What is Entrepreneurship?

Entrepreneurship is the process of conceptualizing, designing, and scaling an idea though a business vehicle such as a small business or “startup”. The idea is transformed into a product or a service that is a “solution” to society’s challenge or “problem”. Small business is the engine that drives the economy. Forbes Magazine estimates that the current 30 million small businesses in the US will balloon to over 42 million by 2021. The same ecosystem is vibrant in Canada, as evidenced by the increase of business investment activity from high net-worth individuals (ie. “Angels”) and large Institutional investors (ie. “Venture Capitalists”) (NACO – Industry Investment Reporting June 26, 2015).

Entrepreneurship can be rewarding as you build your own company and “be your own boss”. On the flip side, the risks can be insurmountable when you attempt to bootstrap (ie. “Self-fund”) your entrepreneurial endeavour. The likes of “Dragon's Den”[TM] or “Shark Tank”[TM] certainly makes it look easy. However, from personal experience and from listening to personal accounts from others, the UILO recognizes the real challenges that entrepeneurship poses. With organization, passion to the point of obsession, and a bit of luck, it is possible to develop a company that you believe in and that also serves the needs of society.

A related term to entrepreneurship is “Intrapreneurship”. You can think of intrapreneurship simply as entrepreneurship inside an existing company in which the group of “intrapreneurs” are granted the opportunity to take risks to develop an innovative idea that will transform or disrupt the existing processes inside the company. This idea goes against the grain of established companies like Nike[TM] or Under Armour[TM] , since one would believe that applying a conservative approach to product or service development would maximize shareholder value; those individuals have a significant stake in the company and would like to ensure profits continue. However, the presence of the likes of Uber[TM] or Tesla[TM] in the marketplace places pressures on existing and established companies to perform and stay “ahead-of-the-game”. Thus, companies such as Ford[TM], IBM[TM] and Under Armour[TM] have created small teams or “Intrapreneurs” that have the freedom to conceptualize and design high-risk innovative ideas that would challenge the companies existing processes but that have the possibility to generate new profits for the shareholders. This is a trend in the current work-place, and current apprentices and trainees in academic institutions should take note as they plan their future career path.

To summarize, Entrepreneurs are the people who take on this high-risk venture to create and develop ideas in startups. The Intrapreneur is an entrepreneur inside an established company. One can connect these ideas with famous entrepreneurs such as Thomas Edison who invented the lightbulb and sparked the energy revolution, with the concept of the serialpreneur (ie. Launching Multiple Startups), and Elon Musk who disrupted the Finance, Energy and Transportation industries.

What makes a good Entrepreneur?

[1] THE IMPORTANCE OF BUSINESS AND FINANCE: To be successful, the entrepreneur must understand deal structure, cost-of-capital, how giving up equity impacts the business, terms in a negotiated deal, and basic accounting and finance concepts. The entrepreneur does not have to be fluent in any of these concepts, but should be able to comfortably and confidently navigate these issues.

[2] ACQUIRING CAPITAL FUNDS: The entrepreneur must understand the development cycle of a business and product development to acquire capital (ie. “funds to support your business”). Timing is everything in raising enough funds to build your company and develop your product or service. It is critical to recognize what you are willing to give up to acquire such funds. Usually, the young entrepreneur will give up their best asset – their first product or “first-born” – to achieve a result. This will prove costly, as the first product is your best asset. It is thus recommended to offer your second product or “second-born” idea to build a more sustainable company.

[3] MANAGE UNCERTAINTY: The successful entrepreneur must be able to “hedge their bets” and manage risk in what they endeavour to accomplish. Many entrepreneurial undertakings do not follow a prescriptive path; if so, then every product or service would have already been developed, and entrepreneurship would cease to exist. It is a key leadership ability to recognize the inherent risks in any approach and the alternatives to this approach without becoming pessimistic, losing energy and motivation, and simply killing any motivating factors that your team relies upon to keep going forward. You will simply fail if you ignore such risks. Risk is a fact-of-life, so the entrepreneur must effectively manage it.

[4] INTEGRITY & CORE VALUES: Create a purpose to drive the entrepreneur, the company, and its employees. The development of culture builds a sense of value and urgency in the company. Its about “us”, not “me”.

[5] DRIVE YOURSELF: Self-motivation and an internal navigation system are essential to building a successful company. You can not be successful without it. You live, think, eat, and breathe it 24/7. The entrepreneur should take their own cues (ie. “instinct”) on the next approaches or steps and not simply wait for instruction from their “Board”. It is essential to always take advice from mentors and other entrepreneurs, but the drive to take the next steps should be instinctual. The entrepreneur is the leader, and in many ways it is lonely at the peak as the entrepreneur can not place blame on anyone else.

[6] KEEP LOOKING OUTSIDE: It is tempting for the entrepreneur to become so focused on their product or service that they forget what is happening around them. This is a mistake. Connecting with colleagues, other entrepreneurs, investors, key opinion leaders, etc. is essential, as they will determine the ultimate success of your company. Key contacts through conferences could lead to the next investment. Listening to several regulatory professionals about product development in your sector could offer an avenue in which to accelerate your product to market. Engaging with trade commissioners or economic development professionals could lead to new customer markets to whom to sell your product or service.

[7] EXPERIENCE: The more experience you obtain, the easier you can field difficult questions from investors, your competitors, and especially your customers. One way to acquire experience is to simply fail in your entrepreneurial endeavour. You gain valuable “take-home” messages as to why your company failed. A successful entrepreneur takes these lessons learned to heart and applies the knowledge to a new company. Another way to gain experience is to hire employee prospects into the company for strategic expertise, and then permit them to continue their education. Gaining experience through frequent meetings and professional development is valuable for a company. A famous quote suggests, “Train your employees to the point that they are able to leave, but treat them in a way that makes them want to stay”.

[8] JUST LUCKY: “Right place at the Right time”. A successful entrepreneur will always recall the event that pushed the nascent company towards success. Having drive, being inquisitive, and asking questions are all important to position oneself for a lucky event. Create an environment in which you can take advantage of one by creating contingency plans to alternative events. Not being ready for that lucky break could be a recipe for a company’s failure and could stymie its future.