Is Entrepreneurship for You?

An entrepreneur is a person who takes a chance on a business idea and acts on it. They bear most of the risks of starting a new business themselves. You should only open a business after fully knowing what a business needs to thrive.

This FindLaw article explains the bottom line of business ownership to help you decide if you are ready to be a full-time business owner.

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What Is Entrepreneurship?

At its core, entrepreneurship is simply starting a business. Economists now view entrepreneurship as one of the critical aspects of a thriving economy. Economic growth requires ongoing disruptions to the status quo. These disruptions drive progress, which is necessary for an economy. Entrepreneurs drive progress by taking risks and entering new industries, which can ultimately transform existing industries.

Do You Have the Qualities of a Successful Entrepreneur?

There is no way to cut all the risks of starting a small business. But starting a business can be exciting and fulfilling if you have the right personality type and risk tolerance. Entrepreneurs must not fear failure.

It's an excellent idea to self-evaluate before entering small-business ownership. You don't have to attend business school to become an exceptional business owner. A strong work ethic and resilient personality are helpful. The personality traits listed below are vital qualities that aspiring entrepreneurs should have. Be honest and ask yourself if you have the desire and drive to start a business independently.

Self-Motivated

When you are self-employed, running your business is entirely up to you. This means marketing campaigns, finding potential customers, and pricing strategies belong to you alone. It helps if you have experience managing projects, administration, and deadlines. Strong motivation will help you during times of self-doubt or personal life struggles at startup.

Adaptable

Business owners need to work with people with various personalities. Introverted, extroverted, self-starters, and those who need motivation are just a few types. You will interact with employees, customers, and vendors as a successful entrepreneur.

When you start your business, you may need to seek investments from lenders or crowdfunding sources. If an angel investor offers to invest in you, you must handle their demands and negotiate a deal with them.

Unforeseen events happen. Entrepreneurs should adapt to new situations and create backup plans. For instance, you may need to rethink your business model if a competitor poses a significant threat. You may need to develop a new product or service when an existing market is less fruitful than you thought.

It's impossible to predict every roadblock or hurdle that could pop up for your business. But, being flexible and creative in problem-solving can help.

Persuasive

As an entrepreneur, you must be comfortable selling your product or service. Selling involves persuasion and the ability to explain your business effectively.

Although you can advertise online and through social media, there's no replacement for in-person business meetings. Many small business owners must absorb several rejections before securing the sales and investments needed. Learn from your rejections to improve your sales techniques and pitches.

Risk-Taker

There is no way to cut all the risks of small business ownership. Nobody is entirely comfortable with taking chances with their money. But, entrepreneurs are usually risk-takers by nature. You should tolerate some uncertainty. You can avoid some of your financial risks with good organization and planning.

Organized

Most business failures stem from poor planning and organizational skills. Honestly evaluate your business idea before you invest time and money into it.

Before you begin your startup business, create a business plan. With a business plan, you:

• Define your goals and purpose
• Focus on a target market after conducting market research
• Lay out marketing strategies

If you are enthusiastic about creating detailed plans, this can help you become a successful entrepreneur.

Creative

Creativity and imagination are closely related to adaptability. As an entrepreneur, you must solve unexpected problems and create solutions when unforeseen issues arise.

Economic downturns, natural disasters, lawsuits, and other unexpected hurdles happen. Finding imaginative ways to cope with these problems makes you a successful business owner.

Creativity also helps you when it comes to creating new products or services. With a bit of imagination, you will have the insight to see gaps in the market. If you can fill those gaps in a way nobody has before, you could have a profitable business.

One way that entrepreneurs use their imaginations is to improve on existing products. Many of us see flaws in products that are already on the market. If you can create a product that does the job better than another product on the market, you might have a valuable idea.

Decisive

Small business owners are constantly making decisions. They often must make judgment calls quickly, independently, and under pressure. You may need a business partner or advisor if you have difficulty making important decisions. This can help you during the first few years of your new business.

But, you will be an excellent leader if you have confidence in your decision-making abilities.

Emotional Stamina

Business ownership can be exciting but also a lot of work. You may need to work more than standard business hours to create a successful business enterprise. Before taking a startup business's emotional and financial risks, ask yourself if you are willing to work these long hours.

Even if you are comfortable working long hours and dedicating yourself to your business, you will still need support from your loved ones in your personal life.

Support System

The first few years of a business startup can be hard on family life. It's essential for family members to know what to expect and for you to be able to trust that they will support you during this time. There may be financial difficulties once the business becomes profitable, which could take months or years. You may have to adjust to a different standard of living or put family assets at risk in the short term.

If your family members are entirely on board with your new business venture, this will help. It will give you the support you need to get through those intense first few years of business ownership. To secure your family's support, be honest with them. Be clear about your entrepreneurial venture's financial outlay and time commitment.

Different Types of Entrepreneurship

The definition of entrepreneurship is the action of creating a new business on your own. Some people believe there are various types of entrepreneurs, too. They argue that entrepreneurs are categorized based on their behaviors and personality types.

Social Entrepreneurship

A social entrepreneur wants to create social change in their community. Their primary focus isn't just to gain profits but to make a difference in the world. This might compel them to start a nonprofit or engage in socially responsible investing.

Social entrepreneurs can champion various causes, from eliminating hunger to creating environmentally sustainable products.

Large Company Entrepreneurship

With large-company entrepreneurship, an existing company expands into a new sector to offer a new or innovative product. This can help the company stay on the cutting edge of its industry.

Upper management of these companies typically has to bring in outside talent or buy other companies to create entrepreneurial growth. If they are lucky, they might have entrepreneurial talent in their workforce.

Apple co-founder Steve Jobs guided his company to disrupt the technology industry with smartphones and other ground-breaking innovations. As with any entrepreneurial venture, there was significant risk.

Innovators

An innovator builds a business almost as a byproduct of their inventions, innovations, or discoveries. They are visionaries who do work that they love. This leads them to create businesses around those projects.

An example of an innovative entrepreneur is Mark Zuckerberg, a social media tycoon. Like Zuckerberg, many innovators create intellectual property that leaves a lasting imprint. If an innovator personality works at a large company, they could use their connections within the company to pitch a new product. This can drive the company to expand into a new product using the latest technologies.

Sometimes, a large company may offer to buy an innovator's invention or business. Your goals will determine whether you accept a large company's offer.

Specialists

A specialist entrepreneur is typically an expert in their field. Their specialty may be mentally demanding, and this is where most of their mental energy goes. As a result, they often need help selling and pitching their innovative ideas. Instead, they expand their business through loyalty and referrals.

Specialists often grow their businesses slower than some other types of entrepreneurs. But, they could grow faster if they become more comfortable and skilled in selling.

Builders

A builder is highly motivated and thrives on quickly creating a large business. Their intense nature often enables them to quickly grow a business into a multi-million-dollar enterprise. A builder will probably need large amounts of venture capital to build a large, scalable business quickly. To secure such investments, builders must practice their sales pitches and techniques.

Builders should focus on relationships and team-building to improve employee morale. These types of entrepreneurs typically have a high employee turnover rate.

Opportunists

As the name implies, opportunist entrepreneurs want to seize business opportunities at the right time and sell when the business peaks. They are keen to spot new markets and products that yield enormous growth.

These entrepreneurs see themselves as successful if they can generate large amounts of residual and passive income. They want a steady cash flow even when they are not working. An opportunist's weakness is that they are impulsive. This can lead to some great business opportunities. But, it can also lead to poorly considered or planned situations.

Why Entrepreneurs Fail in Small Business

Success rates for small businesses are not large. According to the U.S. Small Business Administration (SBA), over 50% of small businesses fail in the first year. Ninety-five percent fail within the first five years. Success awaits those who work hard, are patient, and diligently work on all necessary steps.

Here are some common reasons small businesses fail:

1. Competition
2. Insufficient capital (money)
3. Lack of experience
4. Low sales
5. Over-investment in fixed assets (such as land, equipment, and machinery)
6. Personal use of business funds
7. Poor credit arrangements
8. Poor inventory management
9. Poor location
10. Unexpected growth without planning

As you launch your business, remember the above list. Avoiding common pitfalls will help your business thrive. A great way to invest in yourself for free is to listen to business podcasts.

Benefits of Entrepreneurship

There are many good reasons not to start your own business, especially if you can't commit much of your time and energy.

There are advantages of business ownership, like:

1. Being your own boss
2. Creating processes and workflows how you want them to be
3. Large growth and earning potential
4. Setting your own pace
5. Setting your work schedule

If you are still considering becoming an entrepreneur, talk with other entrepreneurs. If you don't know any, find your local Small Business Development Centers (SBDCS) and speak with an entrepreneurship mentor.

Before Getting Started: Talk to an Attorney

Before putting in the hard work to turn your side hustle into a business, consider all the challenges and potential pitfalls of entrepreneurship. The best way to become successful is preparation. Starting a new business involves many legal issues. These include choosing the right legal structure, securing licenses, getting the appropriate insurance, and more.

A business and commercial law attorney can help you with these issues and other legal questions.