What is Entrepreneurship?

Entrepreneurship is the willingness to take risks and develop, organize and manage a business venture in a
competitive global marketplace that is constantly evolving. Entrepreneurs are pioneers, innovators, leaders and
inventors. They are at the forefront of technological and social movements – in their fields, in their forward thinking,
in their desire to push the envelope. They are dreamers and most importantly – doers.

Entrepreneurship has traditionally been defined as the process of designing, launching and running a
new business, which typically begins as a small business, such as a startup company, offering a product,
process or service for sale or hire, and the people who do so are called 'entrepreneurs'.

In the 2000s, the definition of "entrepreneurship" has been expanded to explain how and why some
individuals (or teams) identify opportunities, evaluate them as viable, and then decide to exploit them,
whereas others do not,[4] and, in turn, how entrepreneurs use these opportunities to develop new
products or services, launch new firms or even new industries and create wealth

What Is Entrepreneurship?

Entrepreneurship can be defined by describing what entrepreneurs do. For example: "Entrepreneurs use personal
initiative, and engage in calculated risk-taking, to create new business ventures by raising resources to apply
innovative new ideas that solve problems, meet challenges, or satisfy the needs of a clearly defined market."

But as the following definitions state, entrepreneurship is not restricted to business and profit:

"Entrepreneurship involves bringing about change to achieve some benefit. This benefit may be financial but it also
involves the satisfaction of knowing you have changed something for the better. (Entrepreneurship: Creating a
Venture by Lily Kretchman et al. Toronto: Wiley, 1991.)

"Entrepreneurship is essentially the act of creation requiring the ability to recognize an opportunity, shape a goal,
and take advantage of a situation. Entrepreneurs plan, persuade, raise resources, and give birth to new ventures."
(Entrepreneurship: The Spirit of Adventure by Richard Bodell et al. Toronto: Harcourt Brace Jovanovich, 1991.)

Who Are Entrepreneurs?

For a long time it was thought that entrepreneurs were special, that they were just born with the ability and desire to
go their own way, on their own. Over the past twenty years or so, we've discovered that entrepreneurs learn to do
what they do that they also learn, to a large extent, to be who they are. That's why we say they are made not born.

Try starting with the Quiz.

Here's a handy way to remember some facts about entrepreneurs and entrepreneurship:

E: xamine needs, wants, and problems to see how they can improve the way needs and wants are met and problems
overcome.

N: arrow the possible opportunities to one specific "best" opportunity.

T: hink of innovative ideas and narrow them to the "best" idea.

R: esearch the opportunity and idea thoroughly.

E: nlist the best sources of advice and assistance that they can find.

P: lan their ventures and look for possible problems that might arise.

R: ank the risks and the possible rewards.

E: valuate the risks and possible rewards and make their decision to act or not to act.

N: ever hang on to an idea, no matter how much they may love it, if research shows it won't work.

E: mploy the resources necessary for the venture to succeed.

U: nderstand that they will have to work long and hard to make their venture succeed.

R: ealize a sense of accomplishment from their successful ventures and learn from their failures to help them
achieve success in the future.

Characteristics of Successful Entrepreneurs

Entrepreneurs are different from each other, but successful entrepreneurs tend to share certain characteristics. Not all
of them have developed each of the following to the same degree, but they tend to have developed most of them to
some degree. Here are some common characteristics of successful entrepreneurs.

Entrepreneurs tend to:

 be passionate about achieving their goals

 have a spirit of adventure (in fact, the word "adventure" is derived from the Latin word meaning "to
venture")
 have a strong need to achieve and seek personal accomplishment
 be self-confident and self-reliant
 be goal-oriented
 be innovative, creative, and versatile
 be persistent
 be hardworking and energetic
 have a positive attitude
 be willing to take initiative
 have a strong sense of commitment

Who are entrepreneurs?

There are no specific traits that every entrepreneur shares, but many do possess a few common
characteristics. In another Business News Daily article, Jenny Ta, founder and CEO of social commerce
platform Sqeeqee, said successful entrepreneurs are typically confident and self-motivated. They are
tenacious but understand their own limitations. Instead of following the status quo, entrepreneurs have a
healthy disrespect for established rules, and often set out to do things that others may not have the
courage to. They are also willing to fail and start over again, taking the lessons they've learned to create
something new and improved.
MJ Gottlieb, co-founder of consulting firm Hustle Branding and author of "How to Ruin a Business Without
Really Trying" (Morgan James Publishing, 2014), said it takes a special kind of person to become a
successful entrepreneur.

"An entrepreneur is someone who can take any idea, whether it be a product and/or service, and have
the skill set, will and courage to take extreme risk to do whatever it takes to turn that concept into reality
and not only bring it to market, but make it a viable product and/or service that people want or need,"
Gottlieb said.

Research shows that Americans are increasingly choosing entrepreneurship. A study by Intelligent Office
revealed that nearly 65 percent of workers would rather be an entrepreneur or independent employee
than work in an office. In addition, data from the Ewing Marion Kauffman Foundation's Index of
Entrepreneurial Activity shows that in 2015, established small business density increased in the U.S.,
reaching higher than prerecession levels.
Tips for aspiring entrepreneurs

If you're ready to enter the world of entrepreneurship, here are a few important tips to keep in mind.

Learn from others' failures. Rather than admiring the small percentage of businesses that grow to become
successful, study those that end up failing. Gottlieb said this research will greatly increase your chances
of success, because most companies have made common mistakes that have led to their demise. He
said that having the humility to learn from the mistakes of others before making them yourself is the
secret to success.
Make sure this is what you want. Because entrepreneurship entails so much hard work, it is critical to
ensure you're following the right path, Amini said. "If this is something you really want, then think long-
term, and be persistent," she said. "The vast majority of great entrepreneurs failed multiple times before
they finally found the business idea that took off and brought them success."
Solve problems. Entrepreneurs should always be in search of problems to solve, and not the other way
around, said Ajay Bam, a lecturer in entrepreneurship and innovation at the University of California,
Berkeley's Haas School of Business. In other words, "they should not start with a solution looking for a
problem," he said.
Be passionate. Successful entrepreneurs are driven primarily by a need for achievement and the desire to
make a meaningful difference, Bachenheimer said. "The most important traits are passion and
persistence, but these must not be confused with arrogance and stubbornness," he said.
Get advice from those who have done it. Amini advised would-be business owners to find mentors who are
successful, as well as to read books, network with people they admire and look into great educational
programs to help them throughout the process.

What is entrepreneurship? You probably think that the answer is obvious, and that only an academic would bother to
ask this question. As a professor, I suppose I am guilty of mincing words. But like the terms “strategy” and
“business model,” the word “entrepreneurship” is elastic. For some, it refers to venture capital-backed startups and
their kin; for others, to any small business. For some, “corporate entrepreneurship” is a rallying cry; for others, an
oxymoron.

The history of the word “entrepreneurship” is fascinating and scholars have indeed parsed its meaning. I’ll spare you
the results, and focus instead on the definition we use at Harvard Business School. It was formulated by Professor
Howard Stevenson, the godfather of entrepreneurship studies at HBS. According to Stevenson, entrepreneurship is
the pursuit of opportunity beyond resources controlled.

“Pursuit” implies a singular, relentless focus. Entrepreneurs often perceive a short window of opportunity. They
need to show tangible progress to attract resources, and the mere passage of time consumes limited cash balances.
Consequently, entrepreneurs have a sense of urgency that is seldom seen in established companies, where any
opportunity is part of a portfolio and resources are more readily available.
“Opportunity” implies an offering that is novel in one or more of four ways. The opportunity may entail: 1)
pioneering a truly innovative product; 2) devising a new business model; 3) creating a better or cheaper version of
an existing product; or 4) targeting an existing product to new sets of customers. These opportunity types are not
mutually exclusive. For example, a new venture might employ a new business model for an innovative product.
Likewise, the list above is not the collectively exhaustive set of opportunities available to organizations. Many profit
improvement opportunities are not novel–and thus are not entrepreneurial–for example, raising a product’s price or,
once a firm has a scalable sales strategy, hiring more reps.

“Beyond resources controlled” implies resource constraints. At a new venture’s outset, its founders control only
their own human, social, and financial capital. Many entrepreneurs bootstrap: they keep expenditures to a bare
minimum while investing only their own time and, as necessary, their personal funds. In some cases, this is adequate
to bring a new venture to the point where it becomes self-sustaining from internally generated cash flow. With most
high-potential ventures, however, founders must mobilize more resources than they control personally: the venture
eventually will require production facilities, distribution channels, working capital, and so forth.

Because they are pursuing a novel opportunity while lacking access to required resources, entrepreneurs face
considerable risk, which comes in four main types. Demand risk relates to prospective customers’ willingness to
adopt the solution envisioned by the entrepreneur. Technology risk is high when engineering or scientific
breakthroughs are required to bring a solution to fruition. Execution riskrelates to the entrepreneur’s ability to attract
employees and partners who can implement the venture’s plans. Financing risk relates to whether external capital
will be available on reasonable terms. The entrepreneur’s task is to manage this uncertainty, while recognizing that
certain risks cannot be influenced by their actions.

Entrepreneurs face a Catch-22. On the one hand, it can be difficult to reduce risk without resources. For example,
outside capital may be required to develop and market a product and thereby demonstrate that technical and market
risks are limited. On the other hand, it can be difficult to persuade resource owners to commit to a venture when risk
is still high. Entrepreneurs employ four tactics in coping with this Catch-22:

 Lean experimentation allows them to resolve risks quickly and with limited resource expenditure, by
relying on a “minimum viable product,” that is, the smallest possible set of activities required to rigorously
test a business model hypothesis.
 Staged investing allows entrepreneurs to address risks sequentially, expending only the resources required
to meet a given milestone–before committing the resources needed to achieve the next milestone.
 Partnering allows entrepreneurs to leverage another organization’s resources and thereby shifts risks to
parties better able/more willing to bear them. In a variation of this tactic, entrepreneurs rent resources to
keep costs variable and to avoid the big fixed outlays associated with resource ownership.
 “Storytelling” by entrepreneurs–conjuring a vision of a better world that could be brought about by their
venture–can encourage resource owners to downplay risks and in the process commit more resources than
they would if they had not been inspired. Steve Jobs, for example, was famous for his mesmerizing “reality
distortion field,” through which he impelled employees, partners, and investors to go to extraordinary
lengths to help fulfill his dreams.

So, does Stevenson’s definition of entrepreneurship matter, in practical terms? I’d argue that it does, for two reasons.
First, it sees entrepreneurship as a distinctive approach to managing rather than a specific stage in an organization’s
life cycle (i.e., startup), a specific role for an individual (i.e., founder), or a constellation of personality attributes
(e.g., predisposition for risk taking; preference for independence). In this view, entrepreneurs can be found in many
different types of organizations, including large corporations. That should be encouraging if you believe that
entrepreneurship is an engine of global economic development and a force for positive change in society.

Second, the definition provides a guidepost for entrepreneurial action; it points to tactics entrepreneurs can take to
manage risk and mobilize resources. One of my former students put it well when asked to give advice to aspiring
entrepreneurs: “For me, ‘pursuing opportunity beyond resources controlled’ sums up perfectly what I do day-to-day.
You need to be inventive, creative, opportunistic, and persuasive, because you rarely have enough resources.
Embracing this definition helps me in my role.”