With the trend of the COVID-19 pandemic and struggles to keep the economy stable, businesses have been scrambling to pursue entrepreneurial activities. With many people being laid off from their jobs, the start-up culture has been booming. With the help of government incentives for new businesses, nominal interest rates, and personal savings, would-be businesses can grow their roots in the marketplace fulfilling the vision they had.
As consumer confidence grows, so will consumer spending, with “revenge buying” sweeping across industries as pent-up demand is discharged. That has been the case in every prior economic crisis. One distinction is that services have been particularly hard hit this time. As a result, the recovery will undoubtedly benefit such businesses, particularly those with a community component, such as restaurants and entertainment establishments.
Other businesses expect increased demand as the virus subsides. People have resumed travel, dining out, and other service industry expenditures that they had been unable to undertake for the majority of 2020 and 2021. This transition, according to Gus Faucher, senior vice president and chief economist at The PNC Financial Services Group, has left certain organisations susceptible. “Nonetheless, the economy’s demand remains robust, and many enterprises are understaffed. As a result, it is quite easy for people who have been laid off to obtain new jobs.”
But the pandemic has made some people motivated to make their town a launchpad to start their own businesses with the increased use of digital penetration, innovative ideas and the lower cost of living. For example:
Chef Junction by Suryanshu Panda and Epari Pritam in Bhubaneswar
During the COVID-19 lockdown, some used social media to publicise their “food experiments,” implying that they were not receiving food from outside sources to ensure safety. While some people practised their cooking skills, others who wanted to make restaurant-quality things like banana bread were unable to do so owing to a number of issues.
Founded in 2020 in Bhubaneswar by Suryanshu and Pritam, two college students solved the problem of food among college teens. With their website Chef junction, they started providing home-cooked meals from the home chefs to the customers. This start-up solves the problems of high-priced restaurant food and the craving for ‘ghar ka khana’ by connecting the home chefs to the students living away from home for studies.
When the lockdown began and all schools and education shifted online, Dishant Gandhi and Alok Kumar of Surat saw a chance to satisfy their business desire with edtech. In June 2020, the pair will develop Gradeazy, which would allow educational institutions to administer online tests for as little as Re 1 per test. After a decade of digital transformation, local universities have declined to embrace online testing procedures. Contrary to popular belief, getting to Mars costs only Rs 7/km, but institutions pay Rs 10-15 for each student who takes an online test. After doing research, we identified three key pain points: inadequate UI/UX, a lack of vernacular support, and expensive expenses.
Entrepreneurs incorporate new incentives in the economy, providing well-developed and research content to improve their business. Being the economy is either bad or good, entrepreneurs are important. Good entrepreneurship develops novelty products, surviving the immense competition which results in boosting the demand of the organization. Apart from boosting the firm’s financial condition, new businesses also help in generating job opportunities and reduce the unemployment status of the economy of the country.
Entrepreneurs create new products and stimulate economic growth
Economic progress is usually the outcome of radical inventions. Entrepreneurs who bring innovative items to market considerably contribute to economic progress. New firms invest more in finding new customers than established businesses. Existing companies may be less likely to innovate owing to organisational inertia, which dulls their responsiveness to market changes, or because new things would compete with their existing product range. Because they are fearful of cannibalising their markets, incumbent firms routinely, and sometimes intentionally, pass up opportunities to adopt new concepts. For inventors and innovators (who may come from established firms), starting their own business looks to be the only way to promote their ideas.
Entrepreneurs create competitiveness in the market
By creating new firms, entrepreneurs increase competition for existing ones. Lower pricing and more product selections benefit consumers. To quantify the consequences of new company development on incumbent enterprises, researchers created a market mobility index. A shift in the ranking of established enterprises based on staff count suggests a shift in market share and increased market mobility. This effect is most obvious when looking at entrepreneurial activity five years before the start-up, indicating a significant time lag in the impact of start-ups on market mobility. Furthermore, the establishment of new businesses has an indirect influence on the competition by placing pressure on incumbent businesses to improve their performance.
Competition between new and established businesses should result in the survival of the fittest. Even if total employment is declining, new enterprises have the potential to enhance productivity. The medium-term productivity-enhancing advantage of business creation comes when the employment effect is driven by the displacement of existing enterprises. This occurs for two reasons. First, new enterprises boost market rivalry, reducing the market strength of existing firms and placing pressure on them to become more efficient or go out of business. Second, only businesses with a competitive edge or those that outperform incumbents will enter the market. Less efficient firms (both newcomers and incumbents) are forced to exit the market as a result of the ensuing selection process.
Conclusion
The existing firms always struggle with the adaptation of the new technologies and trends prevailing in the market, the new businesses bring these changes into the market for developing the economy. Entrepreneurship brings the changes like introducing new products, developing new technologies, creating new employment opportunities, and boosting the productivity of the employees influencing the marketplace. Government rules and regulations regulating property rights significantly impact a country’s ability to innovate. Material property rights ensure that any profits remain in the hands of the entrepreneur, whereas intellectual property rights encourage enterprise and innovation.
Written by – Krati
Edited by – Mehak Vohra