Sunday, May 3, 2009

Define Entrepreneur

"Entrepreneur" is one of the most commonly used terms in business, whether it is in office talk, in periodicals, in books, on television or online. I hear the term used with much frequency.

It is especially common these days, given the 8.5 percent unemployment rate, according to U.S. Bureau of Labor Statistics. People with nowhere to turn, let go from affected companies across the country, are forced to be as creative as ever about how they earn income. Are these people entrepreneurs? Beats me.

I often hear the word stated, particularly in large organizations, to describe an individual who thinks “big.” Is that an entrepreneur, someone who thinks “outside of the box?” Could be.

I know several people who have taken considerable risk to achieve financial success, in some cases many times over, by creating and sustaining enterprises from scratch. Are they entrepreneurs? Not sure.

What, truly, is an entrepreneur? For various reasons, I have given thought to this question lately, so much so that I want to devote time to answering it here.

To start, I picked out a 13-word definition, found at The Free Dictionary online: Entrepreneur (noun) “A person who organizes, operates, and assumes the risk for a business venture.”

The definition, itself, is simple. But, when I look closer at the three verbs of the sentence, there is deeper meaning to be found.

One, “organizes.” Okay, I am not Stephen Covey (in fact, no relation), but would give myself a decent grade when it comes to understanding organization. While it is important to touch on, I see no need to spend time on the organizational capabilities of an entrepreneur.

Two, “operates.” I think of a business operator as someone who leads. Not necessarily a boss, but someone who makes difficult decisions to drive work forward on a day-to-day basis. While this is certainly a critical skill to entrepreneurs, like organization, it does not lead me to what I want to know. It is not the key characteristic that I associate with an entrepreneur.

Three, “assumes.” Whoa. I like this one. Here, I encounter the real challenge of the sentence. It is the least easy of the three to define. "Assumes risk for a business venture." Huh? With measured risk, I will attempt to explain.

Before beginning an entrepreneurial endeavor, one must ask, what is the reward to be gained? What is the goal in taking on this challenge? Is it to be profitable? Is it to earn enough money, so as much to keep a certain standard of living, perhaps equal to or greater than that which is earned in a salaried position?

Defining the reward of an entreprenurial endeavor is no easy task. Sure, it is possible to do, for example, by forecasting financial returns in a business plan. But even then, the reward is not guaranteed. Often, rewards are hard to come by, particularly those of the monetary variety.

In the article, So, You Want to Be an Entrepreneur, which my aspiring brother-in-law recently sent to me, there are ten valuable points to consider when launching an enterprise. The point of the article, in short, is that the risk for entrepreneurs is high and can take a toll. The rewards are not often achieved until years into the venture.

So, back to risk. How do we justify risk without knowing the reward? That, folks, is what entrepreneurs do. They assume risk with confidence. With confidence that the reward, although uncertain, will mitigate the risk.

An entrepreneur can mean many things to many people, but by defining the word and breaking down the definition, I establish, for the purposes of self-evaluation, what an entrepreneur is.

Many of us can efficiently organize. Others of us can effectively operate. Some of us can do both, but how many of us willingly assume the risk required to reap an unknown reward?

The person who does is the true entrepreneur among us.

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