Entrepreneurs

Photo of Sir Richard Branson

“An entrepreneur is an innovator, a job creator, a game-changer, a business leader, a disruptor, an adventurer.”—Sir Richard Branson, business magnate, investor, and philanthropist

Learning Outcomes

  • Define entrepreneur
  • Identify the different categories of entrepreneurs
  • Identify the common traits of successful entrepreneurs
  • List common reasons for choosing to be an entrepreneur

What Is an Entrepreneur?

An entrepreneur has traditionally been defined as “a person who organizes and manages any enterprise, especially a business, usually with considerable initiative and risk.” Rather than working as an employee, an entrepreneur runs a business and assumes all the risk and reward of a given business venture, idea, or good/service offered for sale. The entrepreneur is commonly viewed as an innovator—a designer of new ideas and business processes. Entrepreneurs tend to be good at perceiving new business opportunities. They have a knack for discovering new possibilities and unmet market needs, and their pro-risk-taking attitude makes them more likely to exploit the opportunities they find. 

Let’s begin our discussion of entrepreneurs by taking a look at one: David Fox. As you’ll see in the following video, for this schoolteacher, board games aren’t just a hobby—they’re a way of life. David Fox travels to toy fairs pitching his ideas in hopes of landing a deal that will turn his big dreams into reality. 

Categories of Entrepreneurs

No two entrepreneurs are the same. Anyone with the entrepreneurial spirit who is willing to go out on a limb and assume the risk of starting a new business has unique reasons and goals for doing so. That said, it is possible to broadly classify entrepreneurs into one of the following categories: lifestyle entrepreneurs, social entrepreneurs, and serial entrepreneurs.

The Lifestyle Entrepreneur

A lifestyle entrepreneur develops a business in order to alter his or her own lifestyle, not for the sole purpose of making money. In a sense, the entrepreneur’s own life—as opposed to a business per se—is the venture. Such individuals are focused on leading a fulfilling life and cultivating a passion for what they are doing. Unlike other entrepreneurs who develop their businesses for financial rewards, lifestyle entrepreneurs put their passion before profits and try to integrate their interests into their business. Of course it may happen that the business itself becomes successful due to the involvement of someone who is so passionate about what he/she is doing.[1] Consider, for example, an attorney who puts in eighty hours a week for a multinational corporation and, for years, has little time for anything besides work. If this person is a lifestyle entrepreneur, she might decide to leave the corporate world and establish a small law practice in a rural town, giving her a more flexible schedule that leaves time for family and other interests.

The Social Entrepreneur

Social entrepreneurs are individuals who act as agents of change for society. [2] Social entrepreneurs build companies that solve problems, hire people in need, or both. Celebrity chef Jamie Oliver is a good example of a social entrepreneur. In 2002 Oliver launched his company, Fifteen, to give disadvantaged youths (aged 18–24) a means of creating better futures for themselves by offering culinary training and experience. The restaurant initiative was named for the fifteen young people who originally entered apprenticeships under this program. The following information from Fifteen’s Web site describes some of the accomplishments of this social entrepreneur.

Fifteen Cornwall: Social Entrepreneurship in the U.K.

Photo of Jamie Oliver

Jamie Oliver

The apprentice chefs are the beating heart of Fifteen Cornwall. Every young person who joins the program has at least one thing in common: potential.

The Apprentice Program, now in it’s eleventh year, consists of three months full-time training at Cornwall College, four weeks work experience in high-quality kitchens and one year in the Fifteen Cornwall kitchen. Key to its success is a unique welfare support program that helps young people access the program, stay on board, and overcome any personal barriers.

Candidates must live in Cornwall; must be between 16 and 24; and must not be in employment, education, or training. This year’s graduates bring to 180-plus the number of young chefs the foundation and Fifteen have successfully trained. Some have found other jobs, usually in catering, but more than 80 percent are still cheffing, many in prestigious establishments.

  • 184 apprentices have been recruited to our kitchen
  • 112 chefs have completed the Fifteen Cornwall Apprentice Program
  • 91 percent of graduates remain employed
  • 80 percent are still working as chefs

All the profits from our restaurant Fifteen Cornwall are given to our charity, Cornwall Food Foundation. The charity is responsible for the Fifteen Cornwall Apprentice Program, The Fifteen Cornwall Schools Program, and FoodWorks, its community outreach program.

Source: https://www.fifteencornwall.co.uk/apprentices

The Serial Entrepreneur

A serial entrepreneur is one who continually generates new ideas and starts new businesses, one after the other. In contrast to an entrepreneur who takes an idea, turns it into a business, and remains involved in the day-to-day business operations over the long term, a serial entrepreneur is more interested in the initial creative stages of inventing and launching an idea. Once the venture is off the ground, he or she may give the responsibility to someone else and move on to the next thing.[3] 

Photo of Elon Musk

Elon Musk

One of the most famous serial entrepreneurs of our time is Elon Musk, a South Africa–born Canadian American business magnate, investor, engineer, and inventor. He is the founder, CEO, and CTO of SpaceX; cofounder, CEO, and product architect of Tesla Motors; cofounder and chairman of SolarCity; cochairman of OpenAI; cofounder of Zip2; and founder of X.com, which merged with PayPal. In addition to his primary business pursuits, he has also envisioned a high-speed transportation system known as the Hyperloop and has proposed a VTOL supersonic jet aircraft with electric-fan propulsion, known as the Musk electric jet. Musk has stated that the goals of SolarCity, Tesla Motors, and SpaceX revolve around his vision to change the world and humanity. His goals include reducing global warming through sustainable energy production and consumption and reducing the “risk of human extinction” by “making life multi-planetary” by setting up a human colony on Mars. As of June 2016, he has an estimated net worth of US$11.5 billion, making him the eighty-third wealthiest person in the world. 

Traits of an Entrepreneur

No matter how we might categorize them, all entrepreneurs have certain traits in common:

  • Creativity. The first step in starting a business is to come up with an idea or concept. It takes creativity to develop a new product or service that brings unique value to customers. Sometimes entrepreneurs must create the means to realize their dream. Other times they must wait for the technology to catch up to their creative vision. This was the case for movie director James Cameron.For some entrepreneurs, creativity means looking at problems and inventing new means of solving them. For others, it may involve taking something that already exists and discovering a new use or new market for it. Art Fry is an example of entrepreneurial creativity at work. Though his name may not be familiar, his creative use for an otherwise failed product likely is.

Art Fry and the Post-it Note

Art Fry, accidental inventor of the Post-It Note is shown here displaying his most brilliant invention.

Art Fry

In 1968, a scientist named Dr. Spencer Silver working at 3M in the United States was attempting to develop a super-strong adhesive. Instead, he accidentally created a “low-tack,” reusable, pressure-sensitive adhesive. For five years, Silver promoted his “solution without a problem” within 3M both informally and through seminars but failed to generate much interest. In 1974, Art Fry, a colleague who had attended one of his seminars, came up with the idea of using the adhesive to anchor his bookmark in his hymnbook. Fry then utilized 3M’s officially sanctioned “permitted bootlegging” policy to develop the idea. The original notes’ yellow color was chosen by accident, as the lab next-door to the Post-It team had only yellow scrap paper to work with.

  • Risk tolerance. Successful entrepreneurs are able to tolerate risk and accept that it’s a part of any business venture—no matter how well conceived or planned. Failure is not uncommon among start-up businesses, so the risk is real.
  • Persistence and resilience. Businesses take time to grow—very few are profitable right away—and they often encounter setbacks and failures along the way. Successful entrepreneurs are able to persevere and bounce back despite adversity. Some of the most famous and accomplished entrepreneurs failed at some point, but they never gave up. For example, Walt Disney was once fired by an editor because “he lacked imagination and had no original ideas.” His first animation company went bankrupt, and it’s said that he was turned down hundreds of times when trying to secure financing for Disney World.
  • Flexibility. Even the most well-thought-out business will encounter unexpected developments and challenges. There are inevitably changes in the market, technology, and customer tastes that lie beyond the entrepreneur’s (and business’s) control. For this reason, the ability to be flexible and respond to changes are often the key to a business’s survival. When Netflix first started, the company offered a subscription-based DVD home-delivery service. In a very short time, technology and consumer behavior changed: DVD use was declining and digital “on-demand” viewing was growing. Netflix adapted by expanding their offerings to include downloadable videos and other online options. Today, thanks to the flexibility of the entrepreneurs at the company’s helm, Netflix is a leader in video entertainment while, in contrast, many video rental companies such as Blockbuster have gone out of business.
  • Passion. When successful entrepreneurs are asked how and why they put up with the risk, the uncertainty, the demands, and the setbacks of starting a business, many reveal that having a driving passion behind their ideas was what helped them get there. Like persistence and resilience, passion can help fuel an entrepreneur through good times and bad times, and it can be a key ingredient in any start-up’s success.
Photo of Lori Greiner

“Entrepreneurs are willing to work eighty hours a week to avoid working forty hours a week.” —Lori Greiner, star shark of ABC’s Shark Tank.[footnote]https://www.entrepreneur.com/article/224967[/footnote]

Why People Choose to Become Entrepreneurs

Photo of woman sitting on a boat working on her laptop.

What leads a person to strike out on her own and start a business? Perhaps a person has been laid off once or more. Sometimes a person is frustrated with his or her current job and doesn’t see any better career prospects on the horizon. Sometimes a person realizes that his or her job is in jeopardy. A firm may be contemplating cutbacks that could end a job or limit career or salary prospects. Perhaps a person already has been passed over for promotion. Perhaps a person sees no opportunities in existing businesses for someone with his or her interests and skills.

Some people are actually repulsed by the idea of working for someone else. They object to a system where reward is often based on seniority rather than accomplishment or where they have to conform to a corporate culture.

Other people decide to become entrepreneurs because they are disillusioned by the bureaucracy or politics involved in getting ahead in an established business or profession. Some are tired of trying to promote a product, service, or way of doing business that is outside the mainstream operations of a large company.

Some people evaluate the possibilities for jobs and careers where they live and make a conscious decision to pursue entrepreneurship.

Then there are those who never consider working for someone else—they are born entrepreneurs. The following is an excerpt from an interview with a small business owner, who talks about her lifelong desire to own her own business:

I don’t think I ever considered not owning my own business. My father was an entrepreneur and built his business from a hole in the wall to a very successful multi-location business just a block from the White House on Pennsylvania Avenue in Washington DC. The whole family was involved in the business in some way. My mother did all the bookkeeping, my father ran the business, and when I was old enough to get a job, I went to work for him. It wasn’t always easy for the family. We didn’t take vacations like everybody else, sometimes we didn’t have as much money as everybody else, and some of my friends didn’t understand why my father didn’t have a “real job.” But, I believe that entrepreneurship can be an inherited trait. My great-grandfather was a clockmaker in Germany, my grandfather owned a jewelry store in Richmond, Virginia, my father had his business, my sister owned her own business, and now here I am running my own business. For me and my family, entrepreneurship is like breathing.   —Julia Scheer, owner of Puzzles, Pranks & Games (Kitty Hawk, NC)

No one reason is more valid than another; none guarantees success. However, a strong desire to start a business, combined with a good idea, careful planning, and hard work, can lead to a very engaging and profitable endeavor.

The following short video is an example of the entrepreneurial spirit in action!

Check Your Understanding

Answer the question(s) below to see how well you understand the topics covered above. This short quiz does not count toward your grade in the class, and you can retake it an unlimited number of times.

Use this quiz to check your understanding and decide whether to (1) study the previous section further or (2) move on to the next section.

  1. http://www.businessdictionary.com/definition/lifestyle-entrepreneur.html ↵
  2. http://www.businessdictionary.com/definition/social-entrepreneur.html ↵
  3. http://www.businessdictionary.com/definition/serial-entrepreneur.html ↵