The explorer’s guide to entrepreneurship

 

Entrepreneurship is a simple concept: It’s the process of turning an idea into a business. Coined by Irish-French economist Richard Cantillon back in the 1700s, the word “entrepreneur” comes from the French “entreprendre,” meaning to undertake something or to get something started.

That’s a fitting definition because, at its core, entrepreneurship revolves around imagining a product or service, harnessing the motivation to make it a reality and being resourceful enough to overcome any obstacle as you start your business.

 

What are the main types of entrepreneurship?

If you’re an aspiring entrepreneur, getting to know the different types of entrepreneurship can help you see where your idea might fit into the overall business landscape. While every startup is unique, these are some of the most common entrepreneurial categories: 

• Small business entrepreneurship — Building a small or local business like a brick-and-mortar shop, an online  store, a personal services business or a self-publishing author imprint. As the owner, you get the independence and satisfaction of running the show.

• Scalable startup entrepreneurship — Creating a product or service capable of exponential growth, supported by a business model that allows you to become a major player in your category.

• Large company entrepreneurship (aka “intrapreneurship”) — Leading new product lines, initiatives or divisions within an established corporation. This approach allows you to innovate and make an impact without having to build your own business from the ground up.

• Social entrepreneurship — Starting a mission-driven business that tackles a social problem you have the drive to help solve. The goal is to make a positive impact in the world while also generating a profit so that you can keep making an impact.

• Innovative entrepreneurship — Inventing breakthrough products or services that anticipate unmet consumer needs. Your goal is to shape the future by inventing it, disrupting existing industries along the way.

 

Who can be an entrepreneur?

Today, anyone can become an entrepreneur if they start a new business, usually by coming up with an innovative concept and taking on some financial risk. The key ingredients are a great idea, the guts to pursue it, and the flexibility to learn and grow through trial and triumph.

Entrepreneurs come from all backgrounds, ages and education levels. Some start a business in a college dorm, while others get going after they retire from a long career.

Regardless of where and when they begin, successful entrepreneurs share some common characteristics:

• Creativity — A knack for developing new products, services or ways of doing business

• Motivation — A strong desire to start a venture and make it succeed

• Resourcefulness — A talent for securing the money, tools and partners necessary to get started

• Tenacity — The grit to power through any challenges

• Flexibility — The ability to adapt to changes in the market and pivot as needed

From fleshing out your idea to gathering startup funds to attracting your first customers, it takes a combination of mindset and skill set to be an entrepreneur. But if you succeed, the rewards can be fulfilling and even life-changing.

 

Where do entrepreneurs get their business ideas?

Many entrepreneurs are inspired to start a company after finding an unmet need or a gap in the market. Your own lightbulb moment could come from a personal hassle you’ve had as a consumer. Or it might come from a flash of insight about a unique way to appeal to a customer.

Brian Scudamore recognized the frustration of coordinating junk removal, which was expensive and time-consuming. He launched 1-800-GOT-JUNK? to offer a trustworthy and convenient way to get rid of junk. From that one simple idea, Brian created a large franchise business across North America.

Other founders launch a business because of a passion project they want to pursue full time. Maybe you’ve honed a craft or skill for years and now are wondering if you can monetize your hobby.

That’s what Christina Stembel did when she turned her love of fresh flowers into a successful online business. Christina had been crafting bouquets as a hobby and gifting them to friends but wanted to bring her artistry to a wider audience. Launching her eCommerce startup Farmgirl Flowers provided the perfect platform, allowing Christina to eventually quit her job and focus on growing her floral brand.

Whatever their inspiration, successful entrepreneurs all seem to end up doing the same thing — channeling their unique perspectives to tap into the zeitgeist with the right product at the right time.

 

Where do entrepreneurs get the money to start?

One of the first major hurdles of entrepreneurship can be finding the funds to get started. The best business funding source depends on factors like how much money you need, your business stage and whether you want to give up an ownership stake.

These are some of the most common funding sources:

• Personal savings — The simplest funding route for entrepreneurs is to put up their own money. Best of all, it doesn’t require convincing others to invest.

• Business loans — Entrepreneurs can borrow money from banks or lenders in the form of business loans or lines of credit. The trade-offs are needing good credit and paying interest.

• Angel investors — Wealthy individuals can provide smaller investments, usually in the very early stages. They accept more risk but want an ownership stake.

• Venture capitalists — Big institutional investors can provide large investments for later-stage growth. They’re more likely to fund scalable ideas, plus they also will want equity.

• Crowdfunding — With the right product and approach, entrepreneurs can raise small dollar amounts from a large pool of individual online backers. One benefit is that it allows entrepreneurs to connect with their target customers early on.

As an entrepreneur, knowing your options puts you in the driver’s seat to pick the funding approach that’s right for your vision and goals.

Take Sarah Blakely, for example. When she started Spanx, she bootstrapped the company with $5,000 of her own money. This forced the company into a lean operation early on, but it allowed Sarah to maintain control of her company from the start. Success came fast. After reaching $4 million in sales the first year, Sarah took on a bank loan so that Spanx could continue to successfully scale.

Other entrepreneurs look to outside investors, like Hamdi Ulukaya did when he purchased a defunct yogurt factory to launch Chobani. Despite running into his fair share of skeptics about the mass appeal of authentic Greek yogurt, Hamdi secured the loans he needed to stay afloat until he could partner with a major food distributor. Having enough capital to establish distribution allowed Hamdi to succeed in disrupting the dairy aisle.

 

How do entrepreneurs get their businesses off the ground?

Entrepreneurship is all about turning ideas into reality. But after the initial spark gets you started, it takes thorough planning and preparation to determine whether your big idea fizzles out or catches fire. Every new business venture follows a different path, but for the entrepreneur it typically goes like this:

• Identify a business opportunity — Look for a need in the market or come up with an innovative idea. Once you have your big idea, careful planning and preparation can give your startup its best shot at becoming a success.

• Make a business plan ­— Start by writing a business description to outline your goals and strategy. Research your competition thoroughly. Figure out how much funding you’ll need and where it will come from. Having detailed financial projections shows you’ve done your homework.

• Get funding — Many entrepreneurs self-fund first ventures with personal savings. Others pursue outside financing like small business loans or investment from angel investors. With a compelling pitch around a solid business plan, you can appeal to those who might be willing to back your idea.

• Launch and grow — Build a strong network to find mentors who can provide startup advice. Recruit talented people to join your team. Stay laser-focused on your target audience so you can market to them effectively.

 

Why do we need entrepreneurs?

Entrepreneurship is a major contributor to economic growth, injecting energy and money into industries and communities. The role of the entrepreneur is to discern marketplace needs, then take the necessary risks to bring new ideas to the public while creating jobs and opportunity along the way.

Many entrepreneurs aren’t just fulfilling their personal dreams. Some founders are looking for a purpose beyond profit, launching passion-driven companies committed to social change. But wherever an entrepreneur falls on the entrepreneurship spectrum, they provide broader societal and economic benefits:

• Job creation — Startups hire people to develop, make, market and sell their goods, creating new employment opportunities and even careers.

• Innovation — Entrepreneurs often introduce ideas, technologies, products, services and ways of thinking that didn’t exist before, pushing both business and society forward.

• Economic growth — Successful startups increase productivity, investments, consumption and more that can strengthen local economies as well as entire industries.

• Competition — More companies give consumers more choice through competitiveness, efficiency and market dynamics.

• Social impact — Entrepreneurs can address community needs by launching purpose-driven ventures focused on positive change.

• Wealth creation — Thriving companies can accelerate asset creation, capital and personal wealth through ownership stakes.

 

How can you become an entrepreneur?

There are no set rules or formulas for entrepreneurship. One entrepreneur’s story might unfold over decades, another’s seemingly overnight. Some ideas might emerge from hobbies, others from filling an unmet need.

Brian Scudamore turned his junk hauling service into the successful 1-800-GOT-JUNK? brand, while Christina Stembel’s Farmgirl Flowers found a way to deliver fresh, sustainable flowers at an accessible price point.

Sarah Blakely’s Spanx gave women stylish shapewear options, disrupting the apparel industry. And Hamdi Ulukaya’s Chobani made nutritious Greek yogurt something consumers didn’t know they needed until they tried it once — and then kept trying it.

As their varied stories show, becoming an entrepreneur takes creativity, motivation and perseverance. If you take the leap into entrepreneurship you’ll join the ranks of what, way back in the 1700s, Richard Cantillon called the essential risk-takers.

Looking to explore what it takes to become an entrepreneur? Or want to talk about how to take your business to the next level? Reach out to a Chase business banker today. We’re always ready to help.