Entrepreneurship has traditionally been defined as the process of designing, launching and running a new business, which typically begins as a small business, such as a startup company, offering a product, process or service for sale or on hire. The people who create these businesses are called 'Entrepreneurs'. An Entrepreneur possess capacity and willingness to develop, organize, and manage a business venture along with any of its risks in order to make profit.

In economics, entrepreneurship combined with land, labor, natural resources and capital can produce profit. Entrepreneurial spirit is characterized by innovation and risk-taking, and is an essential part of a nation's ability to succeed in an ever changing and increasingly competitive global marketplace.

The 4 factors of production are:

  • Land – Passive element
  • Labor – Active element
  • Capital – Passive element
  • Entrepreneurship – Active element


  • Capital is nothing but discounting of future profit
  • Once Capital is raised, land and labour can be created
  • Essence of business is value addition without which profit cannot be generated
  • An Entrepreneur finds way in every odd situation