Entrepreneurs and Entrepreneurship: Definitions and Examples

Business is a key driver for any economy. And every business starts out with an entrepreneur. This is someone who develops an idea by identifying gaps in the market. They then try to start a company to bring a product or service to the market. The level of drive, innovation, perseverance, and business acumen is what's behind entrepreneurship. In this article, we explore what it means to be an entrepreneur and how entrepreneurship works.

What Is an Entrepreneur?

An entrepreneur is an individual who starts and runs a business with limited resources and planning. This individual is responsible for all the risks and rewards of their business venture. The business idea usually encompasses a new product or service rather than an existing business model.

Such entrepreneurial ventures target high returns with an equally high level of uncertainty. The entrepreneur is willing to risk their financial security and career, spending time as well as capital on an uncertain venture, arranging for the necessary capital, raw materials, manufacturing locations, and skilled employees. Marketing, sales, and distribution are other important aspects that are controlled by the entrepreneur.

Even if some of these functions are outsourced, the risk is still carried by the entrepreneur. This makes entrepreneurship different from inheriting and/or running an existing business, working for a startup or entrepreneur for a salary, being a commissioned agent, or selling already available goods or services as a franchisee or dealership.

How to Be a Successful Entrepreneur

There are several theories put forward by researchers at leading institutes about entrepreneurship. But there is no one-size-fits-all model for (successful) entrepreneurship. Broadly speaking, entrepreneurship either originates from passion or by identifying suitable business opportunities.

A person who is very passionate about developing electronic circuits may (accidentally) develop a great appliance. Such an individual may not necessarily have the business sense, but they are driven by pure passion. They don't listen to anyone, go with their gut and one day develop a highly marketable product that offers extremely high returns. They fit into the first category of passionate entrepreneurs.

A businessperson with sharp business acumen sensing a profit opportunity with a mix-n-match approach fits into the latter category. 

Myths About Entrepreneurs

There are several misconceptions about entrepreneurship. One of the most common is that entrepreneurs take uncalculated and unknown risks without any plans. This myth is partially true as entrepreneurs often do this. But one thing to keep in mind is that these business people keep resources and plan as much as they can for dealing with the unknown.

Here are some of the other myths about what it means to be an entrepreneur:

• Entrepreneurs Start with a Revolutionary Invention: This is also partially true. That's because not all entrepreneurial ventures are true breakthroughs. Most identify and capitalize on a mix-and-match approach. Google did not invent the internet, McDonald's did not invent the cheeseburger, and Starbucks did not invent coffee. It’s the identification and capitalization of the idea and rapid growth rate that make the venture entrepreneurial.
• Entrepreneurs Have Experience: Most entrepreneurs are young, inexperienced individuals who follow their passion.
• Entrepreneurs Complete Extensive Research: Unless an existing business is setting up a new business line on a new concept, entrepreneurs start with very limited or no research. However, they do have good awareness about the potential of their offering, which gives them the confidence to assume the risk.
• Entrepreneurs Start with Sufficient Capital: Capital is the foremost requirement of any entrepreneurial venture. Most entrepreneurs fail to secure sufficient capital from outside sources unless they have somehow proven themselves or have a marketable prototype. Hence, most entrepreneurs start out with insufficient capital with an aim to secure more along the way.
  

Types of Entrepreneurship

Entrepreneurship comes in many shapes and sizes. Each type depends on the idea, scope, and risks individuals are willing to take. We've noted some of the key types of entrepreneurship below.

Scalable Startup

A startup is a new company that is in the initial stages and has yet to begin full-scale operations. it focuses on one product or service that owners want to develop and bring to market. A scalable startup, therefore, is a fledgling company that attempts to grow at a rapid pace. When they are successful, these startups can be very popular because they identify gaps in the market.

Small Business

Many entrepreneurs start out as (and remain) small businesses. The majority of entrepreneurs are small business owners. In fact, 99.9% of American businesses are small businesses, according to the Small Business Administration (SBA).

Small businesses usually deal with known and established products and services. Limited growth with continued profitability is what many small business owners pursue. As a result, they remain confined to their own domain and group.

Large Corporation

This is the type of business most people are familiar with when they think of entrepreneurship. Keep in mind, though, that large corporations are the most advanced and complicated versions of what it means to be an entrepreneur.

These companies may involve large-scale production, manufacturing, and distribution, and are made up of various levels of management. Demand often keeps these companies at the forefront of people's minds. Examples include Walmart, Amazon, and Microsoft.

Examples of Entrepreneurship

KickStart International

Trading goods—like buying entire lots of branded shampoo at wholesale rates and selling them at retail rates at your retail shop or online—does not constitute entrepreneurship. However, manufacturing your own innovative, herbal shampoo, obtaining a patent on it, and marketing it for business using the same sales channels qualifies as entrepreneurship. 

A great example is the Africa-based KickStart International (not to be confused with Kickstarter), which designs and builds low-cost, low-effort, high-yield irrigation products to help African farmers and end poverty. Their main product is the MoneyMaker Max, a "high-quality, human-powered treadle irrigation pump" and they offer a lower-cost, hip-operated version. Future product plans include a starter pump and submersible solar pumps.

In this example, the entrepreneur risks their time, effort, and financial investments to manufacture the herbal shampoo, get necessary licenses, and handle legal disputes arising from any consumer complaints and competitions.

Airbnb

Airbnb (ABNB) implemented the mix-n-match entrepreneurial approach to build a network of all such available rentals in a certain area and make it available to tourists. Without owning a single property, their innovative business model offers a win-win situation for all parties.

The owners get short-term high-paying customers (tourists) instead of long-term low-paying renters. Tourists benefit from relatively low costs and a secure, home-like stay. Airbnb benefits from service charges for offering this buyer-seller marketplace model, controlling the sales or distribution channel without owning a single property.

Here, the entrepreneur is accountable for ensuring a reliable community of property owners willing to offer proper facilities, as well as the responsibility for handling conflicts arising between various parties. 

The Bottom Line

Innovation, success, and profits are some of the common goals for many entrepreneurs. These are individuals who identify what is missing in the market and develop ideas to help fill those gaps. Along with serving their own needs, the spirit of entrepreneurs is what helps fuel the global economy. That's because they create businesses that not only put new products on the market, but also create jobs and encourage people to spend.