Nowadays, so many people are engaged in entrepreneurship, while some want to repeat their success and learn more about this concept. If you would like to understand this notion better, then we are right here to help you with it. After reading this article, you will know more about the concept of entrepreneurship!
Every person who would like to start their own business has to know the basics of entrepreneurship. No successful entrepreneur was born this way, so if you are a beginner to this entire concept, our article will help you to learn more about it gradually. So, join in and find out the definition of entrepreneurship, its meaning, types, and functions!
What is entrepreneurship?
Commonly, entrepreneurship is defined as the process of creation and development of a specific business or group of businesses with the purpose of generating profit from it. This is how this notion is defined in basic terms. However, there are some broader definitions – such as the transformation of the world for the better cause, initiating changes in society, creating the modern production, presenting the solutions to relevant issues and solving significant problems.
Usually, every entrepreneurship starts because of the good cause. For example, people come up with innovative ideas and want to start their own business to implement them practically. Or they feel that they are particularly talented and skilled in a particular field, and are planning to share their production with as many people as possible. So, this brings us to the next questions: Who is an entrepreneur? What is the entrepreneur definition?
Entrepreneur meaning and definition
The word entrepreneur means someone who set up their own business for making a profit from it in the future. This definition might be vague, but it is supposed to be like this because it has an expansive meaning. The person who is managing their store is an entrepreneur, but so is the person who does freelance work on the internet and is just a beginner in this field. The main reasons why all of those people are considered the entrepreneurs are that they all, to some degree, start their business and make a profit from what they do. It does not matter how large this business is when they are starting – what matters is the profit they generate from their occupation in the future.
An entrepreneur is a person who takes their career into their own hands and takes it into a specific direction that they envision it to be for the future. The entrepreneurship means not having bosses, restrictions or anything that might hold you back: it is building your own business on the terms that you have created for yourself.
In many situations, an entrepreneur is much more than just a business creator or a person with a job. Starting your own entrepreneurship has enough potential to change things in your community, and if you are a skilled business strategist, then maybe you can even change the world. For implementing actual changes, the person needs to see solutions and new opportunities everywhere, even where it seems like they are non-existent.
The successful entrepreneur needs to understand how and when they can help people and contribute to the right causes, be willing to organise and develop the venture and accept the risks which come together with it. This person also needs to possess the leadership qualities, adapt quickly to different environments, and see both their weaknesses and strengths. The most important thing is commitment: none of the difficulties should discourage a determined entrepreneur from reaching their goals.
The brief history of entrepreneurship
This word originated from French and meant the adventurous person. The economist and founder of classical economics, Richard Cantillon, has defined the term “entrepreneur” as someone who buys a product for a certain price and then resells it at the price which is uncertain, by also seeing the risks of this venture, obtaining the available resources and making decisions about their use. According to Cantillon, this person had to take risks and explore every opportunity for financial gain. The concept had gone through a lot of other definitions throughout the 20th and 21st century before it became what it is today.
Nowadays, this term often is used interchangeably with the term “small business”, but in fact, these two concepts are different. Not every small business has an entrepreneurial nature, even though a lot of the ventures have been small businesses in their beginning stages.
Importance of entrepreneurship
So, why is this concept fundamental, and what is it all about? First of all, our society needs determined leaders, who see the problem and focus on its possible solutions. They are committed and dedicate their time and efforts to improving society, no matter if their task is creating new products or jobs. Every day, they take severe actions for ensuring continuous progress in the world.
There are three significant reasons why entrepreneurs are so crucial to the development of society.
- Jobs – the new working opportunities would not have existed if it was not for the entrepreneurs. Their ambitions lead to the creation of the original work positions, where they employ new people. As the business expands, there are more and more possible positions, open to people.
- Change – the entrepreneurs are the exact kind of people who dream big and never give up on their original ideas. So, naturally, it is possible that they will change things about how the world works one day. For instance, they can introduce an innovative product or solve the severe challenge in a creative and modern way.
- Contribution – every new successful venture gives to society. Even though there are stereotypes about people in business being greedy and uncaring, quite often they contribute more than average people because they have platforms for it. Even their taxes help with funding the social services, and they donate to charity causes, invest in the solutions against poverty, and create access to things like health care and water, which every person must have.
Concepts and characteristics of entrepreneurship
Every entrepreneur needs to deal with a large number of problems and obstacles. However, in the end, the result pays off much better. The potential business holders should have the following characteristics if they want to succeed in their quest:
- Interest and vision – the entrepreneur needs to be genuinely interested in the project and envision its outcome. There is no point in doing something that you hold no interest and passion for. Going into an area without a clear vision of what you want to do is not a good idea either – not everyone can work in a chaotic and unpredictable environment.
- Many skill areas – the successful entrepreneur should not only limit his/her skills to one area. Instead, he/she would possess a lot of valuable knowledge from a lot of areas, because you never know when you will need a particular skill come in handy. For example, if the person works on mobile apps, the recommended areas to research are mobile technologies, marketing, app development, game design, etc.
- Financial and personal investment – the company has to be invested in, and not only financially, which is quite apparent, but also emotionally. The personal investment is the time that the person spends on the development of their company, as well as the reputation, skills, and effort. The business person who is unable to invest in their company will be unable to inspire other people to invest.
- Organisation and delegation – the successful company is defined by constant growth and stability. For the unstoppable success and payback, more than one person has to work on the company, and the work needs to be organised. The leader has to pay attention to every detail which is going on in the company and learn how to hire the right people who will be dedicated to their job and perform it professionally.
- Risks and rewards – there is no prosperous enterprise without a chance. The person who runs everything needs to calculate all the risks and make the crucial decisions on their own. The choices they make can either influence the company in a positive way or affect it negatively.
Functions of entrepreneurship
Next, we will talk about some crucial entrepreneurship functions.
- Entrepreneurial functions – these include organising, risk bearing, and innovation.
- Managerial functions – the functions that fall into the management category are planning, organisation, staffing, direction, and control.
- Promotional functions – this category involves selection of the business idea, preparation of the report or business plan on the idea you want to realise, and meeting all the financial requirements.
- Commercial functions – production and manufacturing, marketing and accounting are the functions that easily fall into this category.
Knowing the types of entrepreneurship is essential for every person who wants to set up their own business, as they need to know what exactly this business will serve for, and which category it will fall into.
- Ethnic – this is the type of entrepreneurship which refers to the owners of the businesses who are a part of a particular ethnic or racial minority, mainly in Europe and the United States. This is listed as a separate type because of the unique experience and strategy of people who are trying their best to integrate their business into the society, where their ethnic group is in the minority.
- Institutional – when the new organised entrepreneurs, who have resources for implementing their ideas, are using the new opportunities to realise their highly-valued interests and establish a new institution which will be an arena for their business plan, this is widely known as an institutional type.
- Cultural – this type of entrepreneurship foresees the practices of cooperation between the cultural professions and the creative industry sectors and activities. Cultural entrepreneurs are divided into three groups: cultural personalities, collective enterprises, and tycoons.
- Feminist – this is the type which is based on feminism and its values and is implementing the business approaches which are supposed to improve the quality of life among women. The enterprises which have been created using this approach follow the principle “for women, by women”. Their primary purpose is creating a change in society through the ethical principles of equality, respect, and cooperation.
- Social – this person’s job is using the start-up companies for the development and foundation of solutions to the various cultural, environmental and social issues. It is the concept which can be tied to many different organisations which have multiple beliefs, aims, and sizes.
- Nascent – the entrepreneur of this type is the one who is currently in the process of pursuing a business opportunity and establishing a venture. They are engaged in multiple activities, including the actions which help the business become more specific. For example, this can be the organisation of the teams, the formation of legal entities, seeking finances, and purchasing facilities. In general, this person is expected to dedicate a lot of time and effort to their business.
- Project-based – this entrepreneurship type describes people who consistently create temporary organisations, which means organisations with a specific objective and a limited lifespan. The examples of such project-based enterprises are movie production, sound recording, software development, construction, etc.
- Millennial – finally, this typically refers to someone who uses technology and media for reaching success in their business. The millennial entrepreneurs use their knowledge of technology as a strong side for creating their breakthrough businesses. There have been successful millennial enterprises, such as Facebook created by Mark Zuckerberg.
Why become an entrepreneur?
If you ended up here, the chances are that you might be searching for the reasons to start your entrepreneurship. Every entrepreneur has their motivations to start a specific business. Some of them have dreamed of it from the beginning, while for some it is just a spontaneous activity and passion. However, they can all agree on the fact that it is great to be in control of your destiny.
There are some significant reasons why people become entrepreneurs, which may be interesting to you. Here are the main ones:
- Changing the world – it does not mean that you will immediately make an influence on the world as a whole. It means that you will improve your community and the lives of people for the better, even if it is not a large group of people. Different entrepreneurs can have different purposes – the fight against poverty, exploring space, or making an innovative product that will blow everyone’s mind. Nonetheless, all of them build a specific brand and position themselves in a particular way with a purpose to raise money.
- Not wanting a boss – people who are born for entrepreneurship are usually struggling with working under someone’s guidance. Someone else’s set of rules often holds them back from what they want, and they start feeling like they need to break free and start their own business. A lot of people who now have their successful companies have begun working and gaining experience under some brand, and later decided to go on their own adventure.
- The desire for flexible hours – being an entrepreneur is a popular wish among people who are unable to work for the set amount of hours. A lot of people who for different reasons are unable to work a set amount of hours would instead start their entrepreneurship than have a job with fixed work time. This includes students, parents with children, people with disabilities, and just those who feel like the office work would restrict them.
- Taking risks – in the new businesses, there is often risk-taking and the consideration of entirely different opportunities. There are various types of risks, including financial risk and fear of pressure and expectations. However, every entrepreneur is willing to take risks because their job is to try things that would probably be too scary for the average people.
- Inability to get a job – there is a period in every person’s life when it is just difficult for them to get a job, no matter what they do. For example, this problem quite often happens among students, who go through hardships when it comes to finding a job because the companies need more experienced people. People who are occupied with domestic chores and children are also hesitant when it comes to finding a stable workplace because they are unsure how they will manage everything. That is why they take the matter into their own hands and start the business based on their skills and personal qualities.
- The corporate environment is not for them – thriving in the corporate company might be a hard task for the person who wants to grow personally. Quite often, they do not enjoy their working conditions and wish to have different responsibilities. The person who wants to become an entrepreneur can be easily spotted in the corporate environment because they usually have a business-driven mindset and want to have more control over things.
- Curiosity – this can also be an essential factor on the way to entrepreneurship. The person who wants to start their own business likes experimenting and learning new things, and is always willing to develop their mind, as well as broaden their knowledge. Entrepreneurship is exactly what they need because doing something is the best way to learn and gain experience.
- Ambition – the best entrepreneurs are ambitious, and the difficulties are not a problem for them, but rather a challenge. These people achieve the highest results, because none of the troubles will stop them, and they will fight through all the difficulties. The sky is the limit for those people, and one day, their efforts will pay off.
Now when you have found out why people start their businesses, we can talk a little about examples of entrepreneurs who have started with a passionate idea and eventually reached overwhelming success.
Famous entrepreneurs success stories
- Walt Disney – everyone knows this name because there is not a single person who has not seen Disney cartoons. The brand of Walt Disney started with his first and most famous character, Mickey Mouse. Eventually, his motion picture company included more characters, e.g., Cinderella and Snow White. Nowadays, Walt Disney Pictures is the most famous and revolutionary animation studios, which produces only high-quality animated movies with adorable characters and thrilling plots. Disney’s name was forever written in history.
- Mark Zuckerberg – before creating Facebook, the social media platform that we all use, this developer has created a few other programmes. They have not instantly become popular, but the talented young man never gave up on his dreams. He was always exceptionally talented in creating software because big companies like AOL and Microsoft expressed a firm intention to buy his products. When Mark founded Facebook, he has already had a solid follower base from his previous ventures. Currently, he is one of the most successful people in the world.
- Oprah Winfrey – this woman’s life and career follows a classic and exciting rags-to-riches story. She grew up extremely poor and was bullied at school for wearing old clothes. She has been through a lot in her life, but what she always had is talent and passion for hosting TV and radio shows. Oprah started small and then went her way up to the top until she established her own show “The Oprah Winfrey Show”, which made her famous and brought her a lot of money.
- J.K. Rowling – one of the most famous writers of all time started as a single mother who was struggling with money. Eventually, the inspiration for a children’s book about the magical world struck her, and she wrote the first part of “Harry Potter”. At first, her creation was not accepted in a few publishing agencies, but she would not give up. Nowadays, “Harry Potter” books are significant for the entire generation who grew together with them, and J.K. Rowling, who is a highly respected author, can afford herself a comfortable life.
- Sara Blakely – she is the creator of a famous brand “Spanx”, which mostly releases leggings for women and other types of sportswear. Moreover, this brand was one of the first who came up with the idea of leggings. Since the creation of “Spanx”, Sara has invented many more useful products, including the arm tights.
The business ideas that you could get inspired with are countless. It all depends on what you love and enjoy doing, and what you think could be profitable and gain interest among your target audience. Here are some entrepreneurship examples that people often start:
- Freelance work (e.g., writing a blog, being an accountant, designer, or copywriter)
- Creating apps (social media or chatbots)
- Providing services (dog walking, cleaning or food delivery)
- Consulting services (life coach, advisor, wedding planner, etc.)
- Marketing (SEO brands, PR agencies, influencers)
- Affiliate marketing on large sales websites (in Nigeria you can try Jumia or Konga)
- Blogging (niche blog, magazine, product reviews)
- Vlogging (YouTube channel or Twitch)
- Real estate agency
We hope this essential guide into the concept of entrepreneurship, its types and functions was useful for you! Good luck to you if you want to establish a fruitful business of your own.
READ ALSO: Success stories of entrepreneurs in Nigeria