All about Entrepreneurship!!

 “Entrepreneurship is an activity that involves putting one’s own resources at risk to create a business or create something that is intended to have business application.”

This definition encompasses what I view as the key risk taking, economic and practical elements of entrepreneurship:

First, putting one’s own resources at risk. An entrepreneur is a person who invests their own funds and often a significant amount of their own funds in his or her own commercial venture. You are taking your economic chips and betting those economic chips on you, your vision and your ability to make that vision a profitable reality.

The CEO of a company who is being paid a salary and directs the creation of a new business venture or new business unit is not an entrepreneur. Why? The shareholders of the company rather than the CEO are bearing the economic risk of the venture. The inventor who invents a time machine that is financed 100% by venture capital investors is not an entrepreneur. Why? He is essentially an employee of the venture capital investors.

Second, creating a business. An entrepreneur is a person who is creating something of economic value. The concept of creation is very broad and includes two key aspects: (i) the core business idea and (ii) realizing the core business idea.

The core business idea is the driver of the venture and can include:

the creation of a new business based partially or completely on an old business model, such as opening up a new pizzeria or a consulting firm

the creation of a new use for something that already exists

the creation of a completely new business which does not exist in the market

the creation of a new technology, process or idea that has business application

the creation of a new market or new market segment

The second element of creating a business involves the many steps that are involved in bringing the core business idea to life, which can involve raising capital, setting up a firm, recruiting and managing employees, conducting research, finding clients and addressing all of the issues that inevitably arise in running a business.

Third, business application. The third key element of entrepreneurship is that the risk taking and idea implementation is intended to create a profitable business. The fundamental objective is to create economic value.

Is a person who repeatedly invests his or her funds in developing a business idea that the entrepreneur believes will succeed but in fact has 0% chance of success an entrepreneur? Yes. Why? Because the person: (i) is putting his or her resources at risk; (ii) is attempting to create a business; and (iii) intends for the business to be economically profitable. The fact that the business repeatedly fails may mean that the person is not a great entrepreneur but he or she is still according to my definition an entrepreneur.