What is Entrepreneurship? Definition, Meaning, and Types
An entrepreneur is a creator who devises unique solutions for the development of the economy and society. However, becoming an entrepreneur is not easy. We've covered everything you need to know about entrepreneurship in this detailed read.
Do you know what's common among Aliko Dangote, Femi Otedola, Mike Adenuga Jr., Folorunso Alakija, Abdul Samad Rabiu, and Theophilus Danjuma?
Yes. You guessed it right - all of them are reputed business owners in Nigeria. But did you know that they are also 'entrepreneurs?'
Entrepreneurship is on the rise in Nigeria. Data shows that, despite the COVID-19-led economic slowdown, Nigeria saw 5.4 million new entrepreneurs between 2019 and 2020. While there were a little over 41 million entrepreneurs in 2018, the number increased to 46.4 million in 2020, a jump of 13.17%.
However, entrepreneurship is not always a bed of roses.
The entrepreneurship journey is usually filled with unexpected roadblocks, detours, and dead ends. Many sleepless nights, challenging plans, and budgets need to be revised. It can be gruelling to launch businesses. The struggles might make anyone wonder why people become entrepreneurs.
Regardless of the hardships associated with being an entrepreneur, countless people venture on the entrepreneurial journey to bring their vision to completion and contribute to Nigeria's progress. They launch tech startups and brick-and-mortar businesses or turn their ideas into new services or products.
You can also become a great entrepreneur with inspiration, motivation, a game plan, and the appropriate entrepreneurship process.
Read this post until the end to learn about entrepreneurship meaning, the entrepreneurship process, its importance, and more.
Who is an Entrepreneur?
There are several ideas about entrepreneurs, but the general definition refers to someone who creates a business to make huge profits. They launch their sentiments and ideas into the real world and sell them to others.
Entrepreneurs may occasionally also enhance and modify existing services and goods and sell them as a better option to customers.
Some become entrepreneurs accidentally when their side hustles transform into full-time work, such as those who love to make videos and launch a full-time video creation business. Others become entrepreneurs for their primary income source, such as by becoming owners of online shops or retail businesses.
The entrepreneurship process begins with starting a business to make decent profits. However, in this digital age, it has extended to the practice of transforming the globe by tackling large-scale concerns.
Thanks to the internet's advancement, entrepreneurship can trigger social change via service or product creation, affecting people positively and addressing social issues with creative ideas.
For instance, CowryWise, founded by Edward Popoola and Razaq Ahmed in 2017, has ascended to become one of Nigeria's top startups offering financial services and premium investment advice to common investors.
The best part about the platform is that users can automate their savings and investments. The mechanism is simple - you just need to create an account and choose an investment plan.
Entrepreneurship is the chance for self-motivated individuals to frame their career paths and generate a stable income stream. They work for themselves to construct and produce goods and services by assessing the needs and wants of the people. It may be risky, but if done right, the rewards can be lasting.
Irrespective of what entrepreneurship process they select, entrepreneurs have a significant role in the Nigerian economy and society. The most common characteristics of entrepreneurship set them apart from the average person. Those who opt for entrepreneurship tend to:
- Be creative
- Enjoy flexibility and freedom
- Be Ambitious
- Be problem solvers
- Be goal-oriented
- Understand basic finance principles
Importance of Entrepreneurship
Entrepreneurs hold significant value in the economy. Following are the top reasons why entrepreneurship is important:
1. Create Jobs
If there weren't any entrepreneurs, there wouldn't be any jobs. Their goal to grow their brand eventually leads to the creation of new jobs.
2. Creates Change
Entrepreneurs strive to create a better place through their ideas and make way for global change. They may launch a new service or product that could solve the current hot problem or tackle the challenge of launching something that has yet to be seen in any industry.
3. Entrepreneurs Are Innovative
The greatest technology we have derived is from innovative businesses that have made it to the top. Technology advancements occur by solving problems, improving the world, and creating efficiencies. Whenever there is technological advancement, its credit goes to innovative entrepreneurs.
4. Give To Society
While a small portion of entrepreneurs might be selfish and greedy, they usually do more for society than average humans. Since they make more money, they pay more taxes, which helps the government launch social services. Entrepreneurs are amongst the largest donors to charities and non-profits. Some invest their money to create solutions for those in need with good health care and clean drinking water.
5. Enhances National Income
In terms of the economy, entrepreneurs are instrumental in adding new wealth. New and enhanced ideas about services and products allow wealth and markets to grow.
Types of Entrepreneurs
While the basic definition of entrepreneurship is the same as starting, planning, and running a business, there are various types of people with different skills depending on their industry and business type.
Successful entrepreneurs have definite skills and unique elements which make them stand out. Conventionally, the classification of entrepreneurship is divided into seven primary types such as:
1. Scalable Startup Entrepreneurship
They have the goal of changing the world. This type of entrepreneur focuses on creating a model which is both scalable and repeatable.
The entrepreneurship process for scalable entrepreneurs starts with the anticipation of business expansion and significant returns.
Most startups have an idea which leads to a group of other entrepreneurs supporting them. Google, Amazon, and Apple are prime examples of startups that have transformed the globe.
To create a successful startup, you will have to focus on the amount and human resources behind the business's success. The secret ingredient to initiating this business model is having long-term plans for profits and proven methods to grow the business.
2. Small Business Entrepreneurship
These entrepreneurs start small businesses alone without any prior expansion goal or franchise.
For instance, if you want to open a nail salon, the general goal would be to launch a single store. You will have to hire local employees or family members to take care of your business and invest in the resources associated with your business.
For these types of businesses, the entrepreneur only profits from the growth of the company.
3. Large Company Entrepreneurship
Large corporations refer to firms such as MTN Nigeria, Airtel Africa, Dangote Cement, and the like with innovative products and a sizeable customer base.
They keep innovating and providing their customers with new product variants. The purpose of large-scale entrepreneurs is to create new products inside a company or acquire small businesses. Specifically, they want to reach new markets to expand their customer base and grow their business through company sites.
Another feature of this type of entrepreneur is the commitment to building the best culture within a company. The company usually grows through its employees.
4. Innovative Entrepreneurship
Innovative or creative entrepreneurs try to conceive and formulate the next big thing. If you have world-changing ideas for starting a business or a list of unique products and services, you have the characteristics of a creative entrepreneur.
An innovative entrepreneur is always knowledgeable about the current market conditions to find creative and unique ways to tackle the ups and downs.
Innovation here refers to not only the product ideas but also the methods by which business is conducted. It's all about pushing the boundaries and status quo.
5. Researcher Entrepreneurship
These types of entrepreneurs believe in facts and data. They emphasize the need for useful knowledge and preparation to succeed. A great business startup consists of academic research with an understanding of extending resources to the next level.
6. Social Entrepreneurship
If you're wondering what is corporate social entrepreneurship, know that they're innovators who create services and products that benefit the world while making money.
Social entrepreneurs are associated with non-profit, hybrid, and for-profit enterprises committed to environmental changes. Some primary examples are EdTech companies, companies offering banking services, and microfinance institutes.
The difference between this type of entrepreneur and others is they measure their success based on financial gains and social impact.
7. Imitative Entrepreneurship
The imitative entrepreneurship process involves those who impersonate successful entrepreneurs, usually running businesses with the least financial risks.
Imitative entrepreneurs copy the idea but improve it to make it more appealing. They develop creative methods for a better business by learning from others' mistakes, and becoming successful entrepreneurs.
What Are the Characteristics of Entrepreneurship?
Many willing to become entrepreneurs wonder whether they have what it takes to become one. The following are some traits of entrepreneurs which will make becoming successful easier:
Versatility is important to create something extraordinary. With creativity and versatility, innovation is attainable.
Entrepreneurs with the skills to pinpoint their ideas and work on them are usually the most successful. All ideas need not be a great hit, but the experience they create will be unique.
Versatility helps people develop new solutions for issues, allowing them to come up with ideas using outside-the-box thinking. It unlocks the ability to create new products for markets with similar problems.
Flexibility is a crucial skill for entrepreneurs. Without the ability and courage to explore new things, it will be difficult for you to come up with something unique. This uniqueness will allow you to make a difference in the market.
Investing in thoughts and ideas which people think will fail is a risky thing to do. However, entrepreneurs have different perspectives on risks.
Great entrepreneurship is when people are ready to invest. However, they are always equipped with a great backup.
To become flexible, it is necessary to have a backup in case things go south. Risk evaluation is also essential. A good entrepreneur should only take risks if they have evaluated the possible consequences.
To become a successful entrepreneur, you should be well aware of your business's financial situation for efficient decision-making skills.
A successful entrepreneur knows the financial condition of their business, future targets, and records inside and out. Even when they have an accountant by their side, they are the decision-makers.
They leverage their money to enhance their skills by making budgets and commitments. Available investments turn into business development, but you must take financial risks that you can handle.
You can also consult with advisors who will help you understand the potential effects of your monetary decisions. To get free financial advice, the internet is a gold mine.
Entrepreneurs are resilient and push their skills to stay at the top of the dynamic market of business entrepreneurship.
To become resilient and motivated, they look at the micro-level things, achieving and setting small goals to build the ladder for bigger things.
Morale and confidence maintenance throughout the journey is the greater necessity. Celebrating small wins will help you maintain a positive mindset.
Being focused is the secret ingredient of success. But first, the individual needs to be knowledgeable of their industry.
With focus, they can easily tackle issues and crises. It will allow them to track their development in the market. They are more aware of new market trends or technological advancements this way as well.
New information becomes useful in the form of newly developed strategies. They are further well aware of their weaknesses and strengths so they can work on them and push for the betterment of their business.
6. Business Smart
A vital part of the entrepreneurship process is knowing about one's goals and what one wants to achieve.
Setting to work toward a goal is a great aspect of a good entrepreneur. Vision helps you define the organization's identity. Not only will it keep you driven, but it will also enhance motivation across the business.
If you want to become business smart, you can start by identifying your professional goals and how they work with your vision. Following this, you can set milestones and plan to achieve the goals you have set.
This will allow you to stay committed to your tasks. Focusing on the tasks will also prevent you from getting overwhelmed and let you stay true to your goals.
Skillsets are the fuel that makes the business of an entrepreneur successful. Communication skills are a great characteristic of a successful entrepreneur. The following are examples of great social skills:
- Hiring talent
- Relationship building
- Team strategy
The ability to connect with people and secure opportunities helps entrepreneurs excel in their world. Interacting with people who can offer knowledge or resources you cannot get will greatly help here. You will be able to learn from others' successes and failures.
Why Do People Become Entrepreneurs?
Although many have their professional and personal reasons for becoming entrepreneurs, there are some common reasons why people may begin entrepreneurship, such as:
1. Always Curious
If you love learning and discovering new things about innovations, choosing entrepreneurship will be your best option.
A great entrepreneur is a consummate learner, a consummate researcher of their industry, and comes up with great ideas for the market.
Moreover, they are always eager to learn how to succeed. From reading books to communicating with people who are more successful than them, entrepreneurs scavenge for knowledge in all corners.
The mindset involved in entrepreneurship is usually desirable for those constantly struggling with job loss.
When you are an entrepreneur, the only person you need permission from is you. If you want to take action without anyone's approval or intervention, becoming an entrepreneur will be your best option.
3. Aspiration To Bring change
It may sound like a big order or cause, but entrepreneurs are meant to make a change in their society. Most usually become entrepreneurs because they wonder how they can develop ways to do things regardless of their status.
They want to identify the loopholes in services, gain knowledge and support people in the community and address issues with the best business idea.
Entrepreneurship in Economics
In the current economy, entrepreneurs serve as coordination agents. This type of coordination is in the form of resources diverted to new potential opportunities.
Entrepreneurs clear the fog in a market where uncertainties are prevalent since they assume the risks and make the right judgments.
Well-established companies go through competition and difficulties from entrepreneurs, who usually spur them to their business development efforts. Economically, entrepreneurs are thus those who disrupt the course of the steady-state equilibrium.
The entrepreneurship process involves developing ideas and creating the best business possible. Forming and building a business needs a lot of dedication and work. Thus, entrepreneurs must always be motivated, have a vision, and make countless sacrifices.