If you ask most people about their impression of entrepreneur, they might use words like “small business” or “innovation” or describe it as “working for yourself.”
Simply put, entrepreneurship is the endeavor of creating, owning, and commercializing an idea, technology, product, or service.
Also assuming the risks and rewards associated with that enterprise.
How Entrepreneurship Is Different from Employment
Responsibility. Founders are often the first chief executive officers of their startup. The founder will be responsible for seemingly endless decisions ranging from hiring and firing to product design and purchasing commercial insurance.
And unlike an employee who is confident he will receive a direct deposit of his salary each pay period, an entrepreneur bears the burden of making payroll every month. Even if she is not personally drawing a salary.
When a decision needs to be made, she has to make it, even after closing time.
Compensation. The trade-off for this steady income is that employees may not participate in the proceeds of the sale of a company nor are they commonly guaranteed a raise if the company’s profits grow.
By contrast, it’s not uncommon for entrepreneurs to forgo salary despite working very long hours during the startup phase of a business.
A founder is willing to make sacrifices in the short-term based on the hope of a future financial reward—which is sometimes quite substantial.
Risk of Failure. The other side of the coin is that entrepreneurs bear the risk of failure. While founders enjoy the greatest upside in an endeavor, they also have the most to lose.
An entrepreneur invests time into a business, which can prove valuable in terms of opportunity cost.
However, founders often deploy personal wealth and capital to get the business off the ground, representing a significant monetary cost.
The reality is that many businesses fail, and there’s no guarantee that when a business closes down the entrepreneur will recoup the value they have invested in that business.
An employee may lose the source of their paycheck, but the entrepreneur might lose his or her entire investment.(which is sometimes the bulk of their life savings)
Ready to Launch?
Preparing for entrepreneurship starts with embracing the conviction that owning and operating a business is attainable.
A budding founder can begin preparing by developing common entrepreneurial traits like grit, determination, and a tolerance for failure.
Beyond these personal qualities, a would-be entrepreneur should set out to learn the technical skills within their chosen industry. Also financial skills that will be critical to managing their business.
It takes time, talent, and capital to successfully launch a business. With careful preparation, a commitment to continual learning, cultivating industry experience and know-how. An aspiring founder can begin their journey toward entrepreneurship.