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Entrepreneur: What It Means to Be One and How to Get Started

Juli 11, 2023Juli 11, 2023adminLeave a comment

www.jyoungblood.com – Learn about the challenges facing entrepreneurs as they start new businesses

What Is an Entrepreneur?

An entrepreneur is an individual who creates a new business, bearing most of the risks and enjoying most of the rewards. The process of setting up a business is known as entrepreneurship.

Entrepreneurs play a key role in any economy, using the skills and initiative necessary to anticipate needs and bring new ideas to market. Entrepreneurship that proves to be successful in taking on the risks of creating a startup is rewarded with profits and growth opportunities.

Key Takeaways

A person who undertakes the risk of starting a new business venture is called an entrepreneur.
An entrepreneur creates a firm to realize their idea, known as entrepreneurship, which aggregates capital and labor in order to produce goods or services for profit.
Entrepreneurship is highly risky but also can be highly rewarding, as it serves to generate economic wealth, growth, and innovation.
Ensuring funding is key for entrepreneurs: Financing resources include Small Business Administration loans and crowdfunding.
The way entrepreneurs file and pay taxes will depend on how the business is set up in terms of structure.

Why Are Entrepreneurs Important?

Entrepreneurship is one of the resources economists categorize as integral to production, the other three being land/natural resources, labor, and capital. An entrepreneur combines the first three of these to manufacture goods or provide services. They typically create a business plan, hire labor, acquire resources and financing, and provide leadership and management for the business.

Economists have never had a consistent definition of “entrepreneur” or “entrepreneurship” (the word “entrepreneur” comes from the French verb entreprendre, meaning “to undertake”). Though the concept of an entrepreneur existed and was known for centuries, the classical and neoclassical economists left entrepreneurs out of their formal models. They assumed that perfect information would be known to fully rational actors, leaving no room for risk-taking or discovery. It wasn’t until the middle of the 20th century that economists seriously attempted to incorporate entrepreneurship into their models.

Three thinkers were central to the inclusion of entrepreneurs: Joseph Schumpeter, Frank Knight, and Israel Kirzner.1 Schumpeter suggested that entrepreneurs—not just companies—were responsible for the creation of new things in the search for profit. Knight focused on entrepreneurs as the bearers of uncertainty and believed they were responsible for risk premiums in financial markets. Kirzner thought of entrepreneurship as a process that led to the discovery of opportunities.

Fast-forward to today, entrepreneurs commonly face many obstacles when building their companies. The three that many of them cite as the most challenging include overcoming bureaucracy, hiring talent, and obtaining financing.

What Are Different Types of Entrepreneurs?

Not every entrepreneur is the same and not all have the same goals. Here are a few types of entrepreneurs:

Builder

Builders seek to create scalable businesses within a short time frame. Builders typically pass $5 million in revenue in the first two to four years and continue to build up until $100 million or beyond. These individuals seek to build out a strong infrastructure by hiring the best talent and seeking the best investors. Sometimes, they have temperamental personalities that are suited to the fast growth they desire but may make personal and business relationships difficult.2

Opportunist

Opportunistic entrepreneurs are optimistic individuals with the ability to pick out financial opportunities, get in at the right time, stay on board during the time of growth, and exit when a business hits its peak.

These types of entrepreneurs are concerned with profits and the wealth they will build, so they are attracted to ideas where they can create residual or renewal income. Because they are looking to find well-timed opportunities, opportunistic entrepreneurs can be impulsive.2

Innovator

Innovators are those rare individuals that come up with a great idea or product that no one has thought of before. Think of Thomas Edison, Steve Jobs, and Mark Zuckerberg. These individuals worked on what they loved and found business opportunities through their vision and ideas.

Rather than focusing on money, innovators tend to care more about the impact that their products and services have on society. These individuals are not the best at running a business as they are idea-generating individuals, so they often leave the day-to-day operations to those more capable in that respect.2

Specialist

These individuals are analytical and risk-averse. They have a strong skill set in a specific area obtained through education or apprenticeship. A specialist entrepreneur will build out their business through networking and referrals, sometimes resulting in slower growth than a builder entrepreneur.2

4 Types of Entrepreneurship

As there are different types of entrepreneurs, there are also different types of businesses they create. Below are the main different types of entrepreneurship.

Small-business

Small business entrepreneurship refers to opening a business without turning it into a large conglomerate or opening many chains. A single-location restaurant, one grocery shop, or a retail shop to sell goods or services would all be examples of small business entrepreneurship.

These people usually invest their own money and succeed if their businesses turn a profit, which serves as their income. Sometimes, they don’t have outside investors and will only take a loan if it helps continue the business.

Scalable startup

These are companies that start with a unique idea that can be built to a large scale—think Silicon Valley. The hopes are to innovate with a unique product or service and continue growing the company, continuously scaling up over time. These types of companies often require investors and large amounts of capital to grow their idea and expand into multiple markets.

Large-company

Large company entrepreneurship is a new business division created within an existing company. The existing company may be well placed to branch out into other sectors or it may be positioned well to become involved in new technology.

CEOs of these companies either foresee a new market for the company or individuals within the company generate ideas that they bring to senior management to start the process and development.

Social entrepreneurship

The goal of social entrepreneurship is to create a benefit to society and humankind. This form of business focuses on helping communities or the environment through their products and services. They are not driven by profits but rather by helping the world around them.

How to Become an Entrepreneur

After retiring her professional dancing shoes, Judi Sheppard Missett became an entrepreneur by teaching a dance class in order to earn some extra cash. But she soon learned that women who came to her studio were less interested in learning precise steps than they were in losing weight and toning up. Sheppard Missett then trained instructors to teach her routines to the masses, and Jazzercise was born. Soon, a franchise deal followed and today, the company has more than 8,300 locations worldwide.3

Following an ice cream–making correspondence course, two entrepreneurs, Jerry Greenfield and Ben Cohen, paired $8,000 in savings with a $4,000 loan, leased a Burlington, Vt., gas station, and purchased equipment to create uniquely flavored ice cream for the local market.4 Today, Ben & Jerry’s hauls in millions in annual revenue.

In the 21st century, the example of Internet giants like Alphabet, the parent company to Google (GOOG), and Meta (META; formerly Facebook), both of which have made their founders wildly wealthy, have been clear examples of the lasting impact of entrepreneurs on society.

Unlike traditional professions, where there is often a defined path to follow, the road to entrepreneurship is mystifying to most. What works for one entrepreneur might not work for the next and vice versa. That said, there are seven general steps that many successful entrepreneurs have followed:

Ensure financial stability

This first step is not a strict requirement but is definitely recommended. While entrepreneurs have built successful businesses while being less than financially flush, starting out with an adequate cash supply and stable ongoing funding is a great foundation.

This increases an entrepreneur’s personal financial runway and gives them more time to work on building a successful business, rather than worrying about having to keep raising money or paying back short-term loans.

Build a diverse skill set

Once a person has strong finances, it is important to build a diverse set of skills and then apply those skills in the real world. The beauty of step two is it can be done concurrently with step one.

Building a skill set can be achieved through learning and trying new tasks in real-world settings. For example, if an aspiring entrepreneur has a background in finance, they can move into a sales role at their existing company to learn the soft skills necessary to be successful. Once a diverse skill set is built, it gives an entrepreneur a toolkit that they can rely on when they are faced with the inevitability of tough situations.

Much has been discussed about whether going to college is necessary to become a successful entrepreneur. Many well-known entrepreneurs are famous for having dropped out of college: Steve Jobs, Mark Zuckerberg, and Larry Ellison, to name a few.

Though going to college isn’t necessary to build a successful business, it can teach young individuals a lot about the world in many other ways. And these famous college dropouts are the exception rather than the norm. College may not be for everyone and the choice is personal, but it is something to think about, especially with the high price tag of a college education in the U.S

Consume content across multiple channels

As important as developing a diverse skill set is, the need to consume a diverse array of information and knowledge-building materials is equally so. This content can be in the form of podcasts, books, articles, or lectures. The important thing is that the content, no matter the channel, should be varied in what it covers. Aspiring entrepreneurs should always familiarize themselves with the world around them so they can look at industries with a fresh perspective, giving them the ability to build a business around a specific sector.

Identify a problem to solve

Through the consumption of content across multiple channels, an aspiring entrepreneur is able to identify various problems in need of solutions. One business adage dictates that a company’s product or service needs to solve a specific pain point, either for another business or for a consumer group. Through the identification of a problem, an aspiring entrepreneur is able to build a business around solving that problem.

It is important to combine steps three and four so it is possible to identify a problem to solve by looking at various industries as an outsider. This often provides an aspiring entrepreneur with the ability to see a problem others might not.

Solve That Problem

Successful startups solve a specific pain point for other companies or for the public. This is known as “adding value within the problem.” Only through adding value to a specific problem or pain point does an entrepreneur become successful.

Say, for example, you identify that the process for making a dental appointment is complicated for patients, and dentists are losing customers as a result. The value could be to build an online appointment system that makes it easier to book appointments.

Network like crazy

Most entrepreneurs can’t do it alone. The business world is a cutthroat one and getting any help you can will likely help and reduce the time it takes to achieve a successful business. Networking is critical for any new entrepreneur. Meeting the right people who can introduce you to contacts in your industry, such as the right suppliers, financiers, and even mentors, can mean the difference between success and failure.

Attending conferences, emailing and calling people in the industry, speaking to your cousin’s friend’s brother who is in a similar business, will help you get out into the world and discover people who can guide you. Once you have your foot in the door with the right people, conducting a business becomes easier.

Lead by example

Every entrepreneur needs to be a leader within their company. Simply doing the day-to-day requirements will not lead to success. A leader needs to work hard, motivate, and inspire their employees to reach their best potential, which will lead to the success of the company.

Look at some of the greatest and most successful companies; all of them have had great leaders. Apple and Steve Jobs, Bill Gates and Microsoft, Bob Iger and Disney, are just a few examples. Study these people and read their books to see how to be a great leader and become the leader that your employees can follow by the example you set.

Entrepreneurship Financing

Given the riskiness of a new venture, the acquisition of capital funding is particularly challenging, and many entrepreneurs deal with it via bootstrapping: financing a business using methods such as using their own money, providing sweat equity to reduce labor costs, minimizing inventory, and factoring receivables.

While some entrepreneurs are lone players struggling to get small businesses off the ground on a shoestring, others take on partners armed with greater access to capital and other resources. In these situations, new firms may acquire financing from venture capitalists, angel investors, hedge funds, crowdfunding, or through more traditional sources such as bank loans.

Resources for entrepreneurs

There are a variety of financing resources for entrepreneurs starting their own businesses. Obtaining a small business loan through the Small Business Administration (SBA) can help entrepreneurs get the business off the ground with affordable loans. Here, the SBA helps connect businesses to loan providers.

If entrepreneurs are willing to give up a piece of equity in their business, then they may find financing in the form of angel investors and venture capitalists. These types of investors also provide guidance, mentorship, and connections in addition to capital.

Crowdfunding has also become a popular way for entrepreneurs to raise capital, particularly through Kickstarter or Indiegogo. In this way, an entrepreneur creates a page for their product and a monetary goal to reach while promising certain givebacks to those who donate, such as products or experiences.

Bootstrapping for entrepreneurs

Bootstrapping refers to building a company solely from your savings as an entrepreneur as well as from the initial sales made from your business. This is a difficult process as all the financial risk is placed on the entrepreneur and there is little room for error. If the business fails, the entrepreneur also may lose all of their life savings.

The advantage of bootstrapping is that an entrepreneur can run the business with their own vision and no outside interference or investors demanding quick profits. That being said, sometimes having an outsider’s assistance can help a business rather than hurt it. Many companies have succeeded with a bootstrapping strategy, but it is a difficult path.

Small business vs. entrepreneurship

A small business and entrepreneurship have a lot in common but they are different. A small business is a company—usually, a sole-proprietorship or partnership—that is not a medium-sized or large-sized business, operates locally, and does not have access to a vast amount of resources or capital.

Entrepreneurship is when an individual who has an idea acts on that idea, usually to disrupt the current market with a new product or service. Entrepreneurship usually starts as a small business but the long-term vision is much greater, to seek high profits and capture market share with an innovative new idea.

How entrepreneurs make money

Entrepreneurs seek to generate revenues that are greater than costs. Increasing revenues is the goal and that can be achieved through marketing, word-of-mouth, and networking. Keeping costs low is also critical as it results in higher profit margins. This can be achieved through efficient operations and eventually economies of scale.

How do taxes work for entrepreneurs?

The taxes you will pay as an entrepreneur will depend on how you structure your business.

Sole proprietorship: A business set up this way is an extension of the individual. Business income and expenses are filed on Schedule C on your U.S. personal tax return and you are taxed at your individual tax rate.5

Partnership: For tax purposes, a partnership functions the same way as a sole proprietorship in the U.S., with the only difference being that income and expenses are split amongst the partners.

Entrepreneurs operating as sole proprietors can deduct any legitimate business expenses from their income to lower their tax bill. This includes expenses such as their home office and utilities, mileage for business travel, advertising, and travel expenses.6

C-corporation: A C-corporation is a separate legal entity and has separate taxes filed with the IRS from the entrepreneur. The business income will be taxed at the corporate tax rate rather than the personal income tax rate.7

Limited liability company (LLC) or S-corporation: These two options are taxed in the same manner as a C-corporation but usually at lower amounts.8

7 Characteristics of Entrepreneurs

What else do entrepreneurial success stories have in common? They invariably involve industrious people diving into things they’re naturally passionate about.

Giving credence to the adage, “find a way to get paid for the job you’d do for free,” passion is arguably the most important attribute entrepreneurs must have, and every edge helps.

While the prospect of becoming your own boss and raking in a fortune is alluring to entrepreneurial dreamers, the possible downside to hanging out one’s own shingle is vast. Income isn’t guaranteed, employer-sponsored benefits go by the wayside, and when your business loses money, your personal assets can take a hit; it’s not a corporation’s bottom line. But adhering to a few tried and true principles can go a long way in diffusing risk. The following are a few characteristics required to be a successful entrepreneur.

1. Versatility

When starting out, it’s essential to personally handle sales and other customer interactions whenever possible. Direct client contact is the clearest path to obtaining honest feedback about what the target market likes and what you could be doing better. If it’s not always practical to be the sole customer interface, entrepreneurs should train employees to invite customer comments as a matter of course. Not only does this make customers feel empowered, but happier clients are more likely to recommend businesses to others.

Personally answering phones is one of the most significant competitive edges home-based entrepreneurs hold over their larger competitors. In a time of high-tech backlash, where customers are frustrated with automated responses and touch-tone menus, hearing a human voice is one surefire way to entice new customers and make existing ones feel appreciated—an important fact, given that a significant percentage of business is generated from repeat customers.

Paradoxically, while customers value high-touch telephone access, they also expect a highly polished website. Even if your business isn’t in a high-tech industry, entrepreneurs still must exploit internet technology to get their message across. A startup garage-based business can have a superior website to an established company valued at $100 million. Just make sure a live human being is on the other end of the phone number listed.

2. Flexibility

Few successful business owners find perfect formulas straight out of the gate. On the contrary: ideas must morph over time. Whether tweaking product design or altering food items on a menu, finding the perfect sweet spot takes trial and error.

Former Starbucks Chair and CEO Howard Schultz initially thought playing Italian opera music over store speakers would accentuate the Italian coffeehouse experience he was attempting to replicate. But customers saw things differently and didn’t seem to like arias with their espressos. As a result, Schultz jettisoned the opera and introduced comfortable chairs instead.

3. Money savviness

At the heart of any successful new business, is steady cash flow, which is essential for purchasing inventory, paying rent, maintaining equipment, and promoting the business. The key to staying in the black is rigorous, regular cash flow management. And since most new businesses don’t make a profit within the first year, by setting money aside for this contingency, entrepreneurs can help mitigate the risk of falling short of funds. Related to this, it’s essential to keep personal and business costs separate, and never dip into business funds to cover the costs of daily living.

Of course, it’s important to pay yourself a realistic salary that allows you to cover essentials, but not much more—especially where investors are involved. Of course, such sacrifices can strain relationships with loved ones who may need to adjust to lower standards of living and endure worry over risking family assets. For this reason, entrepreneurs should communicate these issues well ahead of time, and make sure significant loved ones are on board.

4. Resiliency

Running your own business is extremely difficult, especially getting one started from scratch. It requires a lot of time, dedication, and often failure. A successful entrepreneur must show resilience to all the difficulties on the road ahead. Whenever they meet with failure or rejection they must keep pushing forward.

Starting your business is a learning process and any learning process comes with a learning curve, which can be frustrating, especially when money is on the line. It’s important never to give up through the difficult times if you want to succeed.

5. Focus

Similar to resilience, a successful entrepreneur must stay focused and eliminate the noise and doubts that come with running a business. Becoming sidetracked, not believing in your instincts and ideas, and losing sight of the end goal is a recipe for failure. A successful entrepreneur must always remember why they started the business and remain on course to see it through.

6. Business smarts

Knowing how to manage money and understanding financial statements are critical for anyone running their own business. Knowing your revenues, your costs, and how to increase or decrease them, respectively, is important. Making sure you don’t burn through cash will allow you to keep the business alive.

7. Communication skills

Successful communication is important in almost every facet of life, regardless of what you do. It is also of the utmost importance in running a business. From conveying your ideas and strategies to potential investors to sharing your business plan with your employees and negotiating contracts with suppliers—all require successful communication.

Entrepreneurship in Economics

In economist-speak, an entrepreneur acts as a coordinating agent in a capitalist economy. This coordination takes the form of resources being diverted toward new potential profit opportunities. The entrepreneur moves various resources, both tangible and intangible, promoting capital formation.

In a market full of uncertainty, it is the entrepreneur who can actually help clear up uncertainty, as they make judgments or assume risk. To the extent that capitalism is a dynamic profit-and-loss system, entrepreneurs drive efficient discovery and consistently reveal knowledge.

Established firms face increased competition and challenges from entrepreneurs, which often spurs them toward research and development efforts as well. In technical economic terms, the entrepreneur disrupts the course toward steady-state equilibrium.

How entrepreneurship helps economies

Nurturing entrepreneurship can have a positive impact on an economy and society in several ways. For starters, entrepreneurs create new businesses. They invent goods and services, resulting in employment, and often create a ripple effect, resulting in more and more development. For example, after a few information technology companies began in India in the 1990s, businesses in associated industries, like call center operations and hardware providers, began to develop too, offering support services and products.

Entrepreneurs add to the gross national income. Existing businesses may remain confined to their markets and eventually hit an income ceiling. But new products or technologies create new markets and new wealth. Additionally, increased employment and higher earnings contribute to a nation’s tax base, enabling greater government spending on public projects.

Entrepreneurs create social change. They break tradition with unique inventions that reduce dependence on existing methods and systems, sometimes rendering them obsolete. Smartphones and their apps, for example, have revolutionized work and play across the globe.

Entrepreneurs invest in community projects and help charities and other non-profit organizations, supporting causes beyond their own. Bill Gates, for example, has used his considerable wealth for education and public health initiatives.

Entrepreneurial ecosystems

Research shows that high levels of self-employment can stall economic development: Entrepreneurship, if not properly regulated, can lead to unfair market practices and corruption, and too many entrepreneurs can create income inequalities in society. Overall, though, entrepreneurship is a critical driver of innovation and economic growth. Therefore, fostering entrepreneurship is an important part of the economic growth strategies of many local and national governments around the world.

To this end, governments commonly assist in the development of entrepreneurial ecosystems, which may include entrepreneurs themselves, government-sponsored assistance programs, and venture capitalists. They may also include non-government organizations, such as entrepreneurs’ associations, business incubators, and education programs.

California’s Silicon Valley is often cited as an example of a well-functioning entrepreneurial ecosystem. The region has a well-developed venture capital base, a large pool of well-educated talent, especially in technical fields, and a wide range of government and non-government programs fostering new ventures and providing information and support to entrepreneurs.

Questions for Entrepreneurs

Embarking on the entrepreneurial career path to “being your own boss” is exciting. But along with all your research, make sure to do your homework about yourself and your situation.

A few questions to ask yourself:

Do I have the personality, temperament, and mindset of taking on the world on my own terms?
Do I have the required resources to devote all my time to my venture?
Do I have an exit plan ready with a clearly defined timeline in case my venture does not work?
Do I have a concrete plan for the next “x” number of months or will I face challenges midway due to family, financial, or other commitments? Do I have a mitigation plan for those challenges?
Do I have the required network to seek help and advice as needed?
Have I identified and built bridges with experienced mentors to learn from their expertise?
Have I prepared the rough draft of a complete risk assessment, including dependencies on external factors?
Have I realistically assessed the potential of my offering and how it will figure in the existing market?
If my offering is going to replace an existing product in the market, how will my competitors react?
To keep my offering secure, will it make sense to get a patent? Do I have the capacity to wait until I receive it?
Have I identified my target customer base for the initial phase? Do I have scalability plans ready for larger markets?
Have I identified sales and distribution channels?

Questions that delve into external factors:

Does my entrepreneurial venture meet local regulations and laws? If not feasible locally, can I and should I relocate to another region?
How long does it take to get the necessary license or permissions from concerned authorities? Can I survive that long?
Do I have a plan for getting the necessary resources and skilled employees, and have I made cost considerations for the same?
What are the tentative timelines for bringing the first prototype to market or for services to be operational?
Who are my primary customers?
Who are the funding sources I may need to approach to make this big? Is my venture good enough to convince potential stakeholders?
What technical infrastructure do I need?
Once the business is established, will I have sufficient funds to get resources and take it to the next level? Will other big firms copy my model and kill my operation?

What Does It Mean to Be an Entrepreneur?

An entrepreneur is an individual who starts their own business based on an idea they have or a product they have created while assuming most of the risks and reaping most of the rewards of the business.

What Is the Best Definition of Entrepreneurship?

Entrepreneurship is the process of setting up a business, taking it from an idea to realization.

What Are the Four Types of Entrepreneurs?

Four types of entrepreneurs include builders, opportunists, innovators, and specialists.

What Are the Seven Characteristics of Entrepreneurs?

Seven primary characteristics among entrepreneurs include versatility, resilience, flexibility, money-savviness, business smarts, focus, and having strong communication skills.

The Bottom Line

An entrepreneur is an individual who takes an idea or product and creates a business, a process known as entrepreneurship. Creating a business requires a lot of work and dedication, which not everyone is cut out for. Entrepreneurs are often young, highly motivated risk-takers who have a vision and often sacrifice a lot to achieve that vision.

Entrepreneurs enter the market because they love what they do, believe their product will have a positive impact, and hope to make profits from their efforts. The steps entrepreneurs take fuel the economy; they create businesses that employ people and make products and services that consumers buy today.

7 Steps to Become an Entrepreneur

Juli 11, 2023Juli 11, 2023adminLeave a comment

7 Steps to Become an Entrepreneur

www.jyoungblood.com – If you’re thinking of how to become an entrepreneur then, congratulations, because you’ve already taken the first step. That’s because “being” an entrepreneur is less about specific accomplishments or accolades, and more about the mindset.

In fact, if you were to search for “entrepreneurial mindset” you’re likely to find dozens of blogs, videos and webinars discussing secrets and characteristics of how entrepreneurs work to develop a mindset that focuses on achieving success. So if you’re thinking about it, you’re probably motivated to explore it more deeply and perhaps, ultimately, pursue it.

The reason developing a mindset is so important is because, to really be an entrepreneur, to truly embody that creative drive and determination, you need to develop a fundamental nature in how you think of a problem or approach an issue. Just following a checklist of “have an idea, get a loan and then start a business” isn’t going to do you any good when you come across a problem that you don’t already have an answer for, and no list – not matter how thorough – is going to light that fire of inspiration to help see you through difficult times.

Not everyone is going to have an intrinsic mindset of an entrepreneur, but the principles and process can be learned – after all, you were born unable to walk or talk, but that didn’t prevent you from learning how. Becoming an entrepreneur is about learning to recognize the knowledge you need to acquire and the moves you’ll need to make.

So don’t think of this list as “set-in-stone” directions, it’s more like touchpoints for your journey – you might not even follow it in order! Maybe you’re starting with a great idea instead of building towards one, or maybe you are already part of a motivated team looking for a new opportunity. Whatever your circumstance, consider these steps when thinking of how to start out as an entrepreneur.

7 Steps to Becoming an Entrepreneur

1. Build Your Skill Set and Knowledge Base

No matter what, you want to start and stay curious. There’s a lot out there to learn, more than you’ll ever have time to master and any entrepreneur needs to be adaptable and open to new information. That can seem daunting, but there are a few things you can do to simplify the process of continual learning.

Take a “first principles” approach to problems – as Elon Musk has said, first principles is a “good framework for thinking… boil things down to their fundamental truths and reason up from there, as opposed to reasoning by analogy.”
Get comfortable with research – subscribe to trade publications to see what’s trending within an industry. Research the market you’re interested in exploring. Get out and meet people who are doing the things you want to do; not only can they provide good advice, they’ll be an invaluable part of your network.
Focus your attention on what matters – while some serial entrepreneurs have a reputation of being jacks-of-all-trades as they jump around from industry to industry, you can likely find more success by focusing on an area of interest and specialization. Pursue a degree or program that teaches entrepreneurial skills and knowledge specific to the industry that you want to get into.

2. Build Your Network

No one ever succeeded alone. Every successful entrepreneur has benefited from their own network of mentors, partners, employees and investors. Once you’ve found a mentor or advisor who can assist you, it’s important to reach out and find other systems of support.

Unsure of how to go it alone? Partner with a cofounder or small team that will offer complementary skills to your own. Being part of a larger whole provides additional skills and expertise, plus it can make it easier to secure funding.
Talk to friends and family about your venture. Not only are they the surest way to secure additional support, some might be sources of possible “seed” funds or low/no interest loans.
Get professional help! Research and vet professionals like financial advisors and lawyers that you feel comfortable trusting and relying on – you’re going to need them.

3. State Your Idea, Claim Your Niche

If you don’t already have a solid idea, then it’s time to consider what type of product or service you’re able to offer and – more importantly – what’s going to set you apart from everyone else.

Start exploring solutions for every-day problems or frustrations experienced by friends and family and your target markets. As Entrepreneur magazine explains, the most innovative startups are often simple solutions to common problems.
Determine if you’re going to meet an underserved demand or improve on an existing service. The former is a way to claim a space within a market and differentiate yourself from competitors. The latter is more disruptive, where you can position your business as a new way of doing things.
As always, you’ll want to do your research on the categories and fields you’re thinking of entering and start asking questions about how a new product/service can exist within that space. If you’re unsure of how to do the legwork, or need to dedicate time to other aspects of your startup, consider hiring a marketing researcher for assistance.

4. Find and Understand a Market

The best product in the world isn’t going to succeed if there isn’t a market interested in buying it. Starting broad may seem like a good idea, after all that’s the highest possible number of buyers, but trying to sell to everyone means that you’re really selling to no one. To get a better idea of what your market is going to be, you’ll need to develop an understanding of what people are looking for.

Who are the people most likely to buy from you or would be most interested in your service?
Develop profiles of your potential buyers – what jobs do they have? What lifestyles do they lead? What needs do they have? What pain points do they experience?
Narrow your list down to the best opportunities and select the one that you want to start with first.
Set up interviews or surveys with people who fit that profile to continue refining that initial understanding. Which pain points are most urgent for them? Would they prioritize convenience over price? What benefits of your product/service might excite them the most?

5. Design Your Business and Idea

Once you’ve settled on what you want to do, then you’re going to have to outline your business structure and develop your product to show that it’s viable. That’s the only way you’re going to be able to win over investors.

It’s time to start laying out exactly how your business will be moving forward. You’ll want to create a business model, aka a business plan, that details how your business will be organized, a prospective budget for the future, details on how your business will make money. If you’re looking for models to follow, consider these business plan templates from Score and from Hubspot.
Plan out the sales process that you’ll use to acquire new customers. What’s your marketing strategy – are you using certain social media accounts? Are you attempting a viral marketing campaign? What sales materials will you need? Most importantly, what’s the process by which you’ll convert those who express interest into actual sales?
It’s time to truly show what your business is about and build out a proof of concept, or what’s also known as a minimum viable product (MVP). The MVP, whether it’s software, a service or a physical product, should be capable of executing the basic and most important functions of your idea.

6. Secure Finding

You have a plan and you have a product, now it’s time to secure the funding that you’ll actually need to start up your business and get it running. Depending on your product and market, you have several options available.

You can attempt to start with securing initial funding or loans from friends and family. Trust levels are high and you might even be able to receive the funds without having to pay interest or offer too much of a share in your company. Of course, this entirely depends on the level of wealth and assets of the people you know.
A far more likely scenario is that you’ll have to make a pitch to secure funding from venture capital (VC) firms or angel investors. Both are able to provide large amounts of initial funding for startups with the promise of even larger returns through owning stakes in the company. Start by looking at organizations that connect entrepreneurs with funders, such as the National Venture Capital Association and Angel Investment Network.
There’s also the opportunity to secure small business grants and loans. These investments differ from VCs and angel investors by offering (generally) smaller amounts of initial capital and having specific requirements: loans will need to be repaid with interest over time, while grants are reserved for meeting certain conditions – such as assisting minority or underprivileged communities. Read more about business grants and business loans at the SBA
Rather than trying to secure a few large amounts of funding, you could attempt to crowdfund your business through hundreds, or thousands, of smaller donations. With modern digital technology, there are several options for running a crowdfunding campaign, through platforms like Fundable or WeFunder.

7. Build Your Business

Once you’ve gotten this far, now the real work begins. Time to put that funding into place, build out your first real product, and get it out to your target market.

You will need to establish a location for your business, whether you’re renting out an office space for your team to work in or you’re leasing a building in a downtown location. Or, perhaps your business is entirely online and all your employees are expected to work from home. At the very least you’ll need to claim a website to both promote your business and allow customers to learn about your product and contact your business.
You’ll need to consider the actual structure of your organization and what your plans are for incorporating your business. At the very least you should consider the option of registering as a limited liability company (LLC) to both build the credibility of your business and protect your personal finances.
Keep working on promoting and marketing your business! After the initial buzz dies off you’ll still need to find ways to reach out to new, prospective customers and announce the latest updates and developments of your product. Review the metrics of your campaigns and social media channels to determine what’s working, and what’s not, and what you should be doing to effectively advertise.

What Are Some Common Entrepreneurship Pitfalls?

Not every business succeeds, in fact roughly 50% of businesses fail within the first few years. Around just 15% of startups actually manage to achieve large venture returns for their investors. The others, if they don’t go out of business, just manage to sustain themselves without generating any real returns for their owners or investors. There are dozens, if not hundreds, of specific reasons why a business won’t succeed. In general terms, here’s what aspiring entrepreneurs need to be most mindful of:

Running out of money – This is THE #1 killer of startups – all businesses really – and is almost impossible to plan around, as there are no guarantees that a product or service will take off. The best you can do is to get a solid plan into place and then be open to shifting your direction or focus as needed. Changing markets and environments require businesses to be agile and no amount of initial success will guarantee continued growth or sustainability.
Too much debt – This is related to running out of money, as high levels of debt can cripple businesses, choking off additional sources of income as lenders or investors are scared off. The challenge of securing initial funding means that some businesses will settle for high-interest loans in order to get started, but that sort of devil’s bargain can hinder a company before it ever gets to establish itself.
Not keeping the personal and business separate – As an entrepreneur, it can be all too easy to overleverage yourself in a new startup. However, using your own credit as a means for funding could ruin you financially. Not incorporating or registering as an LLC can make you personally liable for actions your company takes. That restriction goes both ways, as entrepreneurs who treat their business’ assets as their personal piggy bank are undercutting their own success.
Internal conflict – Disagreements with a co-founder or disgruntled employees can hold up production, disrupt communication, or even dissolve the business. Try to resolve conflicts as amicably as possible, and don’t let hurt egos sabotage your working relationships. As the owner or CEO of your business, you will need to absorb a lot of the uncertainty, even when things aren’t looking great, as too much uncertainty will disrupt productivity.
Incompatible culture – Everyone brings their own backgrounds with them, employing different workstyles, possessing different value systems and having different expectations. When people are committed to “what has worked before,” it can make it difficult to pivot when change is needed. Entrepreneurs will need to effectively manage the culture of their business, keeping everything moving forward in a disciplined manner while being as flexible as possible.

What Are the Typical Entrepreneurship Salary Ranges?

An entrepreneur’s salary range is about as wide as they come. The problem lies with how “entrepreneur” is categorized by organizations like the Bureau of Labor Statistics and how challenging it is to estimate average salaries considering the vast differences in the scale between Bill Gates or Jeff Bezos vs. the owners of a local mom and pop store. Depending on a whole range of factors, entrepreneurs can risk losing money or stand to make millions, with the most successful of startup entrepreneurs entirely within a league of their own.

You can also consider leveraging your entrepreneurial experience as a part of an established company. “Intrapreneurs” who utilize their drive and knowledge as an advisor, consultant or within a C-suite position can make on average over $110,000 a year. Whether you establish yourself as the CEO of your own company or work your way up to the top, the highest level executives can make upwards of $142,000 a year, with the most successful positions making more than $200,000.

Looking to maximize your potential for success? One particularly interesting pattern we’re seeing is that out of the top 40 entrepreneurs under the age of 40, the majority of them are in tech or tech-related industries.

How Can I Find the Best Entrepreneurship Degree Program?

If you’re really looking for an advantage in how to become an entrepreneur, consider investing in a degree that walks you through the theory and practice of successful entrepreneurship. A graduate degree will also prepare you for higher level corporate careers.

Find a program that highlights the study of business principles, including finance, marketing, management and accounting. See if they offer specialized entrepreneurship classes on concepts like Social Branding, Launching and Leading Startups, or Venture Capital and Private Equity.

You’ll also want to investigate whether they promote hands-on experience through collaborative research opportunities, business competitions, study abroad and real-world networking events.

Finally, determine if a program is flexible enough to work with your schedule. Online degree programs not only enable distance learning, they can be one of the most affordable ways to advance your education and career.

We suggest you start your search for entrepreneurial degrees with the University of San Diego’s Master of Science in Innovation, Technology and Entrepreneurship. It’s perhaps the only degree jointly developed and awarded by a university’s schools of business and engineering to assist tech innovators, business professionals and startup entrepreneurs in bringing their ideas to the fullest potential.

Entrepreneur FAQs

Why are there seven rules?

We liked the number. Seriously, any list of “how to become an entrepreneur” is somewhat arbitrary. It could be a macro list of three things or a micro list of 50. What they all have in common is they try to impart fundamental concepts and habits that you can take forward in your future endeavors.

What are my resources for securing funding?

Arguably THE most important question, as even the world’s greatest idea isn’t getting anywhere without the capital to get it started. You do have access to multiple resources, though some can be quite competitive, so be sure to do your research. Options include:

Find programs your company qualifies for at Grants.gov
Use crowdfunding sites like Kickstarter, Indiegogo, GoFundMe
Pitch your business plan to Angel Investors and Venture Capital firms
Get an SBA microloan or find a nonprofit lender
Use your credit IF you can confidently pay the balance

Is it better to go it alone or find a cofounder?

Do you like working with others? If it’s important that you’re the undisputed head of a startup, then it may be better to ensure that the people you hire understand that they work for you, and that while your investors may own stakes in the company, they don’t have a hand in day-to-day operations.

However, don’t overlook the positive values of having cofounders. Partnering with someone who shares your drive and passion can go a long way toward getting through the initial startup phase and can bring more support and energy into the development process.

How can I market my business?

This could be a whole post unto itself, and there are certainly a lot of options out there, from promoting on social media, to partnering with influencers to just straight up paying people to use and review your product. The best advice would be, whatever medium or method you plan on using, to start the process early. Even during the funding phase, especially when using crowdfunding sources, you’ll want to think about how you’ll advertise your product and what your target market is looking for. If you’re able to generate that initial excitement and interest, then there’s a good chance you’ll turn your early adopters into advocates and evangelists who will continue to spread the word about your business.

What’s the difference between an Entrepreneur and a Freelancer?

“Entrepreneur” as a concept can get used for a lot of different cases. For this blog post we’ve approached it mostly through the lens of a startup, not necessarily a small business owner or freelancer. While both small business owners and freelancers share some traits with entrepreneurs – they are independent, self-reliant risk takers – they do have some important differences.

Freelancers earn money through their direct work, often turning a passion or hobby into their job. An entrepreneur is more interested in creating the business itself, and generally hopes that they’ll earn a large return down the line when they sell their business or go public. This is also in contrast to small business owners, who often start up their businesses with the intent to be in operation for decades and have gradual growth, whereas an entrepreneur is more interested in exponential growth in a shorter time frame.

What’s the difference between an Entrepreneur and an Intrapreneur?

An “intrapreneur” has the same innovative drive as an entrepreneur does, but rather than starting a new business, is more comfortable working within an established company. Intrapreneurs are likely to lead new initiatives within a company, or push for new product development or establish new departments. Working within a system of support, they are exposed to less risk, but don’t have the same level of freedom or independence as an entrepreneur. For some, intrapreneurship could be a first step on the way to entrepreneurship.