An entrepreneur is a person who organizes the means of production to engage in entrepreneurship, often under considerable uncertainty and financial risk. An entrepreneur identifies a need that no existing businesses addresses and determines a solution for that need. Entrepreneurial activity includes developing and launching new businesses and marketing them, often with the end goal of selling the business to turn a profit. Entrepreneurs may partner with other entrepreneurs to jointly found companies (co-founders), or with an existing organization (e.g., corporate or university spin-outs).
Motivating Factors of Entrepreneurs
What motivates entrepreneurs to venture forth when so many others would run in the opposite direction? Though each person's motivation is nuanced and unique, many entrepreneurs are spurred on by one or more of the following motivators:
- Autonomy: Entrepreneurs want to be their own bosses, set their own goals, control their own progress and run their businesses how they see fit. They recognize that their business's success or failure rests with them, yet they don't view this responsibility as a burden but, instead, as a marker of their freedom.
- Purpose: Many entrepreneurs have a clear vision of what they want to accomplish and will work tirelessly to make that happen. They genuinely believe they have a product or service that fills a void and are compelled by a single-minded commitment to that goal to keep pushing ahead. They abhor stagnation and would rather fail while moving forward than languish in inactivity.
- Flexibility: Not everyone fits into the rigidity of traditional corporate culture. Entrepreneurs are often looking to free themselves from these constraints, find a better work-life balance or work at times and in ways that may be unconventional. This doesn't mean they are working fewer hours – often, especially in the early stages of growing a business, they work longer and harder – but, rather, they're working in a way that is instinctual for them.
- Financial success: Most entrepreneurs realize they aren't going to be overnight billionaires, but that doesn't mean they aren't interested in the potential of making a ton of money from a hugely successful business over which they have full control. Some want to establish a financial safety net for themselves and their families, while others are looking to make a huge profit by creating the next big thing.
- Legacy: Entrepreneurs are often guided by a desire to create something that outlasts them. Others want to create a brand that has longevity and becomes an institution. Another group wants to pass on a source of income and security to their heirs. There are also those entrepreneurs who hope to make a lasting impression on the world and leave behind an innovation that improves people's lives in some tangible way.
Characteristics of a Successful Entrepreneur
Examining the commonly shared characteristics may help to explain the way entrepreneurs work. Whether a person is born into it or develops these traits along the way, there are similarities among those who have been successful in their entrepreneurship.
- Passion: Talk to successful entrepreneurs and you'll nearly always hear the word passion when they describe what they do. Following your passion is one of the best predictors of success.
- Independent thinking: Entrepreneurs often think outside the box and aren't swayed by others who might question their ideas.
- Optimism: It's difficult to succeed at anything if you don't believe in a good outcome. Entrepreneurs are dreamers and believe their ideas are possible, even when they seem unattainable.
- Confidence: This is not to say entrepreneurs never have self-doubt, but they're able to overcome it, and believe they can achieve their goal.
- Resourceful and problem-solvers: Lack of assets, knowledge, and resources are common, but entrepreneurs can get what they need or figure out how to use what they've got to reach their business goals. They never let problems and challenges get in the way, and instead, they find ways to achieve success despite hardships.
- Tenacity and ability to overcome hardship: Entrepreneurs don't quit at the first, second, or even hundredth obstacle. For them, failure is not an option, so they continue to work toward success, even when things go wrong.
- Vision: Some of the more stringent definitions of entrepreneurship include vision as a necessary element. It helps to know your end goal when you start. Further, vision is the fuel that propels you forward toward your goal.
- Focus: It's easy to get distracted in this fast-paced world. Many start-ups get side-tracked by the "shiny object syndrome" (products and services that promise fast results), or they get bogged down in unimportant busywork. Successful entrepreneurs avoid these distractions and stay focused on what will bring results.
- Action-oriented: Entrepreneurs don't expect something to come from nothing, and they don't wait for things to happen. They are doers. They overcome challenges and avoid procrastination.
Entrepreneurs and the Economy
Entrepreneurs Impact the Economy
In economist-speak, an entrepreneur acts as a coordinating agent in a capitalist economy. This coordination takes the form of resources being diverted toward new potential profit opportunities. The entrepreneur moves various resources, both tangible and intangible, promoting capital formation.
In a market full of uncertainty, it is the entrepreneur who can actually help clear up uncertainty, as he makes judgments or assumes the risk. To the extent that capitalism is a dynamic profit-and-loss system, entrepreneurs drive efficient discovery and consistently reveal knowledge. Established firms face increased competition and challenges from entrepreneurs, which often spurs them toward research and development efforts as well. In technical economic terms, the entrepreneur disrupts course toward steady-state equilibrium.
Entrepreneurs Help Economies
Nurturing entrepreneurship can have a positive impact on an economy and a society in several ways. For starters, entrepreneurs create new business. They invent goods and services, resulting in employment, and often create a ripple effect, resulting in more and more development. For example, after a few information technology companies began in India in the 1990s, businesses in associated industries, like call center operations and hardware providers, began to develop too, offering support services and products.
Entrepreneurs add to the gross national income. Existing businesses may remain confined to their markets and eventually hit an income ceiling. But new products or technologies create new markets and new wealth. And increased employment and higher earnings contribute to a nation’s tax base, enabling greater government spending on public projects.
Entrepreneurs create social change. They break tradition with unique inventions that reduce dependence on existing methods and systems, sometimes rendering them obsolete. Smartphones and their apps, for example, have revolutionized work and play across the globe.