What is entrepreneurship?

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Is this a journey, and, if so, what is the destination? Where are we going, how will we get there, and how will we know we’ve arrived?!

Dr. Pauline Assenza, Associate Professor of Management at Western Connecticut State University, not only teaches small business entrepreneurship, but also is an entrepreneur herself. Her small online business The August Collection provides an outlet for folk artists who live in Ukraine and other parts of Eastern Europe.

StartupWeekendAssenza
Dr. Assenza believes everyone has good ideas, and can use those ideas to solve problems, perhaps starting a new business along the way. She answers the following question:

WHAT DOES IT MEAN TO BE AN ENTREPRENEUR?

The word “entrepreneur” comes from the French terms “entre”, which means between, and “prendre” which means to take. “Entreprendre” would mean to “undertake”, a “between-taker”, so “entrepreneur” derives from this idea to do something between us that’s a significant undertaking! Therefore, the idea that it’s risky is inherent in the definition.

According to Wikipedia, the term was used by economist Jean-Baptiste Say in 1803 to mean the following: “An entrepreneur is an economic agent who unites all means of production- land of one, the labour of another and the capital of yet another and thus produces a product. By selling the product in the market he pays rent of land, wages to labour, interest on capital and what remains is his profit. He shifts economic resources out of an area of lower and into an area of higher productivity and greater yield.”[1]

One textbook author says: “Entrepreneurship is the process of identifying opportunities for which marketable needs exist and assuming the risk of creating an organization to satisfy them. An entrepreneur needs the vision to spot opportunities and the ability to capitalize on them.”[2]

Key elements of this definition, in addition to risk, include the concepts of creation, innovation (spotting opportunities), business management (creating an organization), and an intention to grow or profit (capitalize) from this enterprise.

Another definition of an entrepreneur is, “a person who relentlessly focuses on an opportunity, either in a new or existing enterprise, to create value, while assuming both the risk and reward for his or her effort.”[3]

Many characterize entrepreneurship as a journey – “creating a path that is uniquely suited to you as an individual, and building a vehicle for driving down that path.”[4] For those who might say, “I’m not sure I have what it takes to be an entrepreneur”, Peter Drucker has this advice: “The entrepreneur always searches for change, responds to it, and exploits it as an opportunity… Anyone who can face up to decision making can learn to be an entrepreneur and to behave entrepreneurially.”[5]

Tom Ehrenfeld says, “acting entrepreneurially means creating value where it didn’t exist before.”[6] It’s ultimately about problem-solving, benefiting someone or something in a way that makes it better. So think about what you can do to add value – to your new idea, to your employer, to your relationships, to your community, to your life – and then take the first step!

CHARACTERISTICS OF ENTREPRENEURS

Given these definitions, entrepreneurs are risk-takers, and the risks can be financial, material AND psychological. In addition, entrepreneurs need to be able to recognize opportunities when they present themselves, and be willing to “capitalize” on them.[7]

Personal characteristics that accompany entrepreneurship also include a high need for achievement, tolerance for ambiguity, internal locus of control, clear awareness of personal values, confidence, the ability to articulate an inspiring vision, and engender a sense of trust in others that leads to commitment.

And the traits of successful entrepreneurs include passion (they have to love what they do), trustworthiness, determination, and a deep knowledge of their subject area that allows them to connect with their customers.

SO the entrepreneur starts the business, but does he or she continue to run it once it’s operating day-to-day? Perhaps not…

A small business manager needs another set of characteristics and skills: perseverance, patience, and the critical thinking skills to handle the (perhaps rather boring!?) day-to-day challenges of planning, organizing, leading, and controlling a business, thereby sustaining a competitive advantage.

There’s some research that suggests there are different types of entrepreneurs – some are “home run hitters” who come up with a great idea (the home run) and decide to make this idea his or her life’s work; and some are “on-base hitters” who like to keep swinging at pitches just to get on base with a number of startups. These are the folks who prefer lots of small, regular successes, and would probably be bored or even intimidated by the day-to day complexities of ongoing business operations.

The best on-base hitters are able to turn a string of small successes into major businesses. We sometimes call these people “serial entrepreneurs” – think Richard Branson and Elon Musk.

The home run hitters, on the other hand, prefer the stability of the one business, and might be unable to cope with the uncertainty and ambiguity of having to “go to bat” over and over. This doesn’t mean these people aren’t entrepreneurial, just that they have a singular passion and the determination to see it through to success – think Howard Schultz and Starbucks.

This idea comes from an article in Inc. Magazine, by John Warrillow, “What Kind of Entrepreneur Are You?”[8] According to the author, “the on-base hitter can focus on starting and exiting lots of smaller businesses in a career and not harbor second thoughts when heading for the exit. In contrast, the slugger would be best served by making a single business their life’s work.” Which are you??

And one other thing… do you have any idea why people want to start their own businesses? Guess what – the profit motive is NOT the major reason! Here’s some data to back that up.[9] Less than 20 percent of small business owners express a desire to earn lots of money. Most people do not start businesses to get rich, but rather to earn an honest living:

ReasonsForGoingIntoBiz

Becoming an entrepreneur is not for everyone. In business, there are no guarantees. There is simply no way to eliminate all of the risks. It takes a special person with a strong commitment and specific skills to be successful as an entrepreneur. Are you ready to start your own business?

Before you begin, you might want to learn something about the overall process of business development, and the environmental, organizational, and personal characteristics that are necessary at each stage of the “entrepreneurial arc”.

This “arc” of business development starts with the idea and the triggering event that prompts you to begin feasibility testing – will this new idea find a market, and is that market profitable? It continues through implementation, growth, and the maturity of your business, and ends with a “harvest” event – reminding you that with every idea comes the need for an exit strategy!

STAGES OF BUSINESS DEVELOPMENT

EntSmBizProcessModel

The purpose of this model is to illustrate the stages of business development and highlight the processes and factors that are significant. In each stage of the start-up process, different personal characteristics will be more important as the business takes on new attributes.[10]

The business also changes as it matures. In the growth stage, attention should be placed on team building, setting strategies, and creating the structure and culture of the business.

In the maturity stage, more attention can be directed to specific functions of the business. Here’s where the people within the business specialize in and concentrate on what they do best, be it marketing, finance, or managing human resources.

One final note: You are more likely to be successful in your business venture if it is something that you feel deeply about, so PASSION is important!

In addition, it’s hard to do this alone, so you need OTHERS to help along the way.

Realize that if you can convince people that your idea can truly add value to benefit a specific community, you’re well on your way to getting support from that community, and this support network can make a real difference to your ultimate success.

Final words? Always be open to opportunities. NEVER stop looking for things you can make better!

[1] See http://en.wikipedia.org/wiki/Entrepreneur

[2] Hatten, Timothy S. 2012. Small Business Management: Entrepreneurship and Beyond, 5th edition, South-Western, Cengage Learning.

[3] Longenecker, J.G., Petty, J.W., Palich, L.E., Hoy, F. 2012. Small Business Management: Launching & Growing Entrepreneurial Ventures, 16th edition, South-Western, Cengage Learning.

[4] Jim Collins, Foreword to The Startup Garden: How Growing a Business Grows You, Tom Ehrenfeld, 2002, McGraw-Hill..

[5] Peter F. Drucker. 1985. Innovation and Entrepreneurship, Harper & Row, p. 26-28.

[6] Tom Ehrenfeld, 2002. The Startup Garden: How Growing a Business Grows You, McGraw-Hill, p. xxii.

[7] The following is adapted from Hatten, Timothy S. 2012. Small Business Management: Entrepreneurship and Beyond, 5th edition, South-Western, Cengage Learning, plus other sources, as indicated.

[8] http://www.inc.com/articles/2010/06/what-kind-of-entrepreneur-are-you.html

[9]Arnold C. Cooper et al., “New Business in America,” NFIB Foundation/ VISA Business Card Primer, as shown in William J. Dennis, Jr.,A Small Business Primer, Washington, DC: National Federation of Independent Business, 1993, p. 31. The accompanying graphic is from Hatten, 2012.

[10] The graphic and conception is from Hatten, Timothy S. 2012. Small Business Management: Entrepreneurship and Beyond, 5th edition, South-Western, Cengage Learning.

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