Economics insights for aspiring entrepreneurs

Dr Oum Kumari R is a highly accomplished educator with over 15 years of experience teaching economics. With an academic background that includes undergraduate and postgraduate degrees from the University of Madras, an M.Phil. from Presidency College, Chennai, and a Ph.D. in Energy Management from MNIT Jaipur, she has established herself as a leading figure in the field of economics. Dr. Kumari has served in various prestigious academic institutions such as MNIT Jaipur and Manipal University, Jaipur, and is currently shaping future business leaders at the Jaipuria Institute of Management. Her dedication to student development, combined with her innovative teaching methods, has garnered her much admiration in academic circles.

In this insightful interview, Dr Kumari discusses the inspiration behind her latest book, ‘Economics for Entrepreneurs’, and shares invaluable advice on how economics can be applied to build successful businesses.

What inspired you to write the book Economics for Entrepreneurs? How is it different from traditional economics books?

I have been teaching economics for the last two decades, and during this time, I noticed a common thread—many of my students expressed a desire to start their own businesses. However, they were often hesitant due to the fear of failure, which is understandable given the statistic that more than 90% of startups fail in India.

In my classes, I always connected economic theories to real-world business situations. By applying economics to business scenarios, many of my students became successful entrepreneurs. Their feedback about how my teachings helped them in their ventures inspired me to write ‘Economics for Entrepreneurs’.

Unlike traditional economics books, which tend to be more theoretical, my book focuses on the practical application of economic principles in business. The goal is to help aspiring entrepreneurs understand how economics can minimize risk and inform better decision-making, making the path to success more attainable.

How is economics related to business?

Economics plays a critical role in business because it provides the framework for sound decision-making. Economics teaches individuals to evaluate opportunity costs and understand the trade-offs of their choices, allowing them to make decisions that maximize benefits and minimize losses.

In the business world, these principles are crucial. Entrepreneurs must constantly choose between various options, whether it’s resource allocation, pricing strategies, or entering a new market. Having a strong foundation in economics helps business owners make informed decisions that contribute to long-term success. The right decision at the right time can be the difference between thriving and struggling.

How can economics make a business successful?

Economics is essentially the study of human behaviour and choices, which makes it directly relevant to understanding market dynamics and consumer behaviour. Successful businesses aren’t built solely on innovation or investment—they rely on a deep understanding of how the economy works and how consumers make decisions.

For example, knowing how to interpret market signals, manage resources, and anticipate consumer needs enables entrepreneurs to respond more effectively to challenges and opportunities. Economics also helps business owners evaluate risks, plan for the future, and stay competitive in a rapidly changing market. It’s about making decisions based on data and analysis, rather than intuition alone, which leads to better business outcomes.

What advice would you give to those who want to become entrepreneurs?

My advice to aspiring entrepreneurs is to develop a mindset of resilience and curiosity. Entrepreneurship is a journey filled with ups and downs, and failure is often part of the process. But instead of viewing failure as a setback, see it as a learning opportunity. Each failure offers valuable insights that can guide your future decisions.

Additionally, it’s crucial to understand your market. Conduct thorough research to gain a clear understanding of the needs and preferences of your target audience. Entrepreneurship is not just about having a great idea; it’s about executing that idea in a way that resonates with consumers. I also encourage building a strong network of mentors and peers. Surrounding yourself with people who can offer advice and support will help you navigate the challenges of entrepreneurship.

What economic strategies would you recommend for people interested in starting their own businesses to build a strong foundation?

There are several key economic concepts that every entrepreneur should understand to build a strong foundation for their business. First is the idea of opportunity cost—the cost of the next best alternative. Understanding this concept helps entrepreneurs make more informed decisions about resource allocation.

Another important concept is the difference between accounting profit and economic profit. Many entrepreneurs focus solely on accounting profit, but understanding economic profit—which takes into account opportunity costs—provides a clearer picture of the business’s true profitability.

I would also recommend entrepreneurs familiarize themselves with the concept of the break-even point, as well as different market structures and pricing strategies. These concepts can help in setting realistic financial goals and managing risks.

Unfortunately, many young entrepreneurs dive into business without a solid understanding of these economic principles, which often leads to significant losses. This not only affects them personally but can also discourage others from entering the business world. India, with its large and growing population, will face significant challenges in creating enough jobs in the future. Encouraging entrepreneurship through economic education can help address issues like unemployment, poverty, and low standards of living.