and jobs, among other factors.

Entrepreneurship drives productivity through innovation

The creation and use of new technologies, new products and services, or new, faster ways of doing things improves the productivity levels of an economy. This productivity leads to business growth, improves the material well-being of society, improves the standard of living, and is the foundation for prosperous economies.

Economists have long believed that innovation is crucial to economic growth, and entrepreneurship plays a central role in driving innovation.

In his classic book, Capitalism, Socialism and Democracy, Joseph Schumpeter wrote that innovation is a constant, disruptive force that is necessary for economic advancement. About entrepreneurs he wrote:

“… the function of entrepreneurs is to reform or revolutionize the pattern of production by exploiting an invention or, more generally, an untried technological possibility for producing a new commodity or producing an old one in a new way, by opening up a new source of supply of materials or a new outlet for products, by reorganizing an industry and so on.”

So, economies can’t grow without innovation, and entrepreneurial activities are largely responsible for innovation.

More recent research supports this perspective. New products and innovations come mainly from entrepreneurs. The airplane, motorcar, radio, telephone, and computer are examples of innovations that have transformed consumers’ lives. In modern society, the proliferation of digital platforms that automate many tasks is an example of innovation transforming our lives.

Entrepreneurs contribute to job creation

Entrepreneurs are, by definition, not job seekers. Instead, they create work for themselves and others. The innovations that entrepreneurs come up with create new employment, affecting entire economies positively. In addition, these innovations cause new developments in or the creation of related businesses to support these new ventures, which, in turn, contributes to economic growth.

For example, the work of software developers in the tech industry has seeped into other industries. There are loads of healthcare apps enabling appointments, medication tracking, remote consultations, pregnancy monitors, and many more. The growing need for apps for healthcare applications has led to a demand for software developers.

Entrepreneurs and the ventures they create, stimulate wealth creation

New and innovative products, technologies, or services by entrepreneurs lead to new businesses, new sectors, and new markets, creating new wealth in the process. For governments, the resulting higher employment levels mean increased national income through taxes, enabling governments to improve infrastructure and services.

Governments can also collaborate with new ventures to provide better services to citizens, improving the general standard of living.

On a personal level, entrepreneurship is also creating immeasurable wealth. For example, the two wealthiest people in the world, Elon Musk and Jeff Bezos, are both entrepreneurs. Also, according to The Barclays survey, Origins and Legacy: The Changing Order of Wealth Creation, entrepreneurship has replaced inheritance as the main source of wealth creation in developed economies.

According to the report, 40% of those surveyed in the US listed entrepreneurship as one of their main sources of wealth, compared with 26% for inheritance, and 45% in the UK said entrepreneurship was their main source of wealth compared with 14% that got their wealth through inheritance.

Entrepreneurs can have a positive social impact

Entrepreneurs have become very cognizant of sustainability, inequality, and the general social impact of economic activities. Consequently, there has been a rise in so-called social entrepreneurship, where the venture focuses on having a positive social impact. The most idealistic among this cohort aims to create a more just and sustainable world through their offerings.

Social entrepreneurship is not new. It’s a form of entrepreneurship that aims to bring about societal change by solving some of its most pressing problems through innovation, while still making a profit. Social entrepreneurship is not the same as running a nonprofit. The former still aims to make a profit while the latter has no profit goal.

Entrepreneurs can, and have, come up with amazing solutions to entrenched societal problems however, social entrepreneurship is not without controversy.

Entrepreneurship as a social enterprise has the opportunity to uplift communities and address serious challenges that many people face just because of the physical environment they find themselves in. Social entrepreneurs can set social change in motion, but the outcome is not always what was envisaged, as the two core aims of profit and social good can sometimes counteract each other.

Social entrepreneurship is probably not as impactful as it could be, since it is plagued by a number of obstacles, including lack of funding and environmental constraints, which result in many of these ventures failing.

Entrepreneurship promotes innovation

By their example and popularized success, entrepreneurs encourage innovation. Many entrepreneurs do cool things that others want to emulate. An entire generation is growing up with entrepreneurs as their heroes. And these youngsters are very well informed about the needs of society, so they are ready to step up with their own innovations, to disrupt industries, start new ventures, and remake the economy.

Entrepreneurship offers a job solution for young people

Let’s face it, the traditional way to make it in a career is disappearing. A higher education that guarantees a job at a large corporation leading up the ladder to the corner office seems unlikely for people leaving college now.

In the meantime, Gen Z is digitally independent and craves a job that allows for creative independence. Entrepreneurship fits the bill.

Being digitally independent, Gen Z has been exposed to entrepreneurship from an early age. This generation has always used the internet to inform themselves and solve problems. This has given them a sense of accomplishment that makes entrepreneurship within easy grasp for them.

Jonah Stillman, co-author of the book Gen Z At Work, told Fast Company that his generation is the ‘do it yourself’ generation. According to him, the DIY generation believes that they can do a lot of things on their own, including becoming an entrepreneur, and that comes from the availability of information.

Entrepreneurship has become a very real career path for a generation who is skeptical about the sensibility of being burdened with crippling education expenses and no guarantee of a position with a good income to pay off the debt. Entrepreneurship seems much more promising and less costly.

Healthcare entrepreneurship

Healthcare and entrepreneurship are becoming closely related. The application of business practices is changing the industry. Entrepreneurs and investors see healthcare as a promising market for innovation.

At the same time, healthcare is moving away from patient care to consumer care, where patients are regarded as consumers who choose the care providers and treatment options they pay for.

Also, healthcare is changing its focus from treating illness to preventing illness, which has seen the proliferation of wearable technology, such as electronic devices like Fitbits and smartwatches that collect data on the wearer’s health and exercise habits. Some of these devices can send the data to the wearer’s healthcare provider in real-time.

Entrepreneurial use of technology in healthcare

Data is becoming the main currency in healthcare. Predictive data and analytical tools are being used to understand the current and future healthcare needs of communities and to ensure that adequate care is provided. These same technological tools are being applied to reveal existing shortcomings in traditional healthcare, which can be used to create new systems and practices that work better.

The enormous body of data about patients’ health and treatment history, hereditary issues, and lab work is paving the way for more accurate treatment decisions.

New care focus leads to new payment models

Traditionally, doctors’ payments were directly related to the number of patients seen. This model is changing. The focus has changed to keeping patients healthy, which has altered the scope of treatment, with treatments being limited as far as possible. The focus is on preventing illness, not treating it unnecessarily.

Entrepreneurs in healthcare are utilizing this development by introducing health-preserving applications like wearable ECG monitors and wearable blood pressure monitors to help people stay as healthy as long as possible. This trend has led to a slew of innovative products and services, augmenting healthcare practices.

Entrepreneurial opportunities in healthcare

Bedside monitoring

Continuously monitoring a patient’s vital signs like body temperature, blood pressure, respiratory rate, blood oxygen, and heart rate requires using expensive custom-made hardware, which is costly to maintain and repair.

Entrepreneurs can find new ways to monitor patient vital signs that are less expensive. One startup that has developed a more streamlined solution to continuous patient monitoring, is Stasis Labs. The company leverages cloud computing by linking monitoring hardware with specific software and sending updates to nurses’ stations and tablets.

Electronic health records (EHRs)

EHRs have been the bane of healthcare professionals for decades now. This practice wastes an inordinate amount of valuable patient time. A study in the Annals of Internal Medicine found that physicians spent an average of 16 minutes and 14 seconds per patient visit reviewing EHRs. A third of the time is spent on reviewing the records, a fourth on creating a new document, and about 17% on ordering tests. 

EHRs present a huge opportunity for entrepreneurs.

Health insurance

Oscar Health, founded in 2012, is a different kind of health insurer. The company uses technology to provide simple health coverage that doesn’t involve confusing co-payments. Private health insurance in America has largely failed and Oscar Health is providing a better solution.

Oscar insurance can be purchased on the “Obamacare” exchange program or directly from the company. The company makes healthcare services affordable by providing free doctor-on-call service and free care team service, and saving customers from having to pay for a doctor’s consultation to obtain a referral to see a specialist.

Medical transcription services

Medical transcription involves processing voice clips dictated by physicians and other healthcare professionals into text format. The medical transcription services team has to convert the voice files they receive into text. This is a time-consuming endeavor.

The advancement of technology has simplified this process. Medical transcription services now rely on speech recognition software and medical transcription software to do the work.

Founded in 2001, Acusis is a leading provider of medical transcription services. Another example is Suki, which uses an AI-empowered voice-enabled solution for medical documentation. Suki has a digital assistant that listens to doctor-patient conversations and transcribes them.

Final thoughts

Entrepreneurship plays a vital role in the development of economies. The practice creates wealth and opens the doors to new and exciting products and services. The health industry, in particular, is fertile ground for entrepreneurs who can take advantage of the factors hampering the industry to develop new solutions.