What is Entrepreneurship? Definition with Examples

Entrepreneurship is one of the oldest professions in the world today. The field of entrepreneurship has gone through a transition that seems to change its definition. 

Today, we have different types of businesses that change how we define the term entrepreneurship.

The advancing technology has made it easier for people to communicate and move from place to place. This has further contributed to the emergence of e-commerce business, which is taking the world of entrepreneurship by storm.

Over 582 million entrepreneurs in the world are always on the move to grow and develop their business. There is a lot to discuss entrepreneurship, and in this article, we shed more light on its current definition, different types of entrepreneurship, and show you what makes a successful entrepreneur.

25 Definitions of Entrepreneurship You Should Know

1. Professor Howard Stevenson from Harvard Business School defines entrepreneurship as the pursuit of opportunity beyond resources controlled.
2. Entrepreneurship is a general term that is used interchangeably. It can mean the study of how to create and start a business or the actual process of starting the business. In this context, an entrepreneur must first have an idea of a product or service that will meet people’s needs before he or she can think of starting the business.
3. It is a process of starting a business and growing it to make a profit. This is the most basic definition of entrepreneurship. However, as the world becomes a global village, most entrepreneurs are venturing into business to transform the world and solve the major problems that people face.
4. There is a lot of information that the basic entrepreneurship definition hides. For instance, the main objective of entrepreneurship is to bring products and services closer to the final consumer. Most people who open their small businesses do so to meet their dreams of managing their companies or being their “own boss.” Most entrepreneurs live in a free world – nobody restricts them on how to plan their work schedules. Entrepreneurs have made the world a better place today by coming up with new products and services that meet the most basic needs of people.
5. Entrepreneurship is also perceived as a concept of developing and managing a startup business to make profits and bear all the risk. It is the willingness to start a business despite the various risks in the corporate world. In this context, every enterprise must bear all the risks and challenges in its quest to provide essential products and services to customers.
6. Entrepreneurship is the readiness and ability to think of a business opportunity, organize resources, and venture into it while baring all the risks to make a profit. It is all about realizing a business opportunity and stretching yourself to venture into it.
7. People start businesses for different reasons, while some may be looking forward to making profits; others are simply focused on availing essential services to a community such as safe drinking water, healthcare, and garbage collection. Therefore, entrepreneurship is organizing resources, starting a business with a motive to meet social needs, or making a profit.
8. Entrepreneurship is a process of starting a new organization in response to identified or existing opportunities. It is an elaborate process comprising of coming up with new products and a production process with a means to create new jobs and improve livelihoods.
9. There is also intrapreneurship, which is the act of starting a new business in an already existing organization. Entrepreneurship is not all about starting a new business but also improving on the existing ones to make them more advanced and able to solve more complex problems that customers have (IGI Global, 2020).
10. You can also define entrepreneurship as an approach that seeks to promote an existing business towards realizing new opportunities and making a profit. 
11. Entrepreneurship is an act that seems to push any business towards achieving its goal of increasing income. For instance, if a company decides to improve its product line to cater to a new market category, it is widening its market reach to realize more profits (IGI Global, 2020).
12. Entrepreneurship is all about coming up with something new that can meet human needs. An organization can come up with a product or services that solve a common problem for people. For instance, Tobias Lutke invented Shopify to make it easier for entrepreneurs to take their business online and expand their customer base (IGI Global, 2020).
13. Entrepreneurship is a process of identifying existing or new opportunities and coming up with what is likely to meet the opportunities through innovation, proactiveness, and risk-taking.
14. It is a process of combining natural resources with other factors of production like labor and capital, taking all the corporate risks to provide essential products and services to society.
15. It is the ability and willingness to take all the risks in providing products and services with a motive to make a profit.
16. Entrepreneurship is having the knowledge and human capacity to transform ideas into actions. It begins with an idea of a product or service, then taking the risk of transforming the idea into a product or service that meets human wants.
17. It is a process of entering a new market with new or existing goods and services to improve the scope of your business. A business that comes up with a strategy to expand its production or reach a wider market is practicing entrepreneurship to its fullest.
18. You can also view entrepreneurship as a new form of business in a market that needs to be nurtured to grow and develop. The new business or enterprise faces many risks in its initial stages and requires proper management to succeed.
19. Entrepreneurship is all about identifying a business opportunity and gathering all the resources that you can get to turn the opportunity into a reality. It is about being there to grab the new business opportunities and create something new to solve existing human problems (Maia Haag, President of I See Me).
20. Entrepreneurship is a mindset. It is setting your mind to identify new opportunities and act accordingly to transform them into reality. It is a business idea that you need to make work or what you see in other people that you believe can help you grow your business.
21. It is the ability to look at market situations in a bigger picture and find out if there are new opportunities to start or enhance a business. It is about coming up with a hypothesis for your opportunities and testing them. When testing the hypothesis, some of your assumptions may come out as true, while others may not work. With persistence, you can come up with a product or service that meets prevailing market demand.
22. You can define entrepreneurship as a consistent urge to make things work better in your community. It is an idea that you are not happy with how things around you are doing, and you intend to transform them (Dobbie Roxarzarde, CEO Rachel’s Kitchen).
23. Entrepreneurship is like a dream. It is all about believing in yourself, starting something new from scratch, and inviting other people to help you make your dreams a reality. You may need courage and determination to succeed as an entrepreneur (Derek Hutson, CEO Datical).
24. Entrepreneurship may have different meanings to different people. Some will think of it as a process of creating a larger business like Amazon, while others take it as a means to starting a small business like a retail shop and growing it to something bigger. It is simply a commitment to transform your ideas into a profitable business venture (Business Daily, 2020).
25. In the 21st century, the definition of entrepreneurship seems to be taking a new dimension. It has been expanded to how and why individuals identify opportunities, evaluate them, and decide to implement them and why others don’t do that.

Importance of Entrepreneurship

Why do we have entrepreneurship? Why do most people long to become entrepreneurs? Most leading economies are those with the most vibrant formal and informal sectors comprising of industrious entrepreneurs. 

Entrepreneurship is a process of coming up with a business that meets the various challenges a community is facing. It is all about making life better for the people around you by offering them products and services that meet their needs.

Here are some benefits of entrepreneurship you should know:

Creates Jobs

At least 26% of entrepreneurs say that the reason they start a business is to become their own boss. In fact, in some countries, a significant proportion of the labor force comprises entrepreneurs. 

For example, in the U.S, at least 15 million people are full-time entrepreneurs. Globally, small businesses create at least 1.9 million new jobs every year.

Entrepreneurship is a leading source of employment for most people in developing countries. Anyone with a business idea can gather resources and start a business. 

In some countries, the legal formalities required are few, making it easier for individuals to start a business. Without entrepreneurship, the number of jobs would reduce significantly.

Entrepreneurs create more job opportunities for people when they grow their business to offer more products and services. They create a source of livelihood for many people and reduce the unemployment rate in every economy.

Improves Research and Development

Entrepreneurship supports the research and development industry. For instance, before a company or a business can launch a new product or service in the market, they must first research the target market. 

The business will spend some money in the process by hiring research companies to do some market research on the product they are about to introduce in the market.

Contributes to National Income

Governments in most countries collect revenue from entrepreneurs in the form of business income tax. This adds to the value of the national income. Therefore, the more businesses in a country, the more revenue the governments collect domestically. 

Entrepreneurship enables the growth of new markets in an economy and thereby creating additional wealth to the country. When more people become entrepreneurs, the unemployment rate of the country reduces.

Improves Livelihoods and Alleviates Poverty

Poverty is a major issue in most of the developing countries. However, through entrepreneurship, most people have been able to come out of the poverty bracket and uplift their living standards. 

Most entrepreneurs can afford basic needs like food, cloth, and shelter with the profits they make from their small businesses. Millions of people all over the world can venture into online business and make a living.

Creates a Better Society

Entrepreneurs give back to the society in terms of the taxes they pay to the government and the direct donations they give. Most entrepreneurs are active donors to charity institutions and NGOs. 

In some cases, entrepreneurs establish a business that only seeks to improve the community’s quality of life. For instance, investing in the business to provide clean drinking water and healthcare may not be with the objective of profits but to help the community get access to these essential services conveniently.

Spurs Innovation

Entrepreneurship is the primary source of development and innovation. Most of the advanced technologies like AI and VR originate from entrepreneurs trying to make the world a better place. 

The need to solve problems worldwide and reduce the existing inefficiencies has spurred innovation and led to the creation of better equipment by entrepreneurs.

Who Is An Entrepreneur?

Ideally, you cannot talk about entrepreneurship without the word ‘entrepreneur’ crossing your mind. So, who is an entrepreneur, and what qualities make you the best entrepreneur?

Peter Ducker argues that an entrepreneur is anyone who looks for, responds to, and exploits change as an opportunity. 

The old definition of entrepreneurship creates a notion that every entrepreneur starts a business to make a profit. 

However, most economists, such as Joseph Alloys, argue that profits are just a measure of how successful entrepreneurs have been and should not be the sole reason for people starting a business.

Here are some definitions of an entrepreneur worth your attention.

1. An entrepreneur is someone who identifies a business opportunity, gathers all factors of production like capital and labor to start a new business while taking all the risks that come with it.
2. An entrepreneur is anyone who sees a problem in the world and comes up with an idea and a business that offers a solution to the problem.
3. An entrepreneur is anyone willing to identify an opportunity for business and work towards achieving his or her goals.
4. An entrepreneur can also mean having the ability and the passion for establishing, administering, and managing a successful business venture to make a profit.
5. An entrepreneur is anyone who comes up with an innovative idea, implements it, and works alone or with the help of others to implement and grow the idea.
6. An entrepreneur is anyone who takes an idea and transforms it into a business opportunity.
7. An entrepreneur can be anyone who manages the business and assumes all the risks that come with it.

Types of Entrepreneurs

Finding the exact definition for “entrepreneur” may not be that easy because of the many types of small businesses in existence. 

Each business has its unique definition, which makes it even difficult to find a general definition of entrepreneurship. Some common types of entrepreneurship include the following:

Small Business Entrepreneur

A small business is any business with less than 500 employees. This type of entrepreneurs includes small retail shops, local business owners, sole proprietors, partnerships, and LLCs.

Online Business Entrepreneur

With advanced technology, most entrepreneurs have been able to establish and run their businesses online. Companies such as Amazon and eBay sell their products and services to customers globally through the internet. 

Online business is any business that does most of its operations online. Today, even large corporations are doing online business.

Serial Entrepreneur

A serial entrepreneur is anyone who starts a business and sells it to someone else to continue it. They keep coming up with business ideas and selling the ideas to investors while they earn some income inform of royalties. 

A serial entrepreneur can earn multiple incomes from different businesses that they have helped others to grow.

Lifestyle Entrepreneur

This is anyone who starts and builds a business based on their passion and life goals. For instance, musicians can decide to establish an online store selling musical instruments. If you love traveling, you can start blogging about travel destinations.

The difference between lifestyle entrepreneurs and other types of entrepreneurs is they create a business that helps them to sustain their life goals. 

Most people refer to this type of entrepreneurs as digital nomads because they spend most of their time online looking for opportunities to grow their online business.

Home-based Business Entrepreneur

A home-based business is any type of business that is run at home. It fits the definition of a small business, except that most of its operations are based at home. 

Most companies such as Apple and Disney started at home, which means that home-based businesses can compete favorably with other large organizations that enjoy economies of scale.

Characteristics of a Successful Entrepreneur 

Everyone can start a small business, but it takes some hidden qualities to succeed as an entrepreneur. Below are some of the qualities of successful entrepreneurs:

Risk-taker 

To invest your resources in a new business involves risk-taking, especially if the odds of success are unknown. 

A successful entrepreneur is willing to bear all the risks that come in the pursuit of growing their business and making more profits. Every entrepreneur must be willing to bear the risks of doing business.

Leadership Qualities  

An entrepreneur must have the best leadership qualities. Because most entrepreneurs are their own bosses, they must exercise the top leadership qualities if they invite others into their business. 

For example, an entrepreneur should have the leadership skills to manage employees to improve productivity and ensure the business meets its short and long-term goals. Without effective management and leadership, any business cannot achieve high productivity and gain a competitive edge.

Innovation 

An entrepreneur must be creative and innovative to come up with a new idea and transform it into a profitable business. An entrepreneur can also advance an existing idea and come up with a simpler and more efficient way of doing things.

Openness 

An entrepreneur should be able to come up with new ideas and respond to all emerging situations. He should transform every circumstance to an opportunity that helps the business to grow.

Flexibility 

When situations or the business environment changes, an entrepreneur should always be ready for the change to ensure their business is running smoothly. 

An entrepreneur should be able to react instantly to changes in the market that affect the products and services he is offering. Embracing and responding positively to changes in the business environment is also another feature that every entrepreneur should have.

Knows About The Market And The Product 

Having full information about the products you are offering and the type of market you are operating is key to establishing a successful business. 

An entrepreneur should always be up to date with the latest market trends and understand how the various market variables like demand and supply affect the products.

Determination and Self-confidence 

It goes without saying that most entrepreneurs are determined and focused on their goals. However, they must have the self-confidence and believe that they can drive their businesses towards achieving their set goals.

Optimism 

Optimism is about being positive that the future is bright. Every entrepreneur should believe that the ideas they implement will succeed even when nobody believes in them. 

Mark Zuckerberg tried a lot of stuff from developing different software before he came up with Facebook. He achieved all that because he believed Facebook was the next big thing in the communication industry. Today, he is one of the most successful entrepreneurs with a net worth of over USD 68.3 billion.

Desire for Action  

Successful entrepreneurs don’t wait for things to happen; they make things happen the way they want. They don’t expect something out of anything and always do everything they can to overcome the challenges ahead of them. Entrepreneurs know how to time and do not procrastinate their actions.

Vision and Focus 

A business without a vision is more likely to fail within the first year, and so is an entrepreneur with no vision. Vision is a necessary element in entrepreneurship because it helps you set your business goals and help you achieve them.

30 Useful Entrepreneurship Statistics

1. The United States is one of the countries with the most number of entrepreneurs. Almost 27 million Americans are either starting or already running a small business.
2. At least 22.5% of small businesses fail within the first year of their establishment. The reason for their collapse span from mismanagement to lack of support from the government (Small Biz Genius, 2020).
3. Most entrepreneurs spend at least 66 hours a week running their businesses. Also, a majority of American entrepreneurs work overtime. This shows how much time entrepreneurs can dedicate to ensure they establish a successful business. (Entrepreneur, 2020).
4. In 2018, almost 99.9% of the 30.20 million firms in the U.S comprised of small businesses.
5. In 2017, the U.K. had over 470,000 social enterprises employing at least 1.44 million people. The country recorded the most number of enterprises in the region that year (Finance online, 2020).
6. In 2016, Australia had over 20,000 social enterprises that employed over 300,000 people and contributed to the country’s GDP by 2-3% (Finance online, 2020).
7. Small businesses account for 99.9% of all companies in the U.S. The country has over 30.7 million small businesses (SBA, 20.19)
8. For the period 2000-2017, small businesses created an average of 8.4 million jobs compared to the 4.4 million jobs that large organizations established in the same period (Finance online, 2020).
9. Nearly 31% or one-third of all small businesses in the U.S. are currently inactive or not operational (Facebook, 2020).
10. Starting an enterprise begins with self-confidence and determination. At least 82% of successful business owners believed that they have the skills, experience, qualifications to run a business (Finance online, 2020).
11. At least 70% of small businesses shut down in the U.S. following the COVID-19 pandemic as the country became the epicenter of the disease (Oberlo, 2020)
12. All startups have a 37% chance of succeeding within the first four years of engaging in active business.
13. Only 60% of small companies will make it to the fifth year. 85% of all startups survive the fifth year of the business, and only 75% survive the second year. It takes courage, patience, and commitment for entrepreneurs to succeed (Finance online, 2020).
14. The majority of entrepreneurs, At least 33%, have high school education or GED. Only 4% of those with doctorates and 29% of those with master’s degrees are entrepreneurs (Guidant Financial, 2020).
15. Every month in the U.S., an average of 543,000 small businesses are started in the country (Business Insider, 2020).
16. Some studies have shown that those who own homes are 10% more likely to start a small business compared to those who do own homes (Fundera, 2020)
17. At least 69% of American entrepreneurs are likely to start their business at home.
18. At least 27% of businesses say that they are not able to receive business funding that they need to grow their business (Fundera, 2020).
19. Entrepreneurs who have succeeded in their first business venture have a 30% chance of succeeding in their next venture. Those who fail in their first business have a 20% chance of succeeding in their second venture (Inc, 2020).
20. Lack of effective market is the number one reason why 42% of startup businesses will fail.
21. Having at least two founders in a business increase the chances of success compared to having only one founder. This explains why most sole proprietor entrepreneurs fail within the first year of business.
22. Industries that recorded the highest number of startups include general retail (7%), business services (11%), home service (6%), and health and body fitness (10%) (Fundera, 2020).
23. 52% of small business owners believe that access to quality labor is the most significant problem that small businesses are facing (CNBC, 2019).
24. Entrepreneurs are 125% more likely to succeed if they venture into a business in the industry they are currently engaged in (Fit Small Business, 2020).
25. Mismanagement of business funds and cash flow problems are the basic reasons why most startup small businesses don’t make it to the second year (Solopreneurinstitute.com, 2020).
26. At least 42 % of self-employed entrepreneurs do not have a retirement plan. Majority of entrepreneurs do not set aside some money for their retirement benefits (Solopreneurinstitute.com, 2020)
27. In 2018, there was a 34% increase in the number of fitness, health, and beauty startups worldwide (Fundera, 2020).
28. Small businesses account for at least 64% of the 1.5 million new jobs created in the U.S. every year (Oberlo, 2020).
29. The most motivating factor for people to start their own business is that they believe they are ready to become their own bosses. This is the first reason that most entrepreneurs give when asked why they decided to start a business (Finance Online, 2020).
30. At least 64% of small businesses are using social media to market their products and services to millions of potential customers (Oberlo, 2020).

How to Become an Entrepreneur 

Anyone can become an entrepreneur, but it takes effort to make their business stand out from the rest. Many people like Bill Gates, Richard Branson, Michael Dell, and Mark Zuckerberg started from nothing, and today they own some of the largest corporations and organizations in the world. 

It doesn’t matter where you are at the moment, as long as you have an idea of what you want to do, you can always achieve it.

Some of the most successful people, like Steve Jobs, became entrepreneurs while still in college. Believing in yourself like Jeff Bezos did when coming up with Amazon, is what makes you push your business to the next limit.

If you are wondering where to start your entrepreneurship journey, then this section of the article is meant for you. Continue reading to find out what you can do to become one of the top entrepreneurs.

Step 1: Come up with a Business Idea

The first step to becoming an entrepreneur is coming up with a business idea that you want to implement. Ideas form the basis of entrepreneurship. Without your original idea, your business cannot be unique, and the chances of entering a flooded market are very limited.

If you want to go the extra mile with your business, you can either create a new product and service or advance other people’s ideas to solve existing problems in the society. 

There are many sources of business ideas. Look around you, and you can easily find a gap in the market that you want to fill. Maybe you are not happy with the kind of services your local fast food joint offers and you feel like you can offer better services – that is a business opportunity in waiting.

What are you passionate about? Do you enjoy cooking, traveling, or you like helping people solve technical problems? Think of what you enjoy doing the most and transform that into a business. 

For instance, you can start an online business to supply clothes if you are passionate about fashion and design.

Step 2: Get Some Education

Not everyone is born a manager or a leader. Therefore, before you start a business, you should first determine if you should get some education and get some basic skills in accounting, marketing, management, leadership, and entrepreneurship. Having basic education helps you to run your business more professionally and avoid mistakes that most entrepreneurs make out of ignorance.

Related: What is Marketing?

Education is a must-have if you want to venture into some businesses, such as technology and software development. You will need to get some education in programming before you can start a tech company or hire some staff with such skills to be part of your team. Note that every state has a unique set of continuing legal education requirements which can be viewed on NBI.

Step 3: Have a Business Plan

Have you heard about that famous saying that failing to plan is planning to fail? Yes, without a business plan, your business is bound to fail within the first year. 

Why is a business plan that vital for a business? A business plan is a document with clearly defined objectives and how a business intends to fulfill such objectives.

A business plan acts as a guide for your business. It lays out the strategies that your business can adopt to achieve its objectives. It is what you need to attract other investors that will finance your business. It also helps you evaluate the success your business has made as time goes.

Step 4: Define your Target Market

Who is your target customer? Every business must first define its target customer before establishing itself. Customers are the primary source of revenue for your business. Find out about your customer demographic. Where are the customers located, and where can you find them?

Defining your target customer helps you know whether you should have a physical address for the business. For instance, if most of your customers are in different countries, you can opt to start an online business so that they can access your products and services online no matter where they are.

Knowing more about your target customers helps you choose the best business model.

Step 5: Network with Other Entrepreneurs

Networking is key to establishing a successful business. Your network determines your net worth as an entrepreneur. You have to team up with other experienced entrepreneurs to gain some skills essential to running your business.

Related: Beginners Guide to Affiliate Marketing

Try as much as you can to network with other entrepreneurs in your industry by attending seminars or trade shows. Learn something from other entrepreneurs like how to manage a business and customer retention strategies that you can implement in your business.

Through networking, you can find new investors who are willing to invest money in your business or hold your hand throughout the business journey. Those in your network can also drive customers to your business, helping you to boost your sales.

Step 6: Market Your Idea

To put your business on the limelight and drive more leads to your business, you must sell your business idea to people. Of course, businesses are offering similar products, and therefore, you must convince your target customers that you are offering the best products.

The only way to achieve this is through marketing. As a startup business, you can begin using inbound marketing strategies like personalized email marketing to reach out to new and existing customers. 

Related: What is Digital Marketing?

Market your products and services to customers by highlighting what makes them unique or adds value.

Final Thoughts

Entrepreneurship is a broad concept and discipline. It creates new jobs, new products, new production processes, and news organizations. Because of its diversity, there are myriad definitions of the term. 

In this article, you’ve learned some of the most common definitions of entrepreneurship and entrepreneur. It is evident that entrepreneurship has several definitions depending on the business model that you intend to adopt.

The knowledge shared here about what makes a successful entrepreneur and statistics on entrepreneurship should help you make the right decisions when you want to start a small business.

Starting a small business should not be that difficult if you have all the resources like human capital and cash flow. However, you must have the right information about the product, the market, and the business model you intend to venture to reduce the risk of failing. 

Lastly, you should not always be afraid to start something new, because that is what defines entrepreneurship. Be a risk-taker, and have a passion for growth if you want to become the next Bill Gates.