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When you hear the word entrepreneur, many things may come to mind. Some people immediately think of a 30-something billionaire with jeans and a hoodie rolling out the newest app or other tech innovation we are all going to be paying for over the next decade.
Others may hear the word and daydream about leaving their salaried, dull 9-to-5 jobs behind forever and starting an exciting company of their own. Still, other small business owners who are struggling with payroll and creditors to keep the light on may wonder what all the fuss over entrepreneurialism is all about.
Entrepreneurs are clearly a key part of the American business landscape and play a vital role in our economic growth, as well as our imaginations.
Let’s take a closer look at entrepreneurship and entrepreneurialism, so we have a better understanding of the concept.
What is the Definition of Entrepreneurship?
What does entrepreneurship mean? Harvard Business School professor Howard Stevenson, long considered a thought leader on the subject of entrepreneurship, defined the practice as “the pursuit of opportunities beyond resources controlled.”
Stevenson’s definition noted the austere starting points of many entrepreneurs when they begin developing their own business venture; entrepreneurs may have ideas and energy, but in most cases, they don’t have the resources (i.e., funds and cash flow) required to get a business started and sustain it.
In most cases, the entrepreneurs involved will have to figure out how to secure the resources they need to make the business venture happen.
Entrepreneurship is also commonly seen as the process of starting a business to make a profit.
It involves recognizing a gap in a market for either a product or a service and developing a viable business to create products or services to fill that gap.
Entrepreneurship often makes optimal use of labor, land, capital, and natural resources to make a profit, too. It is a method of combining austere resources to produce money and profits in the given market as well.
Since many entrepreneurs begin a business with almost nothing, save for the seed money they are able to raise to get their business up and running, the capacity to optimize resources to get the most of them is an important but often overlooked skill within entrepreneurship.
What Is an Entrepreneur?
An Entrepreneur is someone who identifies a gap in a given market for products or services, finds or creates something to meet that gap, then develops a viable business in order to implement his or her idea and make a profit.
Because of the requirement to both identify the gap and then deliver something to close it, entrepreneurs are often associated with creativity or innovation.
Since entrepreneurs often find viable ways to address unmet needs and profit from it, they are seen as critical engines of economic growth. In fact, the Small Business Administration indicates that entrepreneurs account for two-thirds of net new jobs and account for a whopping 44 percent of U.S. economic activity as well.
When talking about entrepreneurs, it is also important to discuss a little bit about exactly who they are. As stated earlier, people like a young Steve Jobs, Bill Gates, Elon Musk, and Mark Zuckerberg typically come to mind whenever people think about entrepreneurs.
However, these young tech leaders tend to be the exception, not the rule, when it comes to founding small successful businesses with high growth potential.
Most entrepreneurs are considerably older than the tech geniuses from Silicon Valley that we are all familiar with. In fact, a recent study indicated that the average age of a successful startup founder is 45, and people 29 and younger actually make up the leadership of less than ten percent of all high growth startups.
So, if you’re in your 40s and are wondering whether or not you have what it takes to build the next Tesla or Facebook, take heart!
The Challenges of Being an Entrepreneur
Entrepreneurs face many challenges when developing and managing new business ventures. One of the biggest problems entrepreneurs must grapple with is financing their venture during the startup phase, and then ensuring it has the cash flow to sustain itself as it begins operations.
Entrepreneurs must first be able to prove to external organizations, whether they are banks or investors, that their business concept is a viable one, and then determine the best method of obtaining cash to put their ideas in motion.
Deciding whether to use debt or equity financing, or a mix of both is one of the first and most daunting tasks entrepreneurs face when developing their business, and it can often have an impact on the venture’s entire trajectory.
Another challenge that entrepreneurs often face is a lack of expertise. Many new business owners may have a great idea or understanding of a project or service that can fill a critical gap. However, they often lack the business acumen – the financing, marketing, and legal skills – to help bring their ideas to fruition successfully.
If you do not have skills or experience in the various areas of how to build, promote, and sell your product, or manage the finances of a business that does so, it can be difficult to get your ideas out of the concept stage.
Moreover, entrepreneurs who enter a market lacking critical business skills will be less able to adapt and deal with established competitors, who are likely going to be aggressive in protecting their own market share.
Resources for Entrepreneurs
Fortunately, there are a plethora of resources out there that can help entrepreneurs be successful. If you’re planning to start your own business, one of the first places you should turn to is the Small Business Administration.
Grants.Gov is another Federal website you should bookmark on your computer as well; the Federal government provides billions of dollars in aid to various entities each year, much of it to small businesses; if you are eligible for a certain type of grant, you may be able to get the financing you need to get off the ground for free, with very few strings attached.
Finally, your local chamber of commerce may be able to provide you the insights and advice you need to launch a business in your community as well.
Another resource that entrepreneurs could consider are business incubators and accelerators. These entities exist to help entrepreneurs that are perceived to have great ideas get them developed, launched and successful.
They often provide critical business training and guidance to the entrepreneurs, link them up with potential financing sources, and help them get the resources in place to make their businesses viable.
Many incubators run sessions of entrepreneur cohorts, too, where entrepreneurs attempting to launch various different businesses are grouped together and get to share their own ideas amongst each other.
There are some very well-known incubators out there, such as Y Combinator and 500 Startups; however, there are hundreds of similar organizations based locally as well, so definitely check to see if there is one with a good track record in your own community.
Why You Should Become an Entrepreneur – the Benefits
Why would anyone want to become an entrepreneur anyway? Actually, there are many reasons why entrepreneurialism could be a great fit for you.
For starters, if you want to be your own boss, there is no better way to do it than to start your own business. Additionally, there is tremendous satisfaction in making a living pursuing an idea you believe in, too.
If you are passionate about your ideas and the company you found to pursue them, there is no limit to how much money you could make, as well, yet another benefit of working for yourself.
Finally, if the idea of spending the rest of your life in a predictable, 9-to-5 salaried job makes you break out in a cold sweat, pursuing your dreams as an entrepreneur may be the only real choice for you!
Why You Shouldn’t Become An Entrepreneur – the Drawbacks
While there are tremendous opportunities in developing your own business, being an entrepreneur definitely is not everyone’s cup of tea.
There is tremendous uncertainty when it comes to entrepreneurship; you can never be certain whether your business will be successful, or when, if ever, it will earn a profit; you often don’t even know for sure if you’ll be able to obtain the funding to get your business off the ground in the first place.
Additionally, you may be able to set your own hours as an entrepreneur, but they are likely going to be long hours; many successful entrepreneurs report putting in 75 to 90 hours a week to get their businesses off the ground and profitable and eschew holiday and weekend breaks to work and keep their businesses running.
For many people, the idea of working long hours in a venture that may never make a profit is just not a good fit for their personalities, or where they are in their lives at the given moment.
Entrepreneurship – A Critical Engine for the Global Economy
The global economy is heavily reliant on the vision and hard work of entrepreneurs, who constantly look for gaps in the economy and then develop successful, profitable businesses to close them.
Being an entrepreneur is not only a critical component of economic growth, however; it is also a rewarding endeavor where you can control your own destiny and work at something that you believe in and love.
While the entrepreneur lifestyle isn’t for everyone, if you have a big imagination and can handle a little bit of risk and uncertainty, being your own boss and building a successful business can be one of the most rewarding things you’ll ever do.
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