What does it take to be an entrepreneur?Posted on: August 30, 2022
Launching a business means taking a risk and trying to avoid joining the number who contribute to the high failure rate among new start-ups. An estimated 20% of businesses fail in their first year, and around 60% will go bust within their first three years.
Whether just starting out in a new business or growing and developing an existing one, it can help to understand the various types of entrepreneurship – and the various struggles entrepreneurs encounter – in order to give a business plan or venture the best odds of succeeding.
An entrepreneurial mindset
Picture an entrepreneur, and bring to mind some of the characteristics they possess. It’s likely someone with passion and drive, a healthy dose of resilience and perseverance, an individual with creativity and vision. However, aside from drive and well-developed business skills, there’s no specific personality profile or demographic to a successful entrepreneur – they come from all walks of life.
Business owners are not necessarily entrepreneurs. The Oxford Dictionary defines entrepreneurs as individuals who ‘organise and operate a business or businesses, taking on greater-than-normal financial risks to do so’, and business owners as individuals who ‘own a business entity in an attempt to profit from the successful operation of the company.’ As highlighted, entrepreneurs are inherent risk-takers with the self-confidence to have “skin in the game” in a new venture – evidenced by the fact that an estimated 74% of British entrepreneurs use personal finances to keep their businesses afloat.
In addition to risk-taking, there are various entrepreneurial skills which can set individuals in good stead, including:
- a growth mindset. Skills aren’t fixed: they are the product of practise, effort and persistence. A growth mindset enables entrepreneurs to engage in personal development alongside business development, adapting to meet evolving demands and fulfilling business requirements as they present themselves. The entrepreneurial journey demands patience, dedication, flexibility and drive – and learning new skills and finding solutions to overcome barriers is integral to this.
- basic financial ability. For anyone running a business, basic finance skills – such as budgeting, monitoring cash flow, and financial statement analysis – are critical. For entrepreneurs, there are the additional requirements of sourcing venture capital, fundraising and speaking to investors, alongside the day-to-day finances associated with running business operations. Staying within budget and allocating resources effectively can mean the difference between start-up success and failure. Entrepreneurs who track their financial performance, can make confident future projections, and accurately manage expenses will be more attractive to banks and other lenders and investors.
- the capacity to network. A network is one of the greatest assets an entrepreneur has. Individuals within a network can serve many purposes, including helping to: guide the business journey and offer mentorship; connect and collaborate with other professionals; inform decision-making; raise capital; build future teams; upskill and share expertise, and much more.
- confident presenting and communication skills. An inability to convey ideas, inspire others and build rapport is a huge barrier to successful entrepreneurship. Whether winning over new clients, pitching to investors, motivating team members or networking at industry events, an entrepreneur is a venture’s greatest advocate. The way in which they present both themselves and the company is key.
The good news? Each of these fundamental skills – together with many others – can be honed and practised. Entrepreneurship Development Programmes (EDPs) offer valuable ways to focus personal development and start a business venture off with the right tools and abilities. Entrepreneurial development is not a linear process – in reality, it is more likely to be a steep, but often incredibly rewarding, learning experience.
The role of an entrepreneur
Indeed list some of the key roles of an entrepreneur as:
- initiating and leading business activities
- allocating employees’ duties
- forecasting business changes
- creating jobs and stimulating economic growth
- identifying business opportunities
- creating and sharing wealth
- improving the standard of living
- taking up and reducing business risk
- building strategic partnerships
- digitalising business operations and embracing new technologies.
While entrepreneurship may focus on launching and scaling one’s own business, there is also the related but distinct intrapreneurship: essentially entrepreneurship, but within an existing organisation. As such, entrepreneurial behaviour does not have to exist solely within the realm of starting a new venture. The same skills, approaches, ambitions and methods can be employed to nurture, scale and develop other businesses, whether the aim is to break into a new market, launch new products or services, transform an existing business model, integrate alternative technologies into established processes, or anything else.
Different types of entrepreneurship
From online businesses to fintech start-ups to brick-and-mortar shops in the high street to social enterprises, the type of business being embarked upon will influence what type of entrepreneur an individual will become.
While many of the entrepreneurial activities implicit in growing a business will be the same – or, at least, similar – the business type will be guided by what the overarching business goals are and what the vision is. Understanding the different types, and the unique differences between them, serves to help understand specific business challenges and what resources and approaches may be required to overcome them.
Entrepreneurship takes many forms, but there exist some common types:
- Small business entrepreneurship
- Large company entrepreneurship
- Scalable start-up entrepreneurship
- Social entrepreneurship
- Innovative entrepreneurship
- Hustler entrepreneurship
- Imitator entrepreneurship
- Researcher entrepreneurship
- Buyer entrepreneurship.
At the heart of all entrepreneurships lies innovation: developing a new concept, approach or product to solve a problem – and changing lives for the better along the way. Regardless of entrepreneurial business type, individuals tend to have grander ambitions and ideas than simply making money. Of course, profit remains a key driver and motivator alongside other ambitions.
Why do so many start-ups fail?
CBInsights surveyed teams from 101 start-ups to identify the reasons behind their failures. Some of the most important aspects which impacted their viability included:
- 42% – there was no need for their services or products
- 29% – ran out of money
- 23% – didn’t have the right team
- 19% – couldn’t compete with the competition
- 17% – lacked a solid business model.
There were also issues with marketing, not listening to customers, and poor product offerings. It pays for entrepreneurs to understand and avoid common pitfalls, learning from mistakes that others have learned the hard way.
Bring entrepreneurial vision and drive to your business practice
Keen to gain entrepreneurial skills to support the promotion of a venture?
Combine in-depth study of all aspects of business, management and leadership – including how to develop as an entrepreneur – with the University of Sunderland’s online MSc Management programme.
Your studies will blend the practical and theoretical: learn how to handle emerging organisational concerns, apply your knowledge and skills to real-world settings, and excel in fast-paced, global environments. As well as strategy, people management, theories of entrepreneurship, marketing and finance, your learning will include project management, decision making, corporate social responsibility, entrepreneurship, and much more.