What is an entrepreneur and how to become one
Portions of this article were drafted using an in-house natural language generation platform. The article was reviewed, fact-checked and edited by our editorial staff.
Key takeaways
An entrepreneur develops new products or ideas, typically taking on more risks than most small business owners
There are various types of entrepreneurs, including innovators, opportunists, imitators, researchers and buyers
Becoming a successful entrepreneur involves researching a market, testing your business idea and achieving financing before creating the business
Entrepreneurs are known for their innovation with new products or business ideas and their flexibility and adaptability as professionals. While they may run a business, they often focus on making new ideas successful. Entrepreneurship can take many forms, including bringing brand new ideas to market, developing a well-researched product, improving an existing product or filling a gap in an existing market.
If you have aspirations for becoming an entrepreneur, you’ll want to understand the inner workings of entrepreneurship and what it takes to be successful.
What is an entrepreneur?
An entrepreneur is someone with an innovative new business idea or product, typically disrupting the current industry or entering a new market. Entrepreneurs take on the task of establishing a new business, along with any uncertainties and benefits that come with it. They are often involved in risky and high-growth ventures as they introduce their ideas to the market.
Small business owner vs. entrepreneur
Entrepreneurs and small business owners share some common ground as they both run businesses. Entrepreneurs are often more focused on innovation and new markets, though they may be considered small business owners if they run a small business based on their business ideas.
But entrepreneurs typically focus on developing fresh ideas and obtaining business success in the short term. Some of these individuals keep their entrepreneurial spirit by allowing others to run a business for them as they focus on developing new ideas, either for the same or another business.
On the other hand, small business owners often manage a business in an established industry with a more predictable customer base. For example, they may open a restaurant with well-known types of food or a fitness studio with recognizable fitness techniques. Small business owners also often focus on the consistent profitability of the business over the long term.
However, especially during the ideation and startup phases, small business owners might also be considered entrepreneurs as they develop their business ideas and find ways to differentiate themselves. As the business becomes successful, they may stop developing new ideas and focus on running the business.
5 types of entrepreneurs
Entrepreneurs come in various forms, though they can share similar characteristics like adaptability and perseverance. Ultimately, they may approach their new businesses in different ways.
Innovative entrepreneurs
An innovative entrepreneur is a visionary with the ability to think creatively, identify opportunities and transform ideas into successful business ventures.
Innovative entrepreneurs will gather resources and build connections to create lasting impact. They challenge existing industries and technology by being adaptable and open to fresh possibilities. Classic ideas of entrepreneurship — launching revolutionary companies from a garage or pioneering innovative vehicle technology in a new industry space — best exemplify this entrepreneur type.
Opportunistic entrepreneurs
Opportunistic entrepreneurs watch for new business opportunities, such as new products or gaps in the market. They may take risks on new technology or business ideas in industries that are new to them.
Opportunistic entrepreneurs are characterized by being proactive and working hard to help the business succeed. An opportunistic entrepreneur might go about their daily life and run across a gap in the market, such as a lack of construction companies specializing in entryways accessible to disabled individuals. They might then start a business related to construction and capitalize on the new market idea.
Imitator entrepreneurs
An imitator entrepreneur is a person or organization capitalizing on existing ideas, products or business models. Instead of creating something new, imitators try to replicate other business models or products, making small changes or adjustments to improve it. In doing so, imitators demonstrate their keen ability to identify popular trends and cater to customers’ needs.
For example, an imitator entrepreneur might open up a retail clothing store in their local community, but they distinguish themselves by offering custom clothing designs.
Researcher entrepreneurs
Researcher entrepreneurs base their products or business ideas on thorough research. They may thoroughly vet an idea with market research and, in some cases, develop the product based on their research. This type of entrepreneur takes a highly calculated approach to creating a business or a new product or service.
A potential business owner might want to test to see if American-made furniture would be popular within their target market. If the results don’t show that the products are favorable, the researcher entrepreneur might test the products for a new audience until they find the right customers. Only then will the researcher start a business surrounding this idea.
Buyer entrepreneurs
Buyer entrepreneurs are known for investing in other businesses. They either purchase an established company or expand their own company to help the business thrive. When acquiring a business, buyer entrepreneurs will choose a business they believe is viable and has the potential for growth. They may then run the business themselves or find someone best fit to manage and expand it.
For instance, a buyer entrepreneur might scour the business world for small businesses that need help growing. If they find one with a unique angle, such as a business developing a new alternative energy source, they may buy the company and use their business acumen and connections to expand it.
5 types of entrepreneurship
Different types of entrepreneurship have varying goals and business models to help them achieve their goals.
Small business entrepreneurship
Small business entrepreneurs may create a small business around a new idea or run an established small business in a unique or specialized market. They have started the business but haven’t grown it to a regional or national scale. In short, small business entrepreneurs focus on starting and running a small business (or handing over management to someone else).
But small businesses can range widely in size, and people’s definitions of a small business may vary. The U.S. Small Business Administration (SBA) sets its own size standards for small businesses in different industries, which can include businesses with hundreds of employees or millions of dollars in revenue.
Large business entrepreneurship
Entrepreneurs may break into an industry with a growth mindset, wanting to grow the business to a regional, national or international scale. These entrepreneurs focus on meeting key business goals, such as revenue, production or other market indicators of success.
The entrepreneur will prioritize investments and processes that will grow the business quickly. They will make business decisions that align with their goals for fast growth, using market research, products that hone in on customers’ needs and expand quickly into new markets.
Large business entrepreneurship may involve starting a franchise, either by building a new brand or growing under an already established franchise.
Scalable startup entrepreneurship
With a scalable startup business model, an entrepreneur will start a business that has the potential to scale into a large business in the future. They may focus on a business idea that can grow and change as the market or customers’ needs change.
While this model sounds similar to large business entrepreneurship, it may not reach the same scale as a large business. The focus is mainly on a business idea’s potential for future growth.
Social entrepreneurship
Social entrepreneurship involves an owner starting an organization to help an underserved people group or otherwise do good for the community. The goals behind this entrepreneurship may be centered on the number of people served or another specific outcome.
For example, this entrepreneurship may measure success by how much food waste is eliminated or how many disadvantaged businesses succeed past the first year. Social entrepreneurship doesn’t typically involve large monetary goals, although these organizations may need to reach funding goals to continue their work.
Intrapreneurship
Intrapreneurship is a type of entrepreneurship that happens when an individual or group of individuals pursue new processes, products or technology within an existing business.
Intrapreneurs may use the business’s resources to create products for new revenue streams or implement new processes that save the business money. In some cases, businesses may break into new technology to stay competitive.
How to become an entrepreneur
Becoming an entrepreneur involves several steps, from developing a unique business idea to financing it and growing your brand.
Brainstorm a startup business idea
The first step to becoming an entrepreneur is to come up with a business idea that sets you apart from your competitors. Often, this may involve identifying a gap in the market and filling it or improving on an existing product.
For instance, you could create a low-cost product that offers the same benefits as a more expensive one or create a business that focuses on the needs of underserved customers, such as minority or disabled customers.
Finally, you could start a business around a new technology or rising industry that doesn’t have a well-known customer base. Your advantage in these rising markets is that you could become a leading expert in that field, helping you lead with experience if that market takes off.
Know your audience
Once you have a business idea, it’s important to identify who your ideal customers are. Knowing your customer’s needs and preferences will make it easier to promote your products and turn your idea into a profitable business.
This may require conducting market research through surveys or interviews. You can also use this research to gather data on their demographics, such as gender, income or personal interests, which will help you hone in your marketing.
Test your business idea
Before fully committing to your business idea, it’s crucial to test it. The process entails developing a rough product and getting feedback from potential customers. You can conduct focus groups or launch a crowdfunding campaign to gauge interest in your product. The goal is to ensure there’s a market for your product before investing too much time or money into it.
Write a solid business plan
A business plan is a strategic document that outlines a company’s goals, strategies for achieving them and how long it may take to succeed. A well-crafted business plan recognizes the challenges and outlines your strategies for achieving your goals.
You can use this business plan to show potential investors or lenders your unique selling point and how you plan to succeed, which can help you get funding to carry out your ideas. You can get help writing your business plan through organizations like SCORE or your local Small Business Development Center (SBDC).
Finance your startup idea
Securing financing for your business idea gives you the runway you need to bring your ideas to market. There are several options available, including:
Bankrate insight
SBA loans offer affordable financing to startups by providing longer repayment terms and lower interest rates than traditional loans. The SBA caps the maximum interest rates lenders can charge, making them competitive for startups compared to conventional business loans.
Build your business and grow your brand
The final step to building a successful business is to promote the mission, vision and values that make your business unique. Essentially, you’re building a brand with unique characteristics and a narrative that sets it apart from other businesses offering similar products or services.
Branding involves developing your company’s identity using consistent typography, colors, imagery and messaging. It also involves the ongoing marketing of your brand to your ideal customers until they start to recognize your brand within the industry.
Bottom line
Entrepreneurs play a vital role in innovating and boosting the economy. They come in various forms, each with their unique approach to business. Anyone can become an entrepreneur by coming up with a unique business idea, understanding their customers’ needs, testing the business idea and building their brand. But you will need the innovation, energy and perseverance common among all entrepreneurs to make your business idea successful.
Frequently asked questions
What exactly do entrepreneurs do?
An entrepreneur runs a business, particularly one that enters a new or risky market. Entrepreneurs may also research, design or engineer new products to fill a market gap or improve the quality or processes of existing products.
How do entrepreneurs get their money?
Entrepreneurs get funding for their business idea in a variety of ways, including using personal savings, getting investors to fund their idea, getting a startup business loan or operating the business with low or no overhead costs until it starts generating revenue. They can also get money through crowdfunding or business grants.
How do I start a business with no money?
Many business owners start their businesses with no upfront investment or by investing personal funds. Here are ways to start a business with no money initially:
Start a digital or service-based business
Put in sweat and time equity rather than money
Apply for financing with no down payment
Start your business as a side job
Write a business plan that uses alternative funding sources like crowdfunding or personal savings
Get a business grant to fund your business
