The definition of entrepreneur, is it not about success?
People often ask us questions about the term entrepreneur, the entrepreneur definition, and what defines successful entrepreneurship.
Understandably, people have these questions because entrepreneurship research is ambiguous on this point. There are significant differences between a small business owner, a true entrepreneur, a founder, a self-employed person, or a venture capitalist, which is closely related to entrepreneurship.
Therefore, in this FAQ, you will find answers to the following 10 most asked questions that shed a better light on the word entrepreneur.
The word entrepreneur stems from the economist Schumpeter back in early 1900. Back then, he gave real meaning to the term entrepreneur. It is a risk taker who constantly procreates innovation by combining all necessary means of production to realize his business idea. In other words, creative destruction implies a successful adaptation of innovation that replaces old technologies. So, besides that, an entrepreneur is the owner of a business; he demonstrates entrepreneurial activity and takes calculated risks. So, it has much more to do with the entrepreneurial mindset than owning a business.
“An entrepreneur is an enterprising business owner”
Our entrepreneurship definition has a high overlap with the definition of an entrepreneur. It is a continuing process of spotting an opportunity, exploiting it, and creating value (more than economic growth alone, especially in social entrepreneurship) for yourself and others. To propel this process, you need the building blocks of business, like an idea, an opportunity, passion, people, profit, organization, marketing & sales, and finance.
Therefore, it is irrelevant if you are an aspiring entrepreneur with a new business or CEO of your own business but if you have an entrepreneurial personality. And that has much more to do with your entrepreneurial qualities, style of thinking, and behavior than having a registered company.
Budding entrepreneurs see multiple business opportunities for a product or service to bring to the market. Furthermore, entrepreneurs like to grow independently as a venture or enterprise. In other words, they love risk-taking and often begin more than one enterprise at the same time or sequentially, which is also called a serial entrepreneur. See also below for more different types of entrepreneurs.
Non-entrepreneurs don’t have an entrepreneurial mindset. Instead, they choose the safety of a steady income above the risk of a business.
The entrepreneurial spirit consists of approximately 13 entrepreneurship competencies. The definition of competence means being able to do something very well, an entrepreneurial skill. These competencies are in random order:
– performance orientation
– social orientation
– personal effectiveness
– market orientation
– creativity and innovation
– financial management
The owner of a small business organizes, manages, and assumes risks. Whether he performs economic activity only to earn a salary or dreams about becoming the biggest company in the world is irrelevant to defining a small business owner. So, the owner of a business is someone who works in a sector on his account and assumes risks.
Strictly speaking, the business owner is someone who has a business. That’s the bottom line. Yet, this says nothing about how entrepreneurial he or she is or about their entrepreneurial success. Instead, you could classify him or her as enterprising; would he have invented a new product or service and tried to conquer the world with it? Even if success never comes.
“A business owner runs a business on his own account and at his own risk”
Any person who mainly provides on his own income, you could call an independent firm owner or solopreneur. He aims to provide his own salary.
However, make no mistake. Some freelancers are doing very well and make money but do not have or want a big company. So, there is nothing wrong with that.
Fortunately, if you don’t want to grow, then you should not and can not be forced to grow. That is the freedom of entrepreneurship.
A businessman or business owner is, by definition, not entrepreneurial. He or she is rather the craftsman who is unwilling or able to work as an employee.
On the other hand, for the owner of an entrepreneurial venture, doing business and being entrepreneurial is a lifestyle. Precisely in being enterprising lies his strength.
Good news for everyone who wants to run a business: anyone can become more entrepreneurial through coaching and personal development. Learn more about entrepreneurial development.
There are many different types of entrepreneurs: solo, creative, technical, hybrid, team, serial entrepreneur or social entrepreneur, and so on.
Can you be entrepreneurial without having a business? Yes, you can. People are working at a large corporation and are very enterprising. The only difference is that they don’t own a business (yet). Nonetheless, they possess and demonstrate entrepreneurial behavior. So, these types of co-workers are called intrapreneurs.
Nowadays, more and more industries have an increasing need for that intrapreneurial type of employee. Because a lot is happening in the world and the economy right now, uncertainty increases. It calls for intrapreneurship or corporate entrepreneurship.
“An intrapreneur is an enterprising employee”
There are several types of investors, like the informal investor or the venture capitalist. Both invest – in exchange for shares – to earn money with it. They take the risk and help the company grow, making it more valuable. When they sell their shares, they make a profit. However, when the business venture fails, everyone loses money. You see that happening a lot in Silicon Valley. In contrast, a bank loans money to entrepreneurs, and they have to pay that back with interest, whether they succeed or not.
The difference with a founder is that investors in the business venture don’t make daily business decisions. That is up to the founder of the enterprise. The investors do help the company with contacts from their broad network. The informal investor is mostly a retired founder who wants to help a younger startup. They give advice, but the decision is ultimately up to the founder.
When you talk about entrepreneurs, people often have a picture of a successful entrepreneur with a successful business. However, being entrepreneurial does not mean that someone is also a successful entrepreneur. You cannot compare someone who wants to grow with his company to someone who does not want to excel in entrepreneurship.
That is why every entrepreneur decides for himself what business success means to him. So, how to define business success, then? We define it by the survival of the first 5 years, the early stages of a company. By then, the business plan had been tested, and a profitable product-market fit had been established.