Key Points to Consider
What is entrepreneurship?
What exactly do entrepreneurs do?
Why is studying entrepreneurship important?
What is your definition of a typical entrepreneur?
What impact does entrepreneurship have on the economy?
What is the typical path of a new business venture?
Who starts a business and becomes an entrepreneur?
What are the different types of entrepreneurs?
Who are some of the most successful entrepreneurs? Why?
What characteristics will separate the winners from the losers?
Following the global economic crisis, the role of the entrepreneur has become increasingly important in restoring the competitive position of the United States in the global marketplace. Entrepreneurs in the U.S. have created an economic sector that is worth trillions. More than 635,000 small businesses are created each year—joining the some 26.8 million that already exist. The total number of small businesses generated 60 to 80 percent of net new jobs annually over the last decade.
Entrepreneurial capitalism is key to the success for entrepreneurship. Entrepreneurial capitalism is defined as private capital, investing in private start-ups, with potential for a viable harvest. The concept of entrepreneurship has been in our modern society for thousands of years and in the history of economic study the word has been overused, and in some cases underused. So, what do entrepreneurs do? What makes an entrepreneur successful? What is governments’ role in supporting entrepreneurial capitalism? Most will agree that the answers are not simple.
Starting with practically nothing, an entrepreneur is one who organizes a new venture, manages it, and assumes the associated risk. In theory, entrepreneurship includes several subdisciplines that include small business or lifestyle entrepreneurs, high-growth potential entrepreneurs, professional or serial entrepreneurs, corporate entrepreneurs, and social entrepreneurs. An entrepreneur’s principal objectives are profit and growth, and they will employ formal strategic management practices to achieve them.
Entrepreneurship begins with an idea and opportunity analysis. Its meaning can be found in the exciting process of putting together a unique team of creative individuals in pursuit of a limited opportunity before any one else does. But being an entrepreneur also means taking on risks. No such “venture team” led by an entrepreneur can control all the necessary “critical capital resources,” such as employees, equipment, raw materials, and startup money, because pursuing such opportunity requires a bridging of the resource gap. Prudent decision making requires that the entrepreneur act in a manner that is consistent with risk reduction and growth.
The exciting lure of entrepreneurship draws a lot of people who really aren’t prepared for it into trying to be entrepreneurs. In fact, this is one reason why so many new startups fail, and, obviously, not all startups are profitable. The average annual net income for the millions of sole proprietorships in the U.S. is less than $50,000 for the first year. And about 25 percent of these ventures do not make a penny of profit during a typical year.
Faced with these odds, entrepreneurs exhibit many of the qualities of the early pioneers because they are prepared to take enormous risks. They innovate in areas where most say that it cannot be done. They work incredibly long hours over extended periods of time, and even suffer personal problems, all for the excitement of developing a product or building an enterprise. Their passion brings a concentrated focus to their projects. Most have an ability to sell themselves and their ideas, but few understand that they can’t do it all by themselves.
Entrepreneurs essentially start with nothing more than an idea and a blueprint or roadmap. Along this “entrepreneurial life cycle” they create “venture teams” that have the ability and resources to develop ideas to the point at which the startup can sustain itself and internally generate a positive cash flow. Typically, they are starting from scratch; they have no offices, no salespeople, no computers, no suppliers, and no customers. Their job at hand is to quickly gain a “critical mass” by putting all the ideas and resources together and yet somehow make a profit as quickly as possible. Professional or “serial” entrepreneurs are masters of this entrepreneurial life cycle. They know how to overcome hurdles and they know how to bounce back from roadblocks and failures.
An entrepreneur is someone who perceives a new idea and creates an organization to harvest the opportunity; the activity involved in that pursuit is called the entrepreneurial life cycle. The entrepreneurial life cycle is very much a series of fits, starts, and brainstorms. What makes an entrepreneur successful is the ability to navigate through uncharted waters and, when faced with a tough challenge, continue on. The economist Joseph Schumpeter said, “As the inventor produces ideas, the entrepreneur gets things done.”
The education of potential entrepreneurs is a difficult task, one that is complicated due to the absence of any clear career patterns. Also, there is really no such thing as a “true entrepreneurial profile” from which to learn. Entrepreneurs come from a variety of educational backgrounds. It doesn’t necessarily take an MBA graduate to start and harvest a business successfully. Entrepreneurs have a special way of thinking, reasoning, and obsessing with harvesting an opportunity. In a holistic approach, they create teams that are leadership balanced, injecting imagination, motivation, commitment, passion, teamwork, and vision.
A definition of tomorrow’s entrepreneur may be as follows: one who is involved in the process of finding, leading, and coaching a close-knit group of talented people committed to pursuing an idea, as well as providing, marshaling, and allocating the resources needed to take advantage of a limited opportunity.
Some say that entrepreneurship is like driving fast on an icy road. To survive the journey, it requires unique industry insight through domain expertise, anticipation, and “traction” with sales. More importantly, it is a matter of finding the right balance between the individual and the opportunity.
Entrepreneurs are rewarded with the freedom to do what they want, the ability to selectively control and reduce risks; they are rewarded with the potential to generate unlimited amounts of income. To accomplish this requires a good, solid plan and a far-reaching vision.