In recent years, the prospect of becoming your own boss has become more and more appealing to people.
In 2022, 60.87% of business owners stated wanting to be their own boss to be the main reason for starting their business.
While it may sound unbelievable, everyone is able to start a business.
All you need is an idea and a passion for your work.
But just because everyone is able to start a business, it doesn’t mean they will succeed.
Start-ups fail all the time and it takes an especially talented person to make their business succeed.
These people are commonly known as entrepreneurs.
In this guide, we will lay out exactly what an entrepreneur is and what skills they possess so you can become one and create a successful business.
Table of Contents
- What Is An Entrepreneur?
- Main Obstacles To Overcome:
- Essential Entrepreneurial Skills
- Types Of Entrepreneur
- 4 Types Of Entrepreneurship:
- Top Tips For Success:
- Develop A Business Plan
- Be Frugal
- Continuously Educate Yourself
- Build A Winning Team
- Find A Mind-Body-Soul Balance
- Take Advantage Of Free Marketing Tools
- Don’t Be Afraid Of Networking
- Be Financially Prepared
- Invest In Insurance
What Is An Entrepreneur?
Entrepreneur comes from the French word ‘entreprendre’ which means ‘to undertake.
In basic terms, an entrepreneur is someone who starts a business venture.
This can be achieved individually or as a team.
Their business usually provides a service or manufactures and sells products.
What makes entrepreneurs stand out when compared to other business owners is their business provides a unique product that appeals to a certain audience.
Entrepreneurs see a gap in the market that people are demanding and create a product or service to fill it.
They know exactly what customers want and are able to provide it.
This knowledge is either through observation, testing, or market research.
In order to be an entrepreneur you need to be innovative, creative, and a problem solver.
You are unable to become an entrepreneur without an idea.
Successful entrepreneurs see things that other people don’t and what those things can mean for business.
Main Obstacles To Overcome:
When creating a business, there are many struggles that you will face.
In order to overcome these challenges, the business will need to take risks and stand out in the market.
Below are the 3 main obstacles you will face when starting your business, but if you are able to overcome them your business with reap the rewards of success.
Becoming independent in a bureaucratic society isn’t easy.
There are many hurdles on the way to creating your own path, but if you stay true to your ideas you can successfully overcome them.
It may seem that the market is run by large corporations, but anyone with the drive and passion can compete with them.
When starting a business, you want to share the venture with people who are equally as motivated as you are and share your vision.
This is not as easy as it sounds.
The people who can help your business succeed are those that possess the skills that your business needs.
Ultimately the main quality you should look for when hiring is if you are able to work well with the person.
No matter a person’s skills, if you do not get along that it will negatively affect the business.
Initial funding for a business should go towards materials and equipment so that you can start making a profit quicker.
While you don’t need huge amounts of money to start a business, it definitely helps as you are able to focus on building your business rather than stress about making money quickly.
The type of funding can vary based on your business.
Some available options are loans, investors, grants, and crowdfunding.
Investors require you to give up a portion of your business, whereas grants are only available to non-profit organizations.
Crowdfunding has become successful in recent years with 40% of crowdfunding investments being focused on business and entrepreneurship.
Some entrepreneurs are even able to self-fund their businesses.
This makes them the sole person responsible for all the success of their business, but also the person responsible for any failures.
Living expenses also need to be considered when self-funding.
All of these methods of funding have their own risks and benefits that need to be taken into account when starting a business.
Essential Entrepreneurial Skills
When starting a business, you will be in charge of a lot of the responsibilities before the business is successful enough to start hiring staff. This means you will need to be a jack of all trades.
We have compiled a list of the most important skills you need to have when starting a business.
It is recommended that you learn these skills before starting so that the business can have a successful beginning.
You can learn these skills through experience or education.
College is a great place to learn many of these skills either through an entrepreneur course or classes in your chosen industry.
Communication is a skill that you use daily and 54% of business owners say that it is the most important skill to have.
When starting a business you need to communicate with vendors, investors, employees, and customers.
You need to be able to successfully communicate with a variety of people to ensure the success of your business.
By personally communicating with these people you are able to receive immediate feedback and establish good relationships.
Communicating with customers also helps to keep them happy which ultimately leads to your business growth.
You want to establish these relationships and loyal customers early on in your business’s life.
Having every aspect of your business organized can lead it to run more efficiently.
The less time spent trying to understand the operations of your business is more time focusing on how to grow it.
Being able to organize your business also highlights what aspects need working on.
That way you create goals and how best to achieve them.
These goals are also a great way to keep you motivated when you feel like your business isn’t growing as fast as you would like.
Time Management Skills
Early on in the business, you will have lots of responsibilities.
Time management is crucial to ensure that all of these tasks are completed and that your business is on the right track.
Data is able to show exactly what needs to be done in a business.
This should be used to make objective and measurable decisions that will help with the success of your business.
By following the data you will also be innovating your business, which will push big firms to try and do the same.
You want to be able to join the market early before it becomes saturated with other businesses.
Similar to the last point, you need to be able to anticipate changes in the market so you can adapt your business quickly.
Not only does strategic thinking help you to discover opportunities for your business, but you are also able to recognize any potential threats and the best methods to approach them.
Once you are skilled at recognizing these patterns you are able to make smart business decisions easier.
Early on you will probably be the one who is in charge of accounting.
While this is a tricky skill to learn, it is pivotal to understanding where your business is heading.
It is especially important to understand the profits of your business if you are looking to expand and hire new people.
Accounting requires you to file and pay taxes as well as manage all the finances.
There are different types of tax rates depending on your type of business.
Below are some of the common ones.
- Sole proprietorship – This is based on your personal tax return and the business is taxed at the individual’s tax rate.
- Partnership – Similar to a sole proprietorship, the difference is that the incomes and expenses are split across everyone in the partnership.
- C-Corporation – This is a completely separate entity and the business is taxed at a corporate rate rather than your personal one.
- Limited Liability Company and S-Corporation – The same as C-Corporation but at lower amounts.
You need to have the drive and focus to carry your company across these challenges no matter how hard it may seem.
Starting a business is not easy.
You will face many challenges and it will be a struggle to get your business off the ground.
Expect failure and rejection, but understand that failure is one part of success.
By being persistent you find that not only is your business stronger from the struggles, but you as a person are too.
These challenges should be used as an opportunity to learn and better prepare yourself for the future of running your business.
Types Of Entrepreneur
While there is no set personality type for being a successful entrepreneur, there are some characteristics that are shared amongst the most successful ones.
Some of these characteristics are responsibility, leadership skills, a natural curiosity, and adaptability.
You also need to be able to work well in a team.
Despite their success in recent years, entrepreneurs weren’t initially considered a part of the economics model.
They still wouldn’t be if it wasn’t for Joseph Schumpeter recognizing that entrepreneurs were responsible for creating ideas as well as companies, Frank Knight seeing entrepreneurs as a part of the risk premiums on the financial market, and Isreal Kirzner understanding that entrepreneurship is a process that leads to discovery.
Not every entrepreneur is the same, everyone has their own goals for their business.
Below we have outlined 4 different types of entrepreneurs you may find.
Builders are looking for fast growth in their company.
They want a scalable business in a short period of time.
To achieve this they will seek to hire the best talent and look for investors.
Their goal is to create a strong infrastructure that can support growth.
Builders tend to have temperamental personalities which can put a strain on their personal and business relationships.
Opportunists recognize the right time to get in on a business, and then also know when to exit as the business reaches its peak.
They are highly focused on ideas that can create renewal and residual income as they care most about the profits and wealth of the business.
Generally, opportunists are more optimistic but also impulsive when it comes to business.
Innovators are a rare kind of entrepreneur as they enjoy experimenting and can bring an idea to the table that no one has thought of before.
Typically this idea is created from a place of passion which leads them to create a business. Innovators care more about their product and the impact it brings rather than money.
Due to this mindset, innovators are better at generating ideas than running a company.
This is why they typically enter a partnership with someone who is better suited to the more corporate side of running a business.
Specialist entrepreneurs have strong skills in a specific area.
They could’ve gained this skill through education, apprenticeship, or experience.
Their goal is to use their specific skills to build their business
This leads them to have an analytical approach to running a business and avoid taking risks.
When compared to a builder entrepreneur, specialist entrepreneurs have slower growth in their business as they build it through referrals and networking rather than investors.
4 Types Of Entrepreneurship:
Entrepreneurship plays a key role in society and the economy.
They can bring new ideas to the world and provide unique services.
The type of business they create depends on the product or service they are providing.
Here are 4 types of business models an entrepreneur can create.
Entrepreneurs starting a small business are not looking to expand their business.
They are typically located in one area, either in 1 store or from an at-home office.
Usually, they will invest their own money into starting a business and will live off any profits.
This means there are no investors involved which allows for full creative freedom.
The goal for small business entrepreneurs is to disrupt the current market and bring something new to it.
To start they are able to get a Small Business Association (SBA) loan, but will typically avoid taking out a loan unless they believe it will help the business.
Scalable startups are created from unique ideas.
Its purpose is to bring innovation to the market and to continue to grow.
Different from small businesses, scalable startups are looking to reach multiple markets.
In order to achieve this, they require investors and a large amount of capital to spread their product.
This is a new division of an existing company.
These businesses are created when a company is looking to branch out into other sectors.
Some reasons for this happening are through the company being involved with new technology, a new market opening up that the company wants to profit from, or ideas that were generated in the company and are being put into action.
Unlike the other business models, the goal of social entrepreneurship is to benefit society or humankind.
This is done by helping certain communities or the environment.
These businesses aren’t driven by profit and are generally non-profit organizations which means they are commonly funded by grants.
Top Tips For Success:
People have become obsessed with the idea of starting their own businesses.
However, the first step to achieving this is by having an idea.
You need to know what the focus of your business is before you start it.
The idea needs to solve a specific problem that a lot of people have.
That way you know that people are going to spend money on it.
For some people, the thought of their idea being realized is enough and they don’t need to make a large profit from it.
This is when social entrepreneurship is created.
Ultimately, you want room in your business for growth.
This is important no matter what business model you are following.
You need to constantly reevaluate your business so that you can adapt it to the current market.
Even if you create your business with no intentions for growth, you have to anticipate a large interest in your product that will require you to expand.
Below are some tips you can use in order to create a successful business.
While these tips are quite general, every entrepreneur is different and the way they approach the business can vary drastically.
Develop A Business Plan
As previously mentioned, your business needs to be built around a solid opportunity for profit.
This is not just about the product you are providing, but also the business surrounding it.
You need to plan your product, and how your business is going to operate in order to get it out to the public.
A business plan will help you envision your business as a whole and understand exactly what your priorities are.
When starting a business, you need to know where resources and time are going to go so that way you can see what aspects of your business need the most focus.
Try not to overdo your business plan.
Having a strict outline you need to follow will only lead to stress if the business doesn’t follow it.
Leave room in your business plan for any mistakes or uncontrollable occurrences.
You want your business to turn a profit as soon as possible, one way to achieve this is by cutting costs where possible.
Having low costs naturally makes a higher profit margin.
When buying items for the business, you need to consider if it is necessary.
If it doesn’t immediately help the business in a large way, then maybe hold off on purchasing it until your business is making more money.
At the beginning of your business, getting a steady income may not be guaranteed.
You need to set money aside for living expenses and accurately bookkeep so you know exactly where your money is going.
While you will be personally working very hard in your business, it is important to keep personal and business funds separate.
If you have to dip into one or another then you are budgeting wrong.
Continuously Educate Yourself
It is important for entrepreneurs to constantly consume knowledge from across different platforms.
Not only about their industry but also about many other subjects.
Having an understanding of the world and the different industries and markets can help entrepreneurs to become better business owners.
Keeping up to date with world affairs also helps entrepreneurs spot other problems they can solve.
In order to find out how to improve, entrepreneurs should study other success stories.
Notable entrepreneurs to study are Walt Disney, Thomas Edison, and Mark Zuckerberg.
Attending seminars or classes are also a great way to gain more knowledge about different industries. You can also use them as an opportunity to communicate with other entrepreneurs.
One of the best ways to learn about your industry is through feedback and criticism.
No one understands what the market wants better than the customers you are selling your product or service to.
They can provide you with useful insight that you won’t be able to get through a mentor or book.
Build A Winning Team
When looking into building your team you should aim to hire people who are able to take on multiple roles or the ones which are the most time-consuming.
Some good first hires are an online assistant and a personal accountant.
That way you are able to focus on the growth and sales of your business and not worry about the finances or the smaller aspects of running a business.
You want your team to have various skill sets and be reliable and competent.
The best and easiest way to do this is to lead by example.
You need to inspire your employees to work just as hard as you do.
Find A Mind-Body-Soul Balance
Running a business is time-consuming and you need to set time aside to care about yourself.
Even just a few minutes away from work can help your personal well-being.
Stress is detrimental, not only can it make you sick, but it can impair your judgment so you make poorer decisions when it comes to your business.
Take Advantage Of Free Marketing Tools
There are many free marketing tools.
One of the most popular ones is Google Business Profile, this can get your business on Google Maps and sets up a Google page so everyone can learn about your business.
A 2022 survey found that on average people spend 147 minutes a day on social media, which means that it is a great opportunity for marketing.
People are constantly using social media and promoting your business on it can help to bring in customers.
A simple but effective way of marketing is word-of-mouth.
Telling friends and family about your business is a great way to spread the word about your business across your local community.
Don’t Be Afraid Of Networking
As an entrepreneur, you are entering a whole new industry and you need to make connections in it to be successful.
Networking not only provides connections, but it is a great way to ask for advice or support.
Everyone started their own business from nothing and understands how hard it is.
It is useful to seek out a mentor in your industry who can help you keep your business on track and make you feel like you’re not alone in starting your own business.
An important part of networking is expanding your contacts.
You are able to get in touch with reliable suppliers and financers to help you with your business.
An easy way to network is by joining LinkedIn.
You are able to get in contact with other people in your industry and could possibly attend networking events, conferences, or email communications.
Be Financially Prepared
Starting a business is always going to be more money than you expect it to be.
No matter how hard you budget, something unexpected will come up that requires you to spend money. You need to be prepared for this.
While properly managing your finances is a great way to know exactly how much money you have and where it can go, it is a good idea to set up an emergency fund.
This way you have money set aside for emergencies or any unexpected expenses.
Having flexible money also prepares your business for any shifts in the economy.
Even the smallest events can send the economy crashing and your business needs to be prepared to deal with these.
Invest In Insurance
As previously stated, unexpected things can happen to a business.
Not just financially but also physically.
Unfortunately, you can’t predict the future so you don’t know exactly what to prepare for, but getting insurance is a great place to start.
Insuring your business is something that you are either glad to have done, or regret not doing.
When disasters strike you need to know that your business can come out without any long-lasting or permanent damages.
Not only does insurance protect your business, but it also protects you.
It means you won’t have to use your personal funds to support the business in times of trouble.
Having insurance is also a great way to show risk management.
Having that security blanket around your business will appeal to investors as it shows you are committed to keeping your business safe and operational.
As you can see, entrepreneurs have certain skills and characteristics that make them ideal for running a business.
But just because you don’t currently have these skills doesn’t mean you can’t gain them.
With enough training and hard work, you can become a successful entrepreneur.
It should be noted that just because you are a successful entrepreneur, it doesn’t mean your business will be successful.
You could have all the ideas in the world but lack the skills, or be very skilled and lack ideas.
There are circumstances where you have all of the above characteristics but you weren’t able to get the funding, or simply luck wasn’t on your side.
If this happens it is important to not get disheartened.
As we mentioned earlier, one of the key characteristics of being an entrepreneur is resilience.
Just because your first business venture failed doesn’t mean you can’t try it again in the future or continue to look out for new business ideas.
While this article is a great guide on how to become an entrepreneur, it should only be used as a guideline.
There is no set path to follow when it comes to becoming a successful entrepreneur. Running a business is all about being adaptable and flexible to any changes.
Even when you are running a business you can expect failures in certain areas.
A business will never go exactly as planned but as long as you keep sight of your goals you know your business is successful.
Staying motivated to keep your business running can be difficult when facing struggles.
One way to combat this is by celebrating the small victories.
Set yourself small targets to reach so that you can feel encouraged when they are met.
If you only focus on the negative aspects of running your business you will quickly lose passion and that will show in your work.
Becoming an entrepreneur is not a job for the faint-hearted.
You need to be responsible, innovative, and talented.
Sometimes this is done through tough decisions but as long as you are staying true to yourself you know that you are doing the right thing.
While it may take time, with perseverance and drive you will eventually be running a successful business.
How you define success is completely up to you.
It could be once you turn a profit, if your product is being talked about, or if you are able to expand.
The only way to define success is that your business achieved what you wanted it to.
Remember to constantly remind yourself of your reasons for starting your business so that you can feel rewarded.