Are You An Entrepreneur?

The Oxford Advanced Learner's Dictionary of Current English defines an entrepreneur as a person who organizes and manages a commercial undertaking.

So much have been written and said about entrepreneurship. Yet, it remains an elusive concept with no generally accepted definition to date.

The above-mentioned definition is, with all due respect to the Oxford Dictionary, a poor definition. Under this definition just about anybody in a commercial undertaking with an organizational and managerial function can be called an entrepreneur.

Define Entrepreneur
 

I propose the following definition of an entrepreneur:  

A person with an inner compulsion to make money for his or her own account regardless of limited resources, who is not afraid to take risks and is able to identify a viable business opportunity and turn it into a profitable business venture.

Qualities Of Successful Entrepreneurs

Let's consider the individual Six Elements that Defines an Entrepreneur:

A person with an (1) inner compulsion to make money for his or her (2) own account regardless of (3) limited resources, who is (4) not afraid to take risks and is (5) able to identify a viable business opportunity and turn it into a (6) profitable business venture.

1. Inner Compulsion to Make Money

In his book How to get rich, Felix Dennis (One of the wealthiest self-made men in Great Britain) remarks:

Wishing for or desiring something is futile without an inner compulsion to achieve it

Entrepreneurs have an inner compulsion to make money. It goes far beyond simply desiring to make money or wishing that they can be rich. In affect, it is an obsession that drives them.    

P.S. I highly recommend How to get rich by Felix Dennis. However, it is brutally honest. He talks about how he built up a net worth of between USD 400 million and USD 900 million and the lessons he learned in the process. I would not really call it a How To... book. It reads more like an autobiography.

2. Own Account

Working as an employee in a company does not make you an entrepreneur, even if you are the CEO of General Electric and the company earns billions of dollars every year, as it is not your company. The correct term to describe such an employee is Intrapreneur.

An entrepreneur makes money for his or her own account. He or she is not paid a pre-determined salary approved by other people in the organization. However, this does not mean you must have your own company. Providing innovative solutions to a company in return for large amounts of money does qualify as making money for your own account.

3. Limited Resources

An entrepreneur does not say things like: "I cannot afford this..." or "I do not have the money to start my own business". Limited resources are never used as an excuse not to act.

An entrepreneur asks questions like: "How can I afford this..." or "How can I raise the money to start my own business".

Some of the wealthiest entrepreneurs in the world today started with no or very little money of their own. Many of them could have used the excuse of limited resources to justify them not going into business for their own account. But, then they would not have been entrepreneurs...

4. Not afraid to take risks

Business is all about managing risks. It is possible to manage risks but I have never come across a risk-free business that never experiences any problems and can guarantee continuous success and wealth creation.

An entrepreneur understands that there is a direct relationship between risk and reward. He or she expects a certain amount of risk and does not run away from problems but manages them knowing that the better he or she can manage problems the bigger the reward will be.

Note: Risks are part of life. Working as an employee can be risky - Risk of company downsizing, etc. By being in control an entrepreneur can actually reduce and manage risks much better than your average employee can.

5. Able to Identify a Viable Business Opportunity

An entrepreneur can spot a good business opportunity a mile away. In fact many entrepreneurs are constantly on the lookout for new opportunities - new product or service, innovation, etc.

Note: You find mainly two types of entrepreneurs - One that focuses on one type of business and does everything possible to grow and expand the business (for example Bill Gates), and another type that has many different business interests. A good example of the second type is Sir Richard Branson - He has his own airline (Virgin Atlantic), own soft drink company (Virgin Cola), own credit card (Virgin Money), own gym chain (Virgin Active), etc.

Bottom line, an entrepreneur can identify a viable business opportunity. By "viable" I mean a business opportunity that can be developed and that will survive without outside help. The opportunity must be viable.

Tip: Use a business plan sample to help determine the viability of a business opportunity.

6. Profitable Business Venture    

They say the proof of the pudding is in the eating. An entrepreneur must be able to turn a business opportunity into a profitable business venture. The keyword here is "profit".

Unless the business venture is making money and is profitable you cannot call yourself an entrepreneur.

Many entrepreneurs do not succeed the first time they try their hands at something new. In fact, it is normal that they may experience several failures. However, they all have one thing in common - Sooner or later they manage to build a profitable business venture.

Note: Where many people would give up after the first failed attempt true entrepreneurs persevere. Quitting is a word that has no place in their vocabulary. Instead entrepreneurs learn from their mistakes and come out much stronger and wiser at the other end.

What Is Entrepreneurship?
  

Entrepreneurship can be defined by the following three steps:

Step 1. See - Look and find a viable opportunity.

Step 2. Act - Take action. Do not procrastinate.

Step 3. Win - Make a success of the new venture.

Based on the above, it should be clear what is meant by an entrepreneur, intrapreneur and entrepreneurship. However, I came across a great practical example of entrepreneurship recently that I would like to share:

Entrepreneur Profit
 

Case Study - Richard and Daniel (not their real names)

Some time ago I decided to build a natural rock wall between my house and the neighbors. Unlike a normal brick and plaster wall, a rock wall would suit the character of my house a lot better although it is a more specialized type of construction.

I hired a rock builder that I used seven years ago to build a rock wall for me called Richard (not his real name). I had many problems with him seven years ago, mainly due to the fact that he simply could not plan the build and always asked for extra money regardless of our agreement. Anyway, he had a great team working for him and they certainly knew what they were doing. (I never actually saw Richard do any work himself)

To make a long story short, I decided to use Richard again. The wall his team built seven years ago still looked great and I had a lot of confidence in his team. In addition, I was sure that he would have learned a lot since the last time I used him on how to plan the build and manage his finances and cash flow.

I was wrong...Seemed Richard is not in the habit of learning from his mistakes. Within a short period of time after

commencing the build I was once again bombarded by requests for extra money. When I refused to give him anything more than what we initially agreed on he started delivering poor quality building materials, e.g. "building sand" that looked more than normal top soil, etc. It was a nightmare all over again.

This brings me to Daniel (not his real name). Daniel had a small but successful business in Zimbabwe. You may not be aware of it but Zimbabwe used to be a very nice country until its dictator absolutely ruined the economy. That is however not important for the purposes of this example. Let's just say that Daniel lost his business in Zimbabwe and left the country as a political refugee (with valid claim for political asylum).

Daniel knew nothing about building rock walls when he started working for Richard at the same time I commissioned Richard to build my wall. Whereas he previously did a lot of office work and marketing, Daniel was now doing hard physical labor and was paid very poorly for it. In fact, I found out that Richard was really exploiting his workers.

Daniel kept his head high and started asking me a couple of questions on the price of having a rock wall built. While working he was calculating - Cost of sand, cement, stone...Number of workers...Time to complete...In addition, he was learning as much as possible about building rock walls, through hard personal experience.

One day Daniel was gone. About a week later he come to visit me. He was well dressed and had a big smile on his face. Yes, he started his own rock building and repair business. He even had some small contracts lined up. He explained to me that he will personally do the marketing of his new business and have found some great workers to help him (including some of Richard's workers).

Daniel realized that Richard was not very popular, neither with customers nor his workers, but had relatively little competition. He decided that his company will focus on good customer service and offer his workers better benefits than Richard. In fact, he even went as far as deciding to split profits with his team.

Who is the entrepreneur in this actual case study? Richard, Daniel, both or neither of them? 

Not hard to guess. Daniel. He had a strong inner compulsion to make money for his own account despite no financial resources. He was willing to take a risk and identified a viable business opportunity after observing the mistakes Richard was making. Lastly, his business was profitable. Now that is what you call Entrepreneur Profit... Knowing how to profit from being an entrepreneur.

Richard had his own business for many years but I never thought of him as an entrepreneurial - He has no compulsion to make money (only a desire). He is very reluctant to take any risks and his business is certainly not viable or profitable as he does not know how to handle money. In many ways he only lives from hand to mouth.

Are you born an entrepreneur?

One of the key questions regarding entrepreneurship that is often debated is whether one is born an entrepreneur or whether one can learn to become one. It is not an easy question to answer.

Fact of the matter is that not all people are entrepreneurs. Most people do not even get past the first element, namely compulsion. They have a desire to make money or dream of making more money but do nothing or very little to realize it.

I know many people that have been complaining for years about their working circumstances and the fact that one day they would like to start their own home based business. Very few of them have actually done anything about it. The older they get the more comfortable, complacent and risk-averce they become and the more difficult they find it to change.

My personal opinion? Some people are born to be entrepreneurs. It is nearly as if they have a natural ability from early childhood to be on the lookout for money making opportunities that they then develop into profitable ventures.

Other people only develop entrepreneurial traits later in life. I do believe you can learn how to become an entrepreneur or money maker although most people will never even try. Could they do it if they wanted to? I don't know. Only they can answer that question.

Infopreneur