{"id":116846,"date":"2023-10-23T07:02:33","date_gmt":"2023-10-23T07:02:33","guid":{"rendered":"https:\/\/www.techopedia.com\/?post_type=definition&#038;p=116846"},"modified":"2023-10-23T12:02:44","modified_gmt":"2023-10-23T12:02:44","slug":"entrepreneur","status":"publish","type":"definition","link":"https:\/\/www.techopedia.com\/definition\/entrepreneur","title":{"rendered":"Entrepreneur"},"content":{"rendered":"<h2><span id=\"who_is_an_entrepreneur\">Who is an Entrepreneur?<\/span><\/h2>\n<p>An entrepreneur is an individual who creates and runs a new business venture, assuming all the risks and rewards of the endeavor.<\/p>\n<p>The entrepreneur is commonly seen as an innovator and source of new ideas, goods, services, and business models. Entrepreneurs play a key role in any economy by developing new businesses that create jobs and improve productivity.<\/p>\n<p>They identify opportunities, evaluate risks, obtain resources, design business plans, and ultimately drive the new venture&#8217;s success. The entrepreneurial process requires persistence, drive, and resilience because new businesses face many hurdles.<\/p>\n<p>However, those who succeed reap the financial and personal rewards of business ownership.<\/p>\n<h2><span id=\"characteristics_of_entrepreneurs\">Characteristics of Entrepreneurs<\/span><\/h2>\n<p>There are certain traits and skills commonly associated with successful entrepreneurs:<\/p>\n<ul>\n<li><strong>Risk Tolerance<\/strong>: Willingness to take calculated risks is essential as most new ventures have uncertain outcomes.<\/li>\n<li><strong>Passion<\/strong>: Strong enthusiasm for their ideas and ventures gives them the required motivation. Their passion also inspires employees and investors.<\/li>\n<li><strong>Confidence<\/strong>: Self-belief in their ability to overcome challenges and succeed.<\/li>\n<li><strong>Competitiveness<\/strong>: Entrepreneurs have the drive to perform better than rivals, and this pushes them to innovate.<\/li>\n<li><strong>Resourcefulness<\/strong>: Ability to find ways to acquire needed resources and accomplish their goals.<\/li>\n<li><strong>Resilience<\/strong>: Perseverance when faced with setbacks or failures during the earliest stages of their development.<\/li>\n<li><strong>Leadership<\/strong>: Ability to communicate visions, manage teams, and motivate workers.<\/li>\n<li><strong>Focus<\/strong>: Capacity to keep their attention on the objectives they have set forth and avoid distractions.<\/li>\n<\/ul>\n<h2><span id=\"types_of_entrepreneurs\">Types of Entrepreneurs<\/span><\/h2>\n<p>There are many paths that entrepreneurs can take to start and grow new businesses.<\/p>\n<p>Some common types include:<\/p>\n<p><span style=\"font-weight: 400;\"><div class=\"su-table su-table-responsive su-table-alternate\"><\/span><\/p>\n<table>\n<tbody>\n<tr>\n<td><b>Type of Entrepreneur<\/b><\/td>\n<td><b>Description<\/b><\/td>\n<\/tr>\n<tr>\n<td>Small Business Entrepreneur<\/td>\n<td><span style=\"font-weight: 400\">Starting a modest business serving local markets, like a restaurant or retail store.<\/span><\/td>\n<\/tr>\n<tr>\n<td>Innovative Entrepreneur<\/td>\n<td><span style=\"font-weight: 400\">Creating new products, services, or business models that disrupt established industries and market niches.<\/span><\/td>\n<\/tr>\n<tr>\n<td>Social Entrepreneur<\/td>\n<td><span style=\"font-weight: 400\">Starting for-profit or non-profit ventures that aim to solve social issues.<\/span><\/td>\n<\/tr>\n<tr>\n<td>Serial Entrepreneur<\/td>\n<td><span style=\"font-weight: 400\">Continuously starting new businesses, often selling old ones to fund new ideas.<\/span><\/td>\n<\/tr>\n<tr>\n<td>Lifestyle Entrepreneur<\/td>\n<td><span style=\"font-weight: 400\">Running small businesses allows them to achieve their desired level of financial independence and a relaxed or luxurious lifestyle.<\/span><\/td>\n<\/tr>\n<tr>\n<td>Entrepreneur Acquirer<\/td>\n<td><span style=\"font-weight: 400\">Buying an existing business and expanding it to new heights.<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<h2><span id=\"importance_of_entrepreneurship\">Importance of Entrepreneurship<\/span><\/h2>\n<p>Entrepreneurship plays a vital role in the economy, here\u2019s how:<\/p>\n<ul>\n<li><strong>Job Creation<\/strong>: New businesses account for a big percentage of all the new jobs created within an economy. They employ people locally and help lower unemployment.<\/li>\n<li><strong>Innovation<\/strong>: Entrepreneurs turn ideas and inventions into economically feasible products and services. This leads to technological advancement.<\/li>\n<li><strong>Productivity<\/strong>: Businesses adopt new methods, technologies, and systems to increase efficiency and output. This raises productivity.<\/li>\n<li><strong>Competition<\/strong>: Rivalry among existing firms and new entrants drives prices down, improves quality, and expands consumer choices.<\/li>\n<li><strong>Wealth Creation<\/strong>: Entrepreneurs who build successful ventures generate profits. This creates personal wealth for the founders and a selected group of investors.<\/li>\n<li><strong>Economic Growth<\/strong>: New business formation and expansion increase output and incomes across the economy. This leads to a higher GDP.<\/li>\n<\/ul>\n<h2><span id=\"becoming_an_entrepreneur\">Becoming an Entrepreneur<\/span><\/h2>\n<p><img decoding=\"async\" class=\"aligncenter size-full wp-image-117602\" src=\"https:\/\/www.techopedia.com\/wp-content\/uploads\/2023\/10\/How-to-Become-an-Entrepreneur-scaled.jpg\" alt=\"How to Become an Entrepreneur?\" width=\"1365\" height=\"2560\" srcset=\"https:\/\/www.techopedia.com\/wp-content\/uploads\/2023\/10\/How-to-Become-an-Entrepreneur-scaled.jpg 1365w, https:\/\/www.techopedia.com\/wp-content\/uploads\/2023\/10\/How-to-Become-an-Entrepreneur-160x300.jpg 160w, https:\/\/www.techopedia.com\/wp-content\/uploads\/2023\/10\/How-to-Become-an-Entrepreneur-546x1024.jpg 546w, https:\/\/www.techopedia.com\/wp-content\/uploads\/2023\/10\/How-to-Become-an-Entrepreneur-768x1440.jpg 768w, https:\/\/www.techopedia.com\/wp-content\/uploads\/2023\/10\/How-to-Become-an-Entrepreneur-819x1536.jpg 819w, https:\/\/www.techopedia.com\/wp-content\/uploads\/2023\/10\/How-to-Become-an-Entrepreneur-1092x2048.jpg 1092w, https:\/\/www.techopedia.com\/wp-content\/uploads\/2023\/10\/How-to-Become-an-Entrepreneur-1200x2250.jpg 1200w\" sizes=\"(max-width: 1365px) 100vw, 1365px\" \/><\/p>\n<p>Starting your own business is filled with challenges but can be immensely rewarding.<\/p>\n<p>Here are some steps that individuals can take to become an entrepreneur.<\/p>\n<h3>1. Assess Your Skills<\/h3>\n<p>Evaluate your tolerance for risk, passion, resourcefulness, and other entrepreneurial traits. Make sure the lifestyle fits your personality. Your skills will largely determine the type of business you will start and how far you may be able to take the project.<\/p>\n<h3>2. Choose a Business Idea<\/h3>\n<p>Determine an unmet consumer need you can address or an innovative product\/service to provide, including:<\/p>\n<ul>\n<li>Research the competition<\/li>\n<li>Get to know your target audience<\/li>\n<li>Develop a solution for an existing problem<\/li>\n<li>Test your prototype to see if your prospective customers are satisfied with it.<\/li>\n<\/ul>\n<h3>3. Write a Business Plan<\/h3>\n<p>Outline your operational and financial plans in detail. This is crucial for attracting investors. A business plan is a blueprint for your venture.<\/p>\n<p>It typically outlines the rationale for the product, service, or business you came up with and provides key details about its target market, technical specifications, leadership team, and finances.<\/p>\n<h3>4. Fund Your Venture<\/h3>\n<p>Bootstrap with savings or use external funds to build your venture. Most entrepreneurs turn to family or friends for seed investment and then go through various funding rounds that incorporate third parties like <a href=\"https:\/\/www.techopedia.com\/definition\/23866\/venture-capital\">venture capitalists<\/a> or angel investors.<\/p>\n<p>Entrepreneurs must learn to manage their finances meticulously in the early stages. This can be achieved by keeping the business\u2019s cash burn at healthy levels and avoiding discretionary expenditures that do not contribute to achieving the project\u2019s goals.<\/p>\n<h3>5. Register Your Business<\/h3>\n<p>Choose a legal structure and register with federal, state, and local agencies. Comply with regulations to avoid penalties and legal issues that cost the venture money that it can\u2019t afford to spend on those kinds of issues.<\/p>\n<h3>6. Find a Location<\/h3>\n<p>Whether home-based or leased commercial space, ensure that your startup\u2019s work environment is adequate to keep your employees motivated and focused on the task at hand.<\/p>\n<h3>7. Promote Your Product<\/h3>\n<p>Use marketing tools like social media, SEO, and email campaigns to build brand awareness and attract clients. Most businesses nowadays rely heavily on online sales to generate revenue before turning to traditional channels. You can also work with influencers to position your product within its target audience.<\/p>\n<h3>8. Hire Staff<\/h3>\n<p>Assemble a team with complementary skills to fine-tune the product\/service, manage the day-to-day affairs of the business, or come up with new ideas. Offer competitive pay and benefits to attract and retain the best talent.<\/p>\n<h2><span id=\"types_of_startup_funding\">Types of Startup Funding<\/span><\/h2>\n<p>New entrepreneurs have several options when seeking capital.<\/p>\n<p>Here\u2019s a list of the six most common funding sources that they typically turn to:<\/p>\n<ol>\n<li><strong>Bootstrapping<\/strong>: Relying on personal savings and cash flow from operations to finance the business. This requires very lean operations and aggressive cost-saving efforts.<\/li>\n<li><strong><a href=\"https:\/\/www.techopedia.com\/definition\/27815\/crowdfunding\">Crowdfunding<\/a><\/strong>: Raising small investments from a large number of individuals, often via platforms like <a href=\"https:\/\/www.fundera.com\/\" target=\"_blank\">Fundera<\/a> and Kickstarter.<\/li>\n<li><strong>Angel Investors<\/strong>: Wealthy individuals who invest their own money in startups. They usually take a stake in the business.<\/li>\n<li><strong>Venture Capital<\/strong>: Firms that pool money from multiple institutions and investors and pour it into new businesses with major growth potential.<\/li>\n<li><strong>Bank Loans<\/strong>: Turning to banks or credit unions to take out small business loans or lines of credit that will have to be repaid with interest.<\/li>\n<li><strong>Government Grants<\/strong>: Federal or local programs that provide funding for certain types of startups and entrepreneurs, often in distressed areas.<\/li>\n<\/ol>\n<h2><span id=\"challenges_that_entrepreneurs_face\">Challenges that Entrepreneurs Face<\/span><\/h2>\n<p>Launching a successful new business is difficult. Some of the most common obstacles that entrepreneurs face when trying to float a new company include:<\/p>\n<ul>\n<li><strong>Obtaining Financing<\/strong>: Convincing lenders and investors to provide funding without a proven business model or existing revenue can be very difficult.<\/li>\n<li><strong>Building a Client Base<\/strong>: Attracting enough paying customers is crucial for generating sales but takes time and effort for new companies with small marketing budgets and no credibility.<\/li>\n<li><strong>Hiring Talent<\/strong>: Finding skilled employees willing to take the risk of joining a new venture can be hard, especially with competition from established firms that offer much better compensation packages.<\/li>\n<li><strong>Achieving Profitability<\/strong>: It takes most startups years of lean operations before they reach profitability and positive cash flows. Survival is tough during the first few years, especially if the product or service fails to capture customers\u2019 attention in the beginning.<\/li>\n<li><strong>Competing Against Well-Established Companies<\/strong>: Large corporations have many advantages related to their scale and vast resources that they can leverage to undercut new entrants.<\/li>\n<li><strong>Bureaucratic Hurdles<\/strong>: Navigating complex regulatory and legal processes to start and operate a business can be challenging for new entrepreneurs.<\/li>\n<\/ul>\n<h2><span id=\"famous_entrepreneurs\">Famous Entrepreneurs<\/span><\/h2>\n<p>Some renowned pioneering entrepreneurs throughout history include:<\/p>\n<p><strong>Steve Jobs<br \/>\n<\/strong>Co-founder of Apple. Helped usher in the personal computer revolution and transformed <a href=\"https:\/\/www.techopedia.com\/2\/25670\/it-business\/creating-the-iworld-a-history-of-apple\">Apple<\/a> into one of the world&#8217;s most valuable companies.<\/p>\n<p><strong>Elon Musk<br \/>\n<\/strong>Founder of Tesla, SpaceX, Neuralink, and The Boring Company. His ventures have transformed multiple industries.<\/p>\n<p><strong>Walt Disney<br \/>\n<\/strong>Built an animation studio into The Walt Disney Company, a global media powerhouse worth over $150 billion today.<\/p>\n<p><strong>Est\u00e9e Lauder<br \/>\n<\/strong>Her eponymous cosmetics company now earns over $10 billion in annual revenues. She is part of the still relatively small group of female billionaires in history.<\/p>\n<p><strong>Jeff Bezos<\/strong><br \/>\nFounded Amazon.com out of his garage to become the globe&#8217;s largest online retailer and <a href=\"https:\/\/www.techopedia.com\/definition\/29017\/cloud-services\">cloud services<\/a> provider.<\/p>\n<p><strong>Madam C.J. Walker<br \/>\n<\/strong>America&#8217;s first female self-made millionaire. Built a hugely successful business developing hair products for African-American women.<\/p>\n<p><strong>Howard Schultz<br \/>\n<\/strong>Built Starbucks from a single coffee shop into the world&#8217;s largest coffeehouse chain with over 32,000 locations globally.<\/p>\n<h2><span id=\"the_bottom_line\">The Bottom Line<\/span><\/h2>\n<p>The entrepreneurial spirit has driven human progress for centuries. Whether through the introduction of new innovations, creating jobs, or delivering products more efficiently, entrepreneurs help create immense economic and social value.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Who is an Entrepreneur? An entrepreneur is an individual who creates and runs a new business venture, assuming all the risks and rewards of the endeavor. The entrepreneur is commonly seen as an innovator and source of new ideas, goods, services, and business models. 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