The pandemic has brought the peacefully sleeping world back from its slumber, disrupting its long-term welfare plans and forcing it to look for answers to a multitude of uncomfortable questions. COVID-19 reminded our civilization of mortality of a man.
This new reality of insecurity, uncertainty, and the never-ending change, however, is as old as the world itself and has been accompanying humankind from its early beginnings.
In pursuit of security, governments around the world introduced a variety of COVID-related measures, including total lockdowns, international travel restrictions, and new regulations and rules. Some chose to restrict, while others chose to continue as is. Some have recognized their own limitations, while others continued to act as if the future was still under their control.
All governments were confronted with the urgency to act against the backdrop of complete uncertainty as to what was to come. They had to take decisions and constantly adapt them to reflect the changing circumstances, knowledge, and forecasts. And to do all this in a climate of continuous discontent and polarization within society.
It would seem—what could be more evident—that in the face of the changing circumstances governments will change their approach to restrictions as well.
This situation presents a great opportunity to remind ourselves that one segment of society operates against the backdrop of uncertainty at all times. The calling of an entrepreneur is always to battle with the unknown of what lies in the future, take risks and act on decisions that might have to be weighted again, and again, and changed accordingly.
Entrepreneurs take thousands of decisions every day, the validity of which will only become apparent in the future. For an entrepreneur this means a life under chronic stress. Despite this difficult task of creating welfare we all so desperately need, often entrepreneurs are labelled the greatest enemy of society and become targets of hatred and shaming.
The global crisis we are experiencing has helped highlight the role of an entrepreneur which in times of peace remains deeply buried. The rising costs of all resources, shortages, supply chain disruptions and global structural changes have now become an everyday reality for businesses. The need to predict the future, or even to shape it purposely, however, was and will always remain at the heart of an entrepreneur’s trade.
Why? Because it is an entrepreneur who has to combine the limited resources available and achieve their synergy thus ultimately figuring out what the consumer needs. And here comes the paradox—consumer verdict will only be available tomorrow or the day after. Consumer might be tempted by other products, alternatives, fruits of indefinite progress. While costs of resources, labor have to be covered by businesses in advance.
Because it is an entrepreneur who has to combine the limited resources available and achieve their synergy thus ultimately figuring out what the consumer needs.
Going on economic patterns, the conclusion whether the costs of all resources used today were reasonable will ultimately depend on the benefits received by the end consumer. Precisely, the benefits and not the costs of production, costs of man-hours but rather whether the consumer sees value in the end product. And the consumer will always compare the product with multiple other products the time or secret of their appearance nobody lo longer knows.
It is worth remembering that the consumer means all of us, our needs and expectations. Therefore, the calling of an entrepreneur is to combine limited resources in a way that they serve us all as consumers as best as possible.
Business conduct paradigms, namely, cheaper, better, and more efficiently, are dictated by all of us acting as consumers when we want better products for as cheap as possible. An entrepreneur is there just to represent us, the consumer, to translate our interests into production and commerce.
During the first wave of this crisis we have seen warehouses stocked with products that demanded high costs and many man-hours to be manufactured but with the introduction of restrictions and disruptions in the supply chain goods could not have been delivered to customers and their price just melted away. Nobody wants to pay for goods just because they were expensive to manufacture.
Equally, we see the prices of raw materials going up, though production costs of many have not really changed. If just one part, let’s say, a chip can save a production line from downtime, a manufacturer will pay for it significantly more compared to yesterday and irrespective of the manufacturer’s costs.
If one wants to avoid a long shipping container journey with all the delays and uncertainties that accompany it, one agrees to pay for an urgent delivery of components by air even though it might seem madness to do so because of costs.
Is the end consumer willing to pay for the enormous shipping costs and price rises of a certain raw material? This will become apparent only tomorrow—today the decision is obscured by a veil of uncertainty.
Yet, businesses have to act now. They have to decide today whether to take on the rising costs of energy or to put production on hold and wait.
When a business consumes thousands of raw materials and production consumables, entrepreneurs have to always weight whether every cost component is reasonable and whether the end cost of a product will be worth it. They have to continuously tackle matters of delivery of each part that is in short supply and find substitutes whenever possible—for materials, technologies, logistics chains.
Some substitutes will work and some won’t. This is the everyday reality of every entrepreneur out there. And the outlook on the gross domestic product (2.9%), ECB inflation (2.2%), wage rises, and other matters does not make things easier for the entrepreneur since nobody is capable of soaking up all the necessary information about a particular market, nobody can weigh up all the alternatives nor predict structural changes.
Our shared welfare today is in the hands of people who take decisions in the face of an uncertain future.
Today, all of us depend on the resilience, experience, and the ability to weigh risks of an entrepreneur—these things determine the success or failure of every business, income or loss of a job of every worker. Our shared welfare today is in the hands of people who take decisions in the face of an uncertain future.
In other words, in the face of a pandemic governments have experienced what always lies at the core of all economic relations: we all depend on future factors but are forced to act today. This is a huge burden and responsibility that can lead to profit or loss for an entrepreneur, and greater welfare or loss of its for states.
That is why this period is a great opportunity for both societies and governments to rediscover the role of an entrepreneur, as well as to stop polarizing society and the business community. This is also an opportunity to put an end to at least one division in society.