What is an Entrepreneur?
An entrepreneur is a person who starts and manages a business, typically taking on a good deal of risk — but also standing to reap great rewards in the case of success.
🤔 Understanding entrepreneurship
Entrepreneurs start and develop businesses, often taking significant financial risk — and standing to reap great financial rewards if they succeed. They usually try to find solutions to consumers’ problems and to meet the needs they see going unmet in the market. Entrepreneurs are generally passionate and confident. Entrepreneurship can be fulfilling and rewarding, but it generally requires hard work. Types of entrepreneurship include business entrepreneurship and social entrepreneurship. Entrepreneurial ecosystems are the social and economic environment in which entrepreneurship takes place. Becoming an entrepreneur requires finding a business idea, making a business plan, and getting funding. There are many different financing options available for entrepreneurs.
Bill Gates, the founder of Microsoft, is a well-known entrepreneur. There are very few people who haven’t interacted with one of his products, such as Microsoft Windows and Microsoft Office. The late Steve Jobs, co-founder of Apple, was another famous entrepreneur. Most entrepreneurs are much less well-known, of course — Millions of entrepreneurs run small businesses (and big ones) in the United States.
An entrepreneur is like a farmer planting a seed…
Just as a farmer chooses what to plant, where to plant it, and then works to make it grow, an entrepreneur comes up with an idea, gives it shape, and then works to build it into something big.
The free stock offer is available to new users only, subject to the terms and conditions at rbnhd.co/freestock. Free stock chosen randomly from the program’s inventory. Securities trading is offered through Robinhood Financial LLC.
What is an entrepreneur?
An entrepreneur is a person who starts a new business or organization, usually taking some personal financial risk to do so. Entrepreneurs are change agents. They see needs, problems, and wants as challenges they can overcome. A serial entrepreneur is an entrepreneur who creates many businesses.
Entrepreneurship refers to the process of creating, starting, and managing a new business. It’s also the capacity and willingness to launch, organize, and run a business — along with bearing the risks to make a profit. Entrepreneurship is a rare quality but is vital for economic development as it creates jobs.
Entrepreneurs need to find a marketable idea for an innovative product or service. They also need to raise money to fund the start of the operations, hire skilled people, and buy necessary resources. Once the company is running well, it may be possible to bring in an outside manager to run it or sell the company to a more established firm at a profit.
Let’s say you’re good with computers and have developed an application that you believe will make you a small fortune. Instead of working for a software company in Silicon Valley, you could become your own boss by starting your own business. You could use your savings or ask your family for money to fund your startup business. You’re not only starting a company, but you’re risking your personal wealth to establish it. You could convince friends to form an entrepreneurial team with you to bring in different talents and to spread out the risk of your new venture.
What are the characteristics of an entrepreneur?
Becoming an entrepreneur is an exciting adventure full of new experiences. But, entrepreneurship requires some tough decisions and hard work. Along with being business savvy, some skills and personality traits are useful to have on the entrepreneur’s journey.
In general, successful entrepreneurs share the following characteristics:
- A positive attitude: Entrepreneurs are usually optimistic, even when sometimes things aren't going the way they’d like them to.
- Confidence: Entrepreneurs should be confident in their ideas and believe in themselves. It’s the determination to see things through that will make things happen.
- Creativity: It’s useful to have some imagination to come up with new ideas and think differently to solve problems.
- Courage: Entrepreneurs' level of courage should be higher than their fear of failure. Failure may include financial loss, professional setbacks, and even personal embarrassment.
- Self-discipline: Entrepreneurs that do what they should do, whether they feel like it or not, have higher chances of reaching their goals.
- Integrity: Entrepreneurs should be honest in everything they do. A successful business is based on trust.
- Passion: Entrepreneurs are usually dedicated, driven, full of energy, and ready to work hard because they love what they do and have a purpose.
- Strong people skills: Having good relationships with customers, employees, suppliers, and partners is essential to success. Entrepreneurs should be willing to build networks. The more people they know, the easier it will be for them to use their power of persuasion to get things done.
- High-risk tolerance: Risk-taking is part of all entrepreneurial ventures. Entrepreneurs don’t wait for something to happen; they make it happen.
- Perseverance: Entrepreneurs are relentless. They don’t give up, no matter the obstacles. They have a strong desire to reach their goals and are determined to do so.
- Vision: Entrepreneurs have a clear view of what they want to achieve in their life and their business. They visualize the big picture and are innovators. They are motivated by their ideas and won’t stop until they get what they want.
- Organization skills: Good organization skills are essential. Entrepreneurs need to understand how to raise and manage money, as well as deal with bureaucracy. They have to set up systems to make their business tick, from IT systems to planning to record keeping. The more organized they are, the smoother things will run.
Not all entrepreneurs will have every one of these characteristics. But good entrepreneurs know their strengths and weaknesses. They bring in people from the outside to provide the other skills that they need.
What are the types of entrepreneurship?
Generally speaking, there are four main types:
- Small business entrepreneurship
- Large company entrepreneurship
- Scalable startup entrepreneurship
- Social entrepreneurship
The first type, small business entrepreneurship, is the most common form of entrepreneurship. Small business owners usually have a goal to make a living, not to make millions of dollars in profit. Grocery stores, small shops, hairdressers, and local service companies are all examples of small business entrepreneurship.
Large business entrepreneurship occurs when a large company develops new products or services. A large company may have to innovate to compete better or to answer customers’ needs.
Scalable startup entrepreneurship is less common. Entrepreneurs starting this kind of business think their vision will change the world. The risk is higher, but the potential for higher returns is greater, too. Silicon Valley attracts that kind of entrepreneurship. Facebook and Instagram are examples of scalable startup entrepreneurship.
Social entrepreneurship is a type of entrepreneurship where the main goal is not to make a profit, but to make the world a better place. Social entrepreneurs create products and services to bring social change.
What is an entrepreneurial ecosystem?
An entrepreneurial ecosystem (or entrepreneurship ecosystem) is the economic and social environment in which entrepreneurship evolves. It includes entrepreneurs, organizations supporting entrepreneurship (like banks and businesses), as well as institutions like universities and public agencies.
The entrepreneurial ecosystem has six domains: policy, finance, culture, supports, human capital, and markets. - Policy: refers to regulation and government support. - Finance: includes all financial services available to entrepreneurs. - Culture: includes social norms and success stories that inspire people to become entrepreneurs. - Support: includes infrastructure, private institutions, and professionals such as advisors, bankers, and technical experts. - Markets: refers to customers and entrepreneurial networks. - Human capital: describes the workforce’s skills and education systems.
How to become an entrepreneur?
Becoming an entrepreneur is not the same as joining a profession, like becoming a doctor or a teacher.
Still, there are steps that are common among entrepreneurs. Here are some basic steps to become an entrepreneur:
- Find your niche: Choosing an industry that you have an interest in is essential. Loving what you do will help you through hard times and gives you the motivation to go on. It can help to have skills and experience in the field in which you choose to start a business.
- Decide if you should get further education: You don’t need a degree to become an entrepreneur, but it could be helpful to have one in specific business areas. If you want to start a tech company, having a degree in computer programming and/or business will be valuable.
- Pick a profitable business idea: Ask people what annoys them. Look for problems that you would be able to solve.
- Confirm your startup idea: Doing market research is a good idea. Before you go all in, you should find out if other people will want your product. You could interview potential customers and ask them what they like or don’t like about your product or idea.
- Build a strong team: You’ll need a reliable team to make your business successful. Finding a co-founder could help you get funding. A partner could also give you emotional support and bring in different skills and connections. Lawyers, accountants, and advisors are professionals that can help you run your business.
- Create a business plan: A business plan outlines what you want to do and how you plan to do it. It will help you to communicate your vision and business model to other people. A business plan can help you get funding from bankers and potential investors, as it shows how your concept can be profitable.
- Seek funding: You generally have to spend money to make money. If you don’t have all the money required to start your business, you’ll need to get financing.
How do entrepreneurs get financing?
Many financing options are available for entrepreneurs. Here are the main ones:
- Personal investment: Entrepreneurs can use their own money to start their business.
- Friends and family: Family and friends can help entrepreneurs by giving or lending them money.
- Angel investors: Angles are generally wealthy individuals who invest directly in small firms. They typically offer entrepreneurs their experience and knowledge to help them succeed.
- Venture capital: Venture capitalists invest in the most promising startups. They often invest in the high-growth technology sector. They finance the early stages of development. Venture capitalists typically invest more than angels.
- Business loans: Entrepreneurs will need a solid business plan for this. Some government programs help entrepreneurs to get loans from financial institutions. Some organizations also specialize in lending to new ventures.
- Crowdfunding: Crowdfunding brings entrepreneurs and investors together through social media and websites such as Kickstarter.
What are some questions to ask yourself before deciding to become an entrepreneur?
Being an entrepreneur isn’t for everyone. If you are an aspiring entrepreneur, there are some crucial questions you should ask yourself before diving in:
- Why do I want to start this business? If you want to become a business owner just because you’re tired of your job and don’t know what else to do, that might not be a good reason. Take time to think about what you want in your life.
- Am I willing to quit my day job? At some point, you’ll need to quit your job to devote yourself fully to your new business venture. If you’re not ready to give up the financial security that comes with a full-time job, you might not be ready to become an entrepreneur.
- How am I going to finance my business? You think you have an awesome idea that will help a lot of people. That’s great! But you’ll need money to finance your dream.
- Do I have the skills to become an entrepreneur? Being an entrepreneur requires perseverance and hard work. If you feel like you don’t have the skills, you should try to find people that have those skills to help you.
- Do I know who will be my target customers and market? Your idea might be great, but if nobody wants your product, then there’s no point in selling it. So, before starting your business, you should do some research to find what could be your potential customers and markets.
- Do I have a plan? To help you set your objectives, writing a business plan will be useful. By knowing the direction where you want your company to go, it will be easier to take the required steps.
You May Also Like
Current liabilities are debts that a company has to pay back within one year — they are often compared to current assets to determine a company’s liquidity.
A statement of retained earnings is part of a company’s financial statement, which explains any change in retained earnings during an accounting period.
When you’re checking out a business, the net profit margin is key — It’s the calculation used to determine the percentage of profit a company earns out of its total overall revenue.
A reverse mortgage allows a senior homeowner to essentially borrow against the equity in their home, getting paid in a lump sum, fixed monthly payment, or line of credit.
An itemized deduction is an expense that you can claim on your taxes to reduce your taxable income based on a qualified purchase or expense.