Written by:

Paulo M.P. Harianja

( NPM: 11.032.111.006 )

Fakultas Ekonomi Jurusan Manajemen Universitas Darma Agung Medan 2012

ENTREPRENEURSHIP
Entrepreneurship is an action in starting a business using creativity and innovative thinking as well as capitals, to transform business opportunities that exist into a profitable economic activity, which can be used to improve a persons life. Entrepreneurship has an important role as a key factor in job creation and economic growth in many countries, especially in developed countries, such as in the USA and Europe. Given entrepreneurship's potential to support job creation and economic growth of a nation, it is the economic policy goal of many governments to develop a culture of entrepreneurial thinking or entrepreneurial mindset. People who work as entrepreneurs, or can be said as the people who work for him or herself, known to have a standard of living far better than the people who work for others as an employee. However, not everyone can be an entrepreneur, because not everyone has the skills, the knowledge and also the mindset (mentality) to be an entrepreneur. Entrepreneurship is all about risks and dealing with ambiguity or uncertainty. An entrepreneur is a person who reflects the personality of someone who is willing to risk his or her career and financial security, and take risks for the sake of an idea or impulses, spending a lot of time as well as capital, on an uncertain venture. But if it succeeds, an entrepreneur will be rewarded in terms of financial gain, for all the risks and the uncertainty he or she faced in the business environment. There are five basic types of capital required to become an entrepreneur, in which each type of these basic capital are related to, and influence each other. The five basic capital required are: I. Intellectual Capital Intellectual capital is the collective skill and knowledge of an individuals in society. These skill and knowledge can be used to create business, increase income, produce wealth and gain competitive advantage from others. It is often measured by education level. A person who wants to become an entrepreneur must have the skills and the knowledge required in the areas of business that will be created. If a person has the skills and the knowledge, it also means that the person has the capability and the competency in the field of business that he or she manages. If a person tries to start a

business without having the skills and the knowledge about the business, these efforts will only lead to failure in the future.

II.

Moral Capital Moral is a state of mind and human behavior related to the values of what is

right or wrong. In business. moral capital refers to business ethics. Business ethics is a form of professional ethics that examines ethical principles and moral that arise in a business environment. It applies to all aspects of business conduct and is relevant to the conduct of individuals and entire organizations. Business ethics reflects the philosophy of business, one of whose aims is to determine the fundamental objective of a business. If the objective of a business is to maximize profit by sacrificing the rights of the employees, it can be said that this type of business objective is wrong according to business ethics. A person who wants to be an entrepreneur must have the moral capital needed. In this case, the person needs to have, to understand, and to apply business ethics in the management of business that will be created. The person must also be able to see that employees are not only as a tool to make profit in business, but is considered as an investment that must be maintained and treated well, so that the business can run properly and may develop in the future.

III.

Mental Capital People who wants to become an entrepreneur, did not ask questions about

whether they could succeed or not. With courage, confidence and determination, they took the first step in their decision to become an entrepreneur by starting their own businesses. They are confident that with their skill and knowledge, they will make their businesses succeed. They execute that courage, confidence and determination in everything they do, and always committed to the decisions they have chosen. This is the true meaning of mental capital. Mental capital also refers to the psychological character or personality which includes a persons emotional intelligence, such as creativity and innovative thinking. Creativity is mental characteristic that allows a person to think outside of the box, which results in innovative thinking. A person can generate new and different ideas

with innovative thinking. These ideas can be used to create new, different, and fresh innovations in the form of marketable products (goods or services) which can be offered to the market and can be used to satisfy needs (something that is necessary for a being to live a healthy life or to survive), wants (something that is desired or something that a person would like to have), and demands (something that is desired by a consumer who is willing to pay a certain price for a specific goods or services as a result of an increase in income) of the consumer. There are some personal characteristics that a person must possess to become a successful entrepreneur, in addition to creativity and innovative thinking as a mental capital. These personal characteristics are: 1. Commitment and determination 2. Desire for responsibility 3. Opportunity obsession 4. Tolerance for risk 5. Self confidence 6. Flexibility 7. Desire for immediate feedback 8. High level of energy 9. Motivation to excel 10. Orientation to the future 11. Willingness to learn from failure 12. Leadership ability

IV.

Material Capital Material capital is needed to start a business. Material capital refers to funds and

other physical assets, which can be measured by money. Some people start their businesses by using their own personal money. But most people start their businesses with cash loans. These loans can be obtained from the bank, financial institutions or from other people. These cash loans called debt. Debt is not only needed in starting a business, but it is also needed in developing ongoing business. In using debt, one needs to consider whether the rate of return on the use of debt is larger or smaller than the interest rate of debt. Keep in mind that in business terms, the debt is not paid by the

person, but by the business itself. A business will not be able to pay off the debt if the rate of return on the use of debt is smaller than the interest rate of debt. So that the debt can be paid off, the rate of return on the use of debt must be larger than the interest rate of debt. In other words, pure economic profits.

V.

Religious or Spiritual Capital Religious or spiritual capital is considered as difficult to be defined and

measured. It is a social concept rather than a religious one. However, for people believing in God, spiritual capital may be considered as the degree of connectedness with God. For others, spiritual capital can be evaluated by commitments to certain noble life purposes and moral values. Religious or spiritual capital can also be viewed in the implementation of the teachings of religion, especially in relation to other human beings in everyday life. A person can not be said to have religious or spiritual capital simply because he or she has a religion, but a person can be said to have spiritual capital for having moral and ethical values, and apply those values in business and on his or her personal and social lives.

CONCLUSION: Entrepreneurship has assumed super important role for accelerating job creation and economic growth both in developed and developing countries. It promotes capital formation and creates wealth in a country. Entrepreneurship is hope and dreams of millions of individuals around the world. It reduces unemployment and poverty and it is a path to prosperity. Entrepreneurship is the process of exploring the opportunities in the market place and arranging resources required to exploit these opportunities for long term profit gain. Entrepreneurship is also the process of planning, organizing, perceiving opportunities, assuming and decision making. It may be distinguished as an ability to take risk independently to make utmost earnings in the market. Entrepreneurship is also known as a creative and innovative skill and adaptive responses to uncertainty of business environment. Not everyone can be an entrepreneur, but for those who can and succeed, they are on their way to prosperity.

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