Small Business
Jun 7, 2024

What Is Entrepreneurship: Becoming an Entrepreneur 101

Entrepreneurship is a word that gets thrown around a lot these days. It’s become synonymous with wacky ideas and Shark Tank stunts. That doesn’t mean it’s a gimmick, though!

As an entrepreneur, you have the ability to transform an idea into a successful business or revolutionize existing businesses with your knowledge and skills.

Whether you’re starting a small business or scaling a startup into a massive company, entrepreneurship is key.

In this article, we’ll cover the basics of entrepreneurship and everything you need to become a skilled entrepreneur.

What Is Entrepreneurship?

Entrepreneurship is the process of spotting opportunities and creating successful businesses out of them. It takes a combination of creativity, resourcefulness, and calculated risk-taking to create something valued and needed by others.

To become an entrepreneur, you’ll need to leverage your skills, knowledge, and networks and bring new ideas to life. You might even find yourself frequently disrupting existing industries and creating new ones.

You’ll definitely need to conduct market research, secure funding, manage finances, and build a team to turn your vision or idea into a profitable business venture.

This relentless pursuit is often the key to both personal success and economic development. That’s why many universities offer degrees in entrepreneurship to teach you how to innovate, ideate, and create your business model.  

Types of Entrepreneurship

Almost all entrepreneurial ventures and successful businesses fall into one of these four categories.

Small-Business

A small-business entrepreneurship is when an aspiring entrepreneur opens a small business without turning it into a large company.

If you open a single restaurant, grocery store, or retail shop, those are all examples of small-business entrepreneurship.

As an aspiring entrepreneur, you’ll likely need to fund these small businesses by investing your own money. That means your main focus will be creating enough profit to make a living.

Small business owners frequently take out personal loans to cover upfront costs, operations, and marketing.

Very few cases of small-business entrepreneurship have outside investors, so you should be prepared for the financial risk and liability that comes with it.

The upside of operating your own business, however,  is that you don’t need to share profit or report to stakeholders. You are your own boss.

Scalable Startup

Scalable startup entrepreneurship takes a unique business idea that satisfies people’s needs and scales it into a large company. Silicon Valley companies are all examples of a scalable startup model.

Scalable startups rely on their product or service’s uniqueness and its ability to satisfy a customer’s needs. That’s the secret to getting long-term demand and ongoing business.

However, this requires substantial resources, and most scalable startup models rely on investors and massive capital to get the ball rolling.

Large-Company

In large-company entrepreneurship, a preexisting company creates a new business division. This is either because stakeholders want to branch out into a new market or develop new technology to boost their market position.

It could be that the CEO has decided to pursue a new entrepreneurial venture or an employee came to senior management with a new idea.

Unlike a small business owner or a startup entrepreneur, large-company entrepreneurs go through a lot of paperwork, planning, and bureaucratic procedures before implementing an innovative idea.

Social Entrepreneurship

Social entrepreneurship is a business model that creates a product or service to benefit society or humankind. It doesn’t focus on profit and revenue streams. Instead, social entrepreneurial companies try to help the community or save the environment.

For example, some companies provide innovative solutions for delivering food and water to poor countries.

Many large companies have a division dedicated to social entrepreneurship as part of their corporate social responsibility (CSR).

Importance of Entrepreneurship

Entrepreneurship is vital for the economy, individuals, and society as a whole. That’s because of its role in:

Job Creation

Entrepreneurs are the lifeblood of any economy because, through their work, they create new job opportunities that didn’t exist before.

They take the risk of self-employment to create a market need for human resources. As their business grows, more jobs are created and the wheel keeps turning.

Innovation

Entrepreneurs are the drivers of innovation. They constantly seek new ways to solve problems, streamline processes, and improve people’s lives.

They introduce new technologies, products, and services that shape the future and make a lasting impact on society.

Enacting Change

Many entrepreneurs don’t focus on revenue. They also strive to make a difference in the world. They tackle pressing environmental issues, try to improve people’s health, and empower and aid local and global communities.

Social entrepreneurs, for example, drive positive change and leave a long-lasting impact regardless of how profitable their startups or companies are.

Philanthropy

Many successful entrepreneurs give back to their communities and support various causes. Some of the largest charity donations come from successful entrepreneurs and non-profit startups.

Economic Growth

Entrepreneurial success in a new business venture benefits the economy as well as the business owner.

By introducing new ideas, products, and services, entrepreneurs create demand, develop new markets, and generate revenue. This keeps the economic wheel turning much faster than large corporations do.  

Encourages Competition

Entrepreneurship promotes competition, which motivates other individuals to innovate, create, and dismantle long-stand monopolies in various industries.

When new businesses enter a market, they force established companies to adapt or lose their market share. This results in better products, lower prices, and improved customer experiences.

What Makes an Entrepreneur?

Entrepreneurs are people who take risks and create their own businesses, often centered around a unique, innovative idea. They’re gifted at spotting market gaps, customers’ needs, and industry trends and using them to build a product or service.

They basically create solutions to problems people may or may not even know exist.  

Types of Entrepreneurs

There are different types of entrepreneurs, each with their own unique business model and goals. Here are the most common types:

Builder

Builder entrepreneurs focus on building a startup or business that can scale into a massive entity in the shortest amount of time.

A successful entrepreneur with a builder-style approach can easily hit the $5 million revenue mark within 2-4 years of launch. They typically continue building their company until they reach $100 million in revenue or more.

Builder entrepreneurs always opt for the best talent they can possibly find to create a solid startup foundation. They’re also picky with investors because they’re not willing to settle.

Instead, they choose the best investors possible to help them grow and scale as quickly as possible.

Builder entrepreneurs might be temperamental and often difficult to work with on a personal or business level. However, they make up for this with their hyper-focused work ethic and constant drive to create a fast-paced growth environment.

Opportunity Hunter

Entrepreneurs who have a good eye for financial opportunities usually keep an eye on certain companies, markets, or industries and go in at the right time when growth is expected.

These entrepreneurs stay on board, ride out the growth period, and as soon as the startup or business reaches the peak of success, they exit having made the greatest profit possible.

Unlike builders, opportunistic entrepreneurs are hyper-focused on making a profit and building wealth, not scaling a business. They only put in effort when there’s a high probability of residual or renewable income.

These entrepreneurs are often impulsive, making split-second decisions when a window of opportunity opens.

Innovator

Innovators are the unicorns of entrepreneurship. They are the entrepreneurs who come up with ideas that no one else has ever thought of or dared to implement. They start with a vision or an idea and work on it, often going against social norms or breaking stereotypes to bring their vision to life.  

Think of Mark Zuckerberg’s Facebook, Steve Jobs’ Apple, and Thomas Edison’s motion picture camera. All of these innovative entrepreneurs created massive businesses that revolutionized countless industries.

While other entrepreneurs are preoccupied with building a company or amassing wealth, innovators are focused on building their products and seeing their ideas come to life. They want to solve a problem or provide a service to society.

Innovative entrepreneurs are usually great at generating unique, exciting ideas. However, they often lack the business skills to run a company or carry out the day-to-day operations of a startup.

Instead, innovators bring on experienced individuals from established firms or companies to handle the business side of bringing their ideas to life.  

Specialist

Specialist entrepreneurs are individuals who have extensive knowledge of a topic and decide to build a company around it. They usually have hands-on experience acquired over several years or educational knowledge that makes them industry experts.

Specialists are incredibly analytical, and they calculate every step beforehand instead of taking risks, as most entrepreneurs do. They also rely on networking and referrals to grow their businesses since they’re usually a superstar in their respective field.

However, this analytical, minimal-risk approach often results in slow business growth, unlike with a builder or innovator approach.

Famous Entrepreneurs

Here are some entrepreneurial rockstars many aspiring entrepreneurs look to for inspiration:

  • Walt Disney: Pioneered the animation industry by creating beloved characters and stories that captured the imagination of audiences around the world. He built a multimedia entertainment empire that continues to inspire generations of entrepreneurs.
  • Mark Zuckerberg: Co-founded Facebook, the largest social media platform in the world, and disrupted traditional communication models by allowing users to easily connect with friends, family, and strangers who share similar interests.
  • Steve Jobs: Revolutionized personal computing and mobile technology by introducing Apple’s intuitive, user-friendly designs.
  • Jeff Bezos: Disrupted the retail industry by introducing e-commerce and subscription services, turning Amazon into a household name and changing the way consumers shop forever.
  • Bill Gates: Co-founded Microsoft, transforming the personal computer into an indispensable tool for work and play. He also used his wealth and influence for social entrepreneurship and philanthropy.
  • Elon Musk: Pioneered the sustainable energy market and space exploration, creating Tesla and SpaceX.

Reasons to Become an Entrepreneur

Here are a few reasons you might want to become an entrepreneur:

  • Make an impact: You can start your own business to address social issues, create innovative products, or donate profits to charity. If you want to change the world for the better, becoming an entrepreneur can fund your noble cause.
  • Be your own boss: Starting your own venture is an excellent idea if you prefer to work on your own terms and don’t want to be constrained by an employer. Entrepreneurship is one of the best ways to work for yourself.
  • Work flexible hours: Entrepreneurship lets you work your own schedule, which is especially useful for parents, people with disabilities, or students with demanding course loads.
  • Work from anywhere: You can do remote work and run your businesses from anywhere, whether it’s a coffee shop, co-working space, or home office.
  • Easily find a job: With the rising unemployment rates, entrepreneurship can help you make a living.
  • Avoid corporate environments: Many entrepreneurs feel they don’t fit in and dislike the traditional corporate culture because it usually stifles creativity and innovation. They quickly outgrow their corporate shoes in pursuit of personal and professional growth.
  • Foster ambition and curiosity: If you enjoy discovering new ideas, experimenting with approaches, and continuously improving your skills, those are the secrets to entrepreneurship.  

How to Become an Entrepreneur

Anyone can become an entrepreneur if they’re willing to put in the time and effort and follow a few tips for entrepreneurs.

Here are the four main steps to becoming an entrepreneur.

1. Work on Your Entrepreneurial Mindset

Anyone can be an entrepreneur. However, to succeed at entrepreneurship, you need to work on your entrepreneurial spirit or mindset.

That means developing a unique set of beliefs, skills, and actions for building a successful business venture.

Some of the main elements of an entrepreneurial mindset include:

  • Resilience: You should be resilient, willing to fall and get back up, and most importantly, learn quickly and improve yourself in an ever-changing environment. Almost every successful entrepreneur has failed and learned from their mistakes.
  • Persuasiveness: You’ll likely need to sell your business idea to potential investors, stakeholders, and team members. This will help you raise money, venture capital, and the necessary resources to fund and grow your startup.
  • Independence: Entrepreneurship means navigating unknown territory. There’s no blueprint for success. You need to be independent, put together a business plan, take measured risks, and gauge your own progress.
  • Curiosity: The best entrepreneurs don’t take anything at face value. You should always question everything because curiosity leads to exploration, and that’s where new, revolutionary products come from.

Here are some of the best business books for entrepreneurs who want to improve their business acumen.

2. Make Sure You’re Financially Stable

Try to be financially stable before setting out to create a business. It’s not a must, but it can make your journey to entrepreneurship much easier.

If you have enough money to cover your monthly expenses, you can take financial risks to build your startup without worrying about the bills.

You’ll focus on perfecting your product or service to suit customers’ needs instead of worrying about securing loans, finding investors, or raising money.

However, many entrepreneurs have built successful startups from scratch with close to zero money in the bank, so don’t be discouraged if you’re in a tight spot.

3. Find a Problem and Solve It

Finding a problem and solving it is the core principle of entrepreneurship.

You’ll need to conduct market research, talk to potential customers, and analyze industry trends. Then, you can validate this problem and determine whether there is a viable market for your proposed solution.

You might need to experiment with different approaches, prototype products or services, and seek feedback from potential customers. Keep refining your product until your customers feel it’s the perfect solution to their problem.

Once you have the perfect solution, create a business model that can successfully bring your product or service to market. Work on your target audience, pricing strategy, marketing tactics, and revenue streams.

4. Networking

Even the most successful entrepreneurs didn’t build their companies on their own. They networked endlessly to get resources, advice, experience, and opportunities.

That’s why you should attend conferences, reach out to other people in your industry, and get maximum exposure. The more people hear about you and your product, the better your chances of success. It also improves your chances of landing investors.  

Final Thoughts

As an entrepreneur, you’re the ship’s captain. You’ll need to chart a course, navigate rough waters, and do everything possible to keep your ship, or startup, from sinking.

However, once you reach your destination, you’ll find entrepreneurship is a rewarding and fulfilling career path worth the hustle.

So is entrepreneurship the road you need to take? Let us know in the comments if you intend on starting your own business soon, and share this with a friend looking for inspiration.