What is entrepreneurship?Posted on: April 14, 2022
When we hear the word ‘entrepreneur’ who do we think of? We may think of Oprah Winfrey, Steve Jobs, Marcia Kilgore, Elon Musk, Steven Bartlett, or Arianna Huffington depending on our interests. But what are the characteristics that all these people share? Why does entrepreneurship come more easily to some and not others? Is there a way to cultivate entrepreneurial spirit?
The definition of entrepreneurship according to Oxford Languages is “the activity of setting up a business or businesses, taking on financial risks in the hope of profit.” However, Howard Stevenson of Harvard Business School, has defined entrepreneurship as the “pursuit of opportunity beyond resources controlled”. He considers it as something more akin to a managerial approach rather than a specific moment in time, such as a business’s creation, or a specific person, like the founder of a business.
The evolution of entrepreneurship
Entrepreneurs tend to be visionaries who have a unique view on the world. They tend – to quote the famous Apple tagline – to “Think different”. Although entrepreneurs can be fully dedicated to their vision, this single-minded view can sometimes mean that they become blinkered to the opinions and advice of others. We mostly hear about the good decisions that entrepreneurs make, but some of their decisions can be terrible. For serial entrepreneurs, the good ideas usually outweigh the bad ideas in the long run, because they have often learnt from previous failures. In fact, the maxim “Fail better” is frequently claimed to be the favourite saying of Silicon Valley start-ups.
Entrepreneurial ventures can be in any sector and usually grow out of a thought that begins with, “Wouldn’t it be great if…?” These ideas can seem outlandish when they are first conceived but if the idea is well executed, they can quickly become part of the norm, such as self-driving cars. Innovative products can revolutionise and disrupt, but there’s only so much money one person can make, and established entrepreneurs usually spend more and more of their time on philanthropy. After co-founding Microsoft for example, Bill Gates now dedicates much of his time to the Bill & Melinda Gates Foundation, a non-profit that seeks to reduce extreme poverty and improve healthcare across the world.
There are many types of entrepreneurship, and although Joseph Schumpeter believed that the entrepreneur was the cornerstone of capitalism, social entrepreneurship is increasingly popular. The structure of capitalism means that there is usually someone, somewhere, who is doing more work and being paid less in order for a business to remain competitive. This model is not sustainable in a world that is becoming rapidly more connected, even if entrepreneurship promotes economic growth. However, Schumpeter also believed that entrepreneurs were the keepers of “creative destruction”; constantly innovating to change the status quo and improve standards of living for all.
What are the characteristics of entrepreneurship?
Entrepreneurship involves having a business idea that you are prepared to put time and money into in order to see it realised. The ecosystem of entrepreneurship usually entails crowdfunding and the raising of venture capital through investors as most people do not have their own capital when starting even a small business. Partnerships are also an option for entrepreneurs and can work very well if the characteristics of each partner complements the other.
Many articles across the internet list the characteristics that entrepreneurs share, but this painting-by-numbers approach never seems to quite encapsulate the essence of these individuals. Yes, it helps to love what you do and to be competitive. Being a strong networker with an eye for gaps in the market can be advantageous too. But passion, drive, and open-mindedness are traits that many people have. Fearlessness around failure and risk-taking are less common, but not exclusive to entrepreneurs.
It would appear that the cocktail of characteristics required also relies in part on timing and who you know. And of course, practical steps such as starting small and having a business plan contribute to successful entrepreneurship. Entrepreneurs often make a lot of sacrifices as well. Richard Branson is quoted as saying in a 2012 interview with Entrepreneur magazine, “Building a business from scratch is 24 hours, 7 days a week, divorces, it’s difficult to hold your family life together, it’s bloody hard work and only one word really matters – and that’s surviving.”
The reality of entrepreneurship
In 2012, Shikhar Ghosh, who was then a senior lecturer at Harvard Business School, published research which indicated that three quarters of venture capital-backed firms never recover their investment. More recently, at the end of 2020, Startup Genome reported that one quarter of VC-funded start-up businesses experienced revenue drops from 20% to 60%.
The reality of starting a business is a little harsher than the dream-incubation period that many aspiring entrepreneurs might imagine when they think about starting a new business. In fact, many ideas do not make it past the business incubators that offer support and resources to small businesses in the early stages. Running your own business and being your own boss is more than a full-time job. Only those with true grit and determination reach the other side of realising their business venture successfully.
What is worth noting is that entrepreneurs are not always brilliant at managing a business – business school is not a prerequisite of becoming an entrepreneur. In fact, there’s a whole other vocation in entrepreneurial management, offering entrepreneurs guidance and structure for their new venture or new product. Some entrepreneurs may be adept at this and have sound knowledge of business models, however, when a business starts to grow, areas which will need more stakeholders’ input include financial management, strategic management, and human resources. As a successful business gains shareholders, it can also be advisable to keep risk-taking founders away from social media.
Are entrepreneurs born or made?
The question of whether entrepreneurs are born or made is also a popular topic of many articles and blogs. It seems that the question is a divisive one. A number of entrepreneurs believe that you’re born with the ability while some think that it can be learnt, while others are of the opinion that it’s a mixture of both.
A person’s propensity for risk-taking seems to be a defining factor and one which we are mainly taught to avoid from early on in our education. So it takes a strong character to override this teaching and go with their instinct. Those who are brought up by risk-takers that lead by example may be better equipped to do this but failing in itself can be a good teacher. Many entrepreneurs did not get to where they are on their own either and mentoring is often credited as a crucial part of succeeding.
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