Which Type of Economy Do Entrepreneurs Play a Key Role In?

Entrepreneurs innovate to meet consumers' needs.

Entrepreneurs innovate to meet consumers' needs.

Entrepreneurs turn the wheels in any economy because they understand the needs of society, the country and the world. Consumers' needs change with economic trends, but whatever those needs are, entrepreneurs develop a way to fulfill them, find a market to sell to, and make a profit while driving the economy.

Slump

During an economic slump, the challenge of generating enough revenue through a traditional retail store to cover lease and overhead costs led to the rise of e-commerce entrepreneurship. With an online shop, there are no overhead costs to worry about other than the low costs of registering the business and developing a website. E-commerce allows you to sell, around the clock, niche products such as fashionable jewelry, sunglasses, exotic lingerie and other popular items.

Recession

In the age of technology, a recession creates, "accidental entrepreneurs," according to CNBC. People are driven into entrepreneurship by the need for money, not passion. As an accidental entrepreneur, you may have an MBA or other higher education. With your tech-savvy ability, you aggressively provide consumers and businesses with cloud computing and other high-tech services, pushing smaller, less-sophisticated tech companies out of the market. Your focus is on profits and you waste no time feasting on the market.

Post-Recession

A recession paves the way for more cautious entrepreneurs, which results in longer-lasting businesses and jobs during a post-recession economy. You must be diligent in checking customers', vendors' and suppliers' credit rating before granting credit. Instead of relying on big banks, you consider options of a credit union and online financial services like Paypal. You also learn to avoid using personal credit for your business and depend on the strength of your corporate credit.

Capitalist

In a capitalist economy, entrepreneurs are only as strong as consumer demand. Consumers create the demand for goods and services; entrepreneurs create the goods and services, which create jobs. For example, former Apple CEO, Steve Jobs couldn't exist without the demand for high-tech gadgets. Similarly, there would have been no need for Henry Ford if there was no demand for automobiles. In a capitalist economy, entrepreneurs play an important role in creating jobs, but only with the demand for goods and services.

 

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