An entrepreneur doesn't have an exact definition. It is a person that can come in many forms.
Essentially, this is an individual who seeks to create and extract value from an economy. Through innovation, this person brings ideas to market, which result in economic value. The gains from said activity result in, hopefully, profitability, something the entrepreneur extracts.
When starting (or taking over) a business, there is a degree of risk involved. The entrepreneur is willing to take this on in an effort to generate a larger financial reward in the future. Unlike employees who often seek security or certainty, an entrepreneur has to deal with the exact opposite.
One of the reasons why there is no clear definition is because there is debate about the enterprises that qualify as being run by entrepreneurs.
There are two camps:
- an entrepreneur is anyone who works for him or herself
- an entrepreneur starts a business that is innovative and can grow
The first includes any small business. This is often discounted by some because there are franchises which are small business yet are use the copy/paste model. Innovation is lacking since it was already created.
Ultimately, this comes down to a question of scaling. Small businesses are just that. An innovative company that is a start up can reside in that realm for years, then suddenly become a behemoth. Apple is a great example of a company that went from a niche to a global corporation with great power.
Importance To Economy
Entrepreneurs are vital to a growing economy. These are the individuals who take the risk to start businesses that employ the majority of the population. While many entrepreneurial pursuits remain small, as was just mentioned, some can take off.
Size is not the only important factor. New innovation can alter society. This is especially true when coupled with technology. Entrepreneurs can bring new ways of doing things to market, completely revolutionizing an existing industry or starting a new one.
Entrepreneurs have, historically, led the most disruptive companies. Industries tend not to get revolutionized from within. Instead, it is usually an outside force that looks at things differently, brings a product or service to market, and obliterate the established standard. Netflix putting Blockbuster out of business is a prime example.
Companies started by entrepreneurs often scale once larger entities get a hold of them. The exit plan for owners is often to sell to a major competitor. Since the latter tends to lack the innovation, this is how they can get a hold of new avenues to pursue. Their money and reach can often allow for faster growth of the idea.
There is a flip side. Entrepreneurs can often end up in bankruptcy. There are many variables to success and equally as many ways to fail. Since these firms tend to lack the financial resources, i.e. capital, recessions and other setbacks can be devastating.
Even in failure, the ideas are often carried forward by others. Sometimes these can lay dormant for years before someone picks it up. A failure is a lesson for everyone to learn.
Characteristics of an Entrepreneur
It is hard to size up an entrepreneur. There are some characteristics that tend to be present in most.
- Hard Working
- Independent Thinking
- Problem Solver
Types of Entrepreneurs
Here are some types you will typically find:
- Small business
Since many basically require a computer and an Internet connections, many are finding they can operate their businesses from anywhere. This is creating the rise in digital nomads, people who can work from anywhere and make a living from online activities.
Elon Musk's Starlink, a network of satellites being released to provide global Internet coverage is only going to assist in this endeavor.