Many people equate being self-employed with being an entrepreneur. We suggest that few of us are entrepreneurs, but all of us are self-employed. To make the distinction, let us explore the requirements of entrepreneurship.
Entrepreneurship is generally characterized by some type of innovation, a significant investment, and a strategy that values expansion. The entrepreneur is often quite different in mindset from a manager, who is generally charged with using existing resources to make an existing business run well. The roles of entrepreneur and manager are not necessarily incompatible, but entrepreneurs are seldom patient enough to be good managers.
How Entrepreneurs Work
It is often instructive to analyze the experiences that have formed our attitudes toward entrepreneurship. A recent study showed that 70% of business startups were by a person who had an entrepreneurial parent.
The U.S. Small Business Administration has developed a Checklist for Going into Business that leads the prospective entrepreneur through a skills inventory that includes supervisor and/or managerial experience, business education, knowledge about the specific business of interest, and willingness to gain the missing necessary skills. A commitment to filling any knowledge or experience gap is a very positive indicator of success.
Personal characteristics required, according to the SBA, include leadership, decisiveness, and competitiveness. Important factors in personal style include will power, and self-discipline, comfort with the planning process, and with working with others. Can you objectively rate yourself in these dimensions?
Peter F. Drucker, author of Innovation and Entrepreneurship, says that anybody from any organization can learn how to be an entrepreneur, that it is systematic work. But there is a difference between learning how to be and succeeding as an entrepreneur. “When a person earns a degree in physics, he becomes a physicist,” says Morton Kamien, a professor of entrepreneurship at Northwestern University. ” But if you were to earn a degree in entrepreneurship, that wouldn’t make you an entrepreneur.”
What Is Social Entrepreneurship?
The primary factor that distinguishes social entrepreneurs from the other entrepreneurs is their mission. These entrepreneurs are focused on solving a problem in their community or furthering some kind of social change. Their aim goes beyond the bottom line.
Some additional factors to consider:
Most examples of social entrepreneurship take a nonprofit structure. Money that’s generated is put toward advancing the company’s mission and maintaining necessary overhead, but not necessarily toward corporate growth or expansion.
Social entrepreneurship often involves alternative forms of fundraising, which may include grants, sponsorships, or small-donor fundraising within the community.
Innovation requires experimentation, but funding for social entrepreneur projects focuses on results, so there’s little incentive to pay for unproven approaches.
All enterprises require a steady flow of capital, but social entrepreneur projects provide investors with lower returns than other opportunities.
Relations between social entrepreneurs and investors can become strained by conflicting goals and a lack of financial transparency.
We are all self-employed
The reasons commonly given for people going into business for themselves are: freedom from a work routine; being your own boss; doing what you want when you want; boredom with the current job; financial desires, and; a perceived opportunity. Which of these might get you to take the risk?
Several yardsticks have been proposed for measuring whether a person is a likely candidate to be a successful entrepreneur, but the real challenge is in accurately applying them to ourselves.
We are all self-employed; even as employees of a firm, we are still primarily personal career managers. Trends toward downsizing and outsourcing will lead to smaller companies using networks of specialists. Fortune magazine suggests that almost everyone, up through the highest ranks of professionals, will feel increased pressure to specialize, or at least to package himself or herself as a marketable portfolio of skills.
How marketable is your portfolio of skills? Many think they have several years’ experience, when what they really have is one year’s experience several times. Are you continuing to learn and keeping up with developments in your field? The best approach to preparing for an entrepreneurial career is often to find some aspect of your field in which you can become an expert.