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What Is an Entrepreneur? Insights Into Business Strategy

June 27, 2024
Young entrepreneur standing in an office

Entrepreneurs discover opportunities. Having developed ideas about products and services that can create value for customers, they run rigorous tests to confirm those ideas. This isn’t an inexpensive undertaking; it requires funding, expertise, and effort—often from multiple people—to create, improve, and deliver goods and services that can serve a purpose and attract a strong customer base.

While business entrepreneurs can and do come from a variety of backgrounds, they have many things in common, including the challenges they face, the strategies they apply to solving them, and skills and characteristics that can help them succeed.

What is an entrepreneur? Read on to find out.

Defining Entrepreneurship

On its website, the Center for American Entrepreneurship (CAE) notes that entrepreneurship is “an elusive concept to pin down. … ‘Entrepreneur’ is an English derivation of the French word ‘entreprendre’ (to undertake), leaving wide latitude for interpretation and application.”1

The site goes on to offer this clarity:

Entrepreneurship is the process by which individuals (entrepreneurs) exploit a commercial opportunity, either by bringing a new product or process to the market, or by substantially improving an existing good, service, or method of production.

An entrepreneur is a person who organizes the means of production to engage in entrepreneurship, often under considerable uncertainty and financial risk.”1

Risks and Solutions in Entrepreneurship

In pursuing new opportunities without access to the resources they need, entrepreneurs face four primary types of risk:2

  • Demand risk addresses this question: How willing will prospective customers be to accept and use the solution that the entrepreneur has proposed? 
  • Technology risk involves the need for engineering or scientific breakthroughs to make the entrepreneur’s proposed solution a reality; the greater the need, the higher the risk
  • Execution risk involves how easily the entrepreneur can attract employees and business partners to implement the proposed ideas
  • Financing risk involves securing outside capital on reasonable terms

These uncertainties present a seemingly no-win situation: It can be hard to lessen risk without resources, and to secure funding when risks are high. Four key approaches can help:2

  • Through lean experimentation, entrepreneurs can resolve risks quickly, using limited resources, by employing the smallest possible set of activities needed to test a business model hypothesis thoroughly
  • Staged investing lets entrepreneurs use only the resources needed to meet a single milestone before committing the necessary resources to reach the next one
  • Through partnering, an entrepreneur can use another organization’s resources, which moves the risks over to a company that’s better able to shoulder them; one version of this approach involves renting resources to reduce costs
  • Effective storytelling by entrepreneurs—presenting a compelling vision of how a proposed venture can improve the world­—helps resource owners focus on the benefits, rather than the risks, involved in supporting the new endeavor

What makes a successful entrepreneur?

Key Traits and Skills

In 2020 and 2022, the Harvard Business School and Forbes, respectively, each published a list of characteristics of successful entrepreneurs. Those lists include:3,4

  • Adaptability to handle the iterative changes that are inherent to entrepreneurship
  • Comfort with failure, because not every effort works out as hoped
  • Confidence in one’s own abilities and in the idea driving the business  
  • Curiosity about new opportunities and new ways to overcome challenges
  • Decisiveness, because leadership involves making tough choices about funding, allocation of resources, business strategy, and so on
  • Determination to do whatever is needed to succeed
  • Innovative thinking to find new ideas and new ways to use existing ones
  • Long-term focus, because entrepreneurship doesn’t just involve starting a business; it requires expanding and strengthening it to succeed over time
  • Optimism: the belief that things can work out for the best
  • Persistence in the face of disappointment; the knowledge that failure is a temporary setback
  • Problem-solving skill, which requires the ability to see challenges from multiple viewpoints
  • Risk tolerance: the willingness to accept some uncertainty in exchange for the benefits of success
  • Self-awareness, because knowing one’s strengths and weaknesses helps a leader hire and partner with people who complement—not compliment—them
  • Willingness to experiment and to test every possible opportunity: Is a solution viable, helpful for customers, and worth the price being charged for it?

Growth Mindset vs. Fixed Mindset

To be successful in business, an entrepreneur needs a growth mindset, the value of which becomes especially clear when it’s compared to a fixed mindset. Developed by psychologist Carol Dweck and published in her book Mindset: The New Psychology of Success, the concepts of fixed and growth mindsets vary in these ways:

Fixed Mindset5
Growth Mindset6
The belief that abilities are innate and unchangeable
The belief that natural abilities are the starting point, not the final determiner, of a person’s potential
The view that success or failure reflects inherent proficiency
The view that effort to learn and improve will pay off
The avoidance of new challenges
The recognition of failure as a problem to be faced, dealt with, and learned from

Business Owner, Entrepreneur: What’s the Difference?

An entrepreneur is likely to launch a new business; perhaps more than one. It’s perhaps counterintuitive, therefore, to note that entrepreneurship and business ownership are not the same thing. While some of the responsibilities overlap, the priorities involved vary significantly.

Business owner and author Melissa Houston, formerly an Internal Control Specialist with the Canadian government and now a contributor for Forbes, wrote in 2024 of five essential priorities for business owners:7

  1. Finances. “It's important to have a clear understanding of your income, expenses, and cash flow so that you can make informed decisions about your business. … Make sure that you are regularly tracking your spending and revenue. … It’s crucial to stay on top of your tax obligations to avoid penalties and fines.”
  2. Customer service. “Your customers are the lifeblood of your business. Make sure that you are always available to answer questions, respond to feedback, and address concerns promptly. Train your employees to provide exceptional customer service.”
  3. Marketing. “No matter how great your products or services are, if nobody knows about them, you won't be able to grow your business. … Do your research and identify the marketing channels that will be most effective for your business, and then create a plan to execute those strategies.”
  4. Networking. “Attend networking events and participate in industry groups to meet like-minded people and potential partners. Building a strong professional network can help you learn new skills, find new customers, and stay current on industry trends.”
  5. Time management. “There are always more tasks to complete than there are hours in the day, so you need to prioritize your work and be efficient with your time. Consider delegating tasks to employees or outsourcing work to freelancers so that you can focus on the most important aspects of your business.”

Entrepreneur Anthony K. Tjan is a Harvard University MBA and a former Fellow at Harvard’s Kennedy School of Government. Writing for the Harvard Business Review, he noted that business entrepreneurs hold three primary responsibilities:8

  1. Planning. “Entrepreneurs set the vision, the romance, and culture around a big and daring goal. In doing so, they must have a general plan for where they want to go, but they should not get hung up on developing the perfect plan. … The details of every initiative should change with new customer and market feedback.”
  2. Researching and selling. “Great entrepreneurs need to be constantly selling the story of their vision, as well as researching how it should evolve. Whether raising funds, evangelizing the vision among employees, recruiting top new talent, or selling the product itself, an entrepreneur needs to … act as the company’s chief storyteller.”
  3. Executing. “Excellent execution comes from adhering to a tight set of controls and operating principles. … The key to delivering what you want to deliver is to know how to pick the few customer and operating metrics that can serve as leading indicators for the ultimate financial metrics desired.” 

Gene Marks is a business owner, author, and past columnist for The New York Times and The Washington Post. Writing for Forbes, he detailed the differences between entrepreneurs, such as his father, and business owners—particularly small business owners—such as himself:9

Business Owners
Take risks
Are not risk-takers
Raise money from outside investors or bring on equity partners
Make investments once assured of a probable return
Are never satisfied with the status quo; are always looking ahead to the next thing
Hate to lose
Are involved in multiple projects at once
Concentrate on one thing at a time
Thrive on chaos
Avoid failure
Are interested in inventions, science, and new technologies
Are interested in profit margins, revenue projections, and support costs
View their companies as assets to be developed, shaped, and readied for market
View their companies as their livelihood, their retirement, and a reflection of their lives
Love what they do and would do it for much less money
Don’t necessarily love what they do, but are happy because they’re not doing it for someone else
Want to change the world
Want to pay the mortgage, put money away for college, and have a nest egg left over for retirement

Business Strategies Used by Entrepreneurs

In the competitive arena of entrepreneurship, success hinges on strategic maneuvers and forward-thinking decisions. One key strategy involves carving out a unique competitive advantage that distinguishes a venture from its rivals. This could involve introducing groundbreaking products, adopting advanced technologies, or implementing superior customer service practices that exceed market standards. By doing so, entrepreneurs not only meet but anticipate customer needs, fostering a loyal consumer base.

Parallel to creating such an edge is the pivotal task of building a brand. More than a logo or tagline, a brand encapsulates the essence of a business' identity and values, thereby cultivating an emotional connection with customers. Effective brand strategies can turn a business into a household name, instilling trust and preference among consumers.

The backbone of enduring business success, however, is sound financial management. This involves meticulous budgeting, strategic forecasting, and shrewd investment practices. By managing capital wisely, entrepreneurs can fuel growth and insulate their businesses against economic fluctuations.

When financial obstacles emerge—whether they’re cash flow dilemmas, sudden market shifts, or funding shortfalls—resilient entrepreneurs respond with agility. Overcoming these financial challenges might entail securing alternative financing, revising business models, or pivoting product offerings, demonstrating both ingenuity and grit in ensuring business success against the odds.

Set yourself up for success.

For a thriving business career, you need the entrepreneurial mindset and expertise instilled in CSUMB’s Responsible Business Online MBA program. Learn from the business veterans and supportive educators of the College of Business faculty and gain professional competencies valued by employers in today's global marketplace. This rigorous yet flexible online experience empowers you to complete your degree while keeping up with your commitments at home and at work.

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