What Is Entrepreneurship? A Complete Definition
Oprah Winfrey, Jeff Bezos and Elon Musk are names we’ve all heard before. And while these three individuals come from different walks of life, they have one primary thing in common: they are all entrepreneurs.
But what distinguishes an entrepreneur, anyway? An entrepreneur is more than just a business owner - they help advance their industry forward with original and innovative ideas.
Entrepreneurship requires a unique set of skills including self-determination, self-motivation and perseverance. Whether you’ve conceptualized a solution to a known problem or you’ve simply decided to work for yourself, you’ll want to establish a business and create a business website to cement your online presence from the start.
In this article, we’ll give you a complete understanding of entrepreneurship to help determine if it’s the right path for you. Here’s what you need to know about what it means to be an entrepreneur.
What is entrepreneurship?
Entrepreneurship is the act of starting a business in the hope of earning a profit. However, our modern perception of entrepreneurship has evolved into recognizing its ability to solve large-scale problems and influence social change. Entrepreneurs may also become thought leaders in their fields, although this isn’t necessarily a distinguishing factor of someone in this role, but it can be a natural outcome.
Entrepreneurship also plays an important role in the economic development of our vibrant marketplace. It leads to better standards of living and generates new wealth, as well as increased employment and national income. Entrepreneurs also have the opportunity to help bridge the digital divide, the gap between those with access to internet and those without.
With technological advancements and market demand for new business ideas and innovation, the practice of entrepreneurship is growing rapidly. Today, more and more self-motivated individuals are looking to become fully independent in their professional lives and are aspiring to create their own future.
Types of entrepreneurship
There are a variety of types of entrepreneurships and it’s important to focus on the differences to gain a deeper understanding of the direction you can go. Here are four of the primary types to familiarize yourself with.
4 types of entrepreneurship
Small businesses entrepreneurship
Small business entrepreneurship is the process of starting a business knowing you will not plan to turn it into a franchise or large corporation. Just looking at the multifaceted infrastructure of this type of entrepreneurship shows us that small businesses are an extension of the entrepreneurs themselves. From the restaurateur and book seller, to the fitness instructor down your block, these are people whose passions and skills serve their customers to the fullest extent on a small scale. They may hire employees or manage remote employees, or be a one-person business.
While a small business owner may take out a loan or receive some financial backing down the line, they will be primarily bootstrapping their venture until it can eventually sustain itself. This ethos of independence distinguishes small business entrepreneurship from the rest.
Scalable startup entrepreneurship
Scalable startups set out to innovate. This type of entrepreneurship can be defined as a business model in which a person or group of individuals is guided by a unique business idea. Silicon Valley is the living embodiment of that practice.
Though they begin small, successful startups expand rapidly and generate big profits, including Google, Wix and Airbnb. These types of companies often require outside investors and more capital in order to scale and break into different global markets.
Large company entrepreneurship
Large company entrepreneurship refers to companies that have a finite life cycle. They can grow and sustain by creating new products or offering other services around their main target markets. For example, a jeans manufacturer may decide to start selling denim backpacks, hats and even sneakers, as they already have the production process in place to do so.
This type of entrepreneurship is based on creating new opportunities that help expand an existing company’s reach and stay competitive. In other words, they are different from all the other business models on this list because they do not rely on opening an entirely new venture. Rather, their motivation to reinvent themselves may come from outside pressure to evolve or technological advancements that have rendered them obsolete.
Social entrepreneurship focuses on creating products or services that benefit society. These individuals work for the betterment of the world, and keep this mission at the front of mind even while sustaining a profitable business.
There has been a recent surge of media attention on social entrepreneurship, particularly on businesses with strong environmental initiatives. Some of the best known examples include companies like Seventh Generation and Patagonia.
A great entrepreneurship quote by journalist David Bornstein states, “What business entrepreneurs are to the economy, social entrepreneurs are to social change. They are the driven, creative individuals who question the status quo, exploit new opportunities, refuse to give up, and remake the world for the better.” And the idea of social responsibility among brands continues to grow. The business climate is changing and consumers are now choosing brands not only based on the product it produces, but on its ethical standards and moral responsibilities, as well.
Why should you become an entrepreneur?
Entrepreneurship is risky, but it’s also rewarding. Not everyone has what it takes to start and run their own venture - but if you are self-motivated, creative, resourceful and undeterred, you’re ready to reap the benefits. Here just some of the advantages of pursuing this career path:
Be your own boss
When you are your own boss, you gain complete autonomy. You have the unique opportunity to call all the shots and decide how you work. Entrepreneurship also lets you pick and choose the aspects of running a business that bring you the most pleasure. Then, you can simply outsource certain tasks to others and focus on the areas of the business that matter to you most.
Have a flexible schedule
Many people are drawn to the idea of entrepreneurship because it liberates them from the confines of nine to five and two-week vacations per year. That said, remember that running a business means you’re going to work really hard and face long hours. Luckily, as an entrepreneur, you can control the workflow, manage your own time, and determine your own workplace - whether it’s at home or in an office.
Create a career aligned with your values
What makes you thrive? Your answer will help you identify what the perfect job looks like for you. From your company culture and mission statement to the types of employees you bring onboard, you can prioritize your values in everything tied to your business.
Become a problem-solver
At its core, entrepreneurship is about taking risks and working hard in the name of solving problems. As an entrepreneur, you’ll learn how to be a critical thinker and focus on coming up with unique solutions as an agent of change. Using your creativity, you’ll also be able to improve upon existing services or products and better address the public’s needs.
For example, Editor-in-Chief of Entrepreneur Jason Feifer has a flourishing side business of his own. His website, podcast, newsletter and recently published book are all dedicated to teaching fellow entrepreneurs how to be more resilient to change.
How to become an entrepreneur
Now that you know the reasons why entrepreneurship is appealing to so many, the next step is to actually learn how to become an entrepreneur. Here are 5 essential steps:
01. Identify a problem
The first step is to identify a problem you want to solve. Your ultimate goal is to work for yourself and disturb the current market with a groundbreaking idea. So, this is the time to throw all your ideas at the wall and see what sticks. Consider your previous work experience, skillset and, most importantly, what kind of business you have the grit and motivation to bring to life. After all, you’re starting a business from scratch and it’s on you to make it happen, so you’ll want to have some deep seated inspiration.
02. Do your research
The motto “knowledge is power” couldn’t be more fitting. You’ve determined a pain point and now is the time to dive in and learn all you can about the industry. Whether it’s a completely new field or a market you’ve worked in before, take advantage of the abundance of content online to educate yourself.
Research and familiarize yourself with your target market by reading books, perusing blog articles and browsing other entrepreneurs’ websites. You can even take online courses through websites like Coursera or Udemy. Consume content that gives you a fresh perspective on your idea and keeps your finger on the pulse.
You’ll also need to create a buyer persona of an ideal customer so you have a picture in your mind of who your product is for. To do this, consider who your customers are and what they want from their products. Think about what demographic you want to target, such as age and occupation, as well as a common pain point your buyers experience.
These ideas will help you with the next step, creating a solution.
03. Create a solution
Entrepreneurs are known for their fresh perspectives and ability to think outside the box. Your solution should be something that hasn’t been executed before in your given market. Consider creative and innovative approaches that will appeal to your target audience - this is what’s going to gain traction and attract potential investors. However, you don’t need to have every detail ironed out at this stage. Start with a general solution and fill in the details to see which option is the most realistic and attainable.
For example, in 1983, a man named Howard Schultz took a trip to Milan and discovered there were over 1,500 coffee shops where people could sit, work and leisure for as long as they wanted to. This coffee shop culture we see today in America did not exist yet, and Schultz knew there was a market for it. So he took the idea and established the first American coffee chain, Starbucks, which has grown into the largest coffee chain in the world. But Schultz did something else, too. Not only did the coffee giant change the way Americans interact with the idea of drinking coffee—he raised the bar and peaked the public’s interest in fine coffee, ultimately shifting the entire market.
04. Build your network
Connecting with other professionals in your field is an extremely strategic step of gaining practical knowledge of your industry. Networking options such as conferences, relevant speaking events and finding a mentor to guide you throughout your journey. In addition, one of the most valuable tools at your disposal is LinkedIn, which allows you to contact other professionals directly. While you can become a member for free, a Premium account ($29.99 - $59.99/month) provides additional features that can be tremendously useful for an entrepreneur in the early stages of their business. Some of these include InMail messaging, in which you can message individuals without prior connection, as well as advanced search filters.
05. Secure funding
You’ve got a killer idea, talked it over with friends and colleagues and come up with a practical solution. Now is the time for the most crucial and perhaps most difficult step - securing the funding to get your business off the ground.
Fortunately, you don’t necessarily need to have cash upfront or even a rich uncle to bring your dream to fruition. Once you’ve established a business, such as a sole proprietorship or limited liability company (LLC), consider applying for a loan from the bank or Small Business Administration (SBA). In addition, crowd funding sites like Kickstarter and Fundable are a great way for people from all walks of life to contribute to your new venture. You can also hold fundraising events specifically to raise money and introduce people to your idea.
And lastly, you can look for investors. Whether you’re pitching to friends and family members, angel investors or venture capitalists, you’ll need to be able to prove that your concept is developed, cohesive and worthwhile. Prepare a detailed pitch deck proposing the problem you seek to solve, the solution, your target market and your business and marketing strategies. You want potential investors to see that you’re prepared, have done your homework and have thought through every aspect of your business.
How entrepreneurs benefit economies
Entrepreneurs bring new jobs and wealth to economies through a domino effect. When a new and innovative business idea is introduced, the market begins to shift and other companies follow suit, creating competition. When a product or service becomes a need, job creation is an inevitable outcome as there is a higher demand for the product. That need requires further resources, wealth and investments, resulting in positive economic growth.
By Talia Cohen
Small Business Expert and Marketing Blogger
Small Business Expert & Writer