An entrepreneur is “a person who sets up a business or businesses, taking on financial risks in the hope of profit”. With this Oxford definition, it is no surprise that any person who starts a business is considered an entrepreneur, regardless of how successful the business is, or not.
I have been wondering lately about what it means to be an entrepreneur. That is, are you an entrepreneur if you establish an electric car manufacturing company, and also an entrepreneur if you establish a food and beverage (F&B) outlet, like a speciality coffee shop?
First of all, this is in no way a denunciation of one or the other, but an attempt to look further into what actually makes a person an entrepreneur… and what does not.
Let’s assume that both of the aforementioned ventures qualify each of the founders to be considered an entrepreneur. What happens when one expands in terms of operations, and the other turns to be nothing but a mere flop?
In other words, does the success of a business further highlights what it means to be a true entrepreneur, whereby a business failure undermines the founder’s standing in the entrepreneurial world?
These were a few of the questions that helped me reflect on what it really means to be an entrepreneur. I have summarised my thoughts into the following three main points.
• First, the word entrepreneur should apply to individuals who come up with interesting and innovative ideas. Though I am not a fan of the latter word, the point that I am trying to make here is that there must be authenticity and ingenuity in the business idea that ensures it success, as long as there are no uncontrollable factors that may prevent it from doing so.
As a rule of thumb, those are the ideas that get acquired for millions, if not billions, of dollars by companies that have been in the field for ages and can recognise a brilliant business idea when they see one.
Moreover, the acquisition sum could be sometimes an indicator of the potential that the business idea holds, including at times when the acquired business has made no profits since inception. If the idea is great and the business has potential, initial failure to have a few profitable quarters could be overlooked.
Another rule of thumb is when the business is listed publicly, via an Initial Public Offering (IPO), and where stocks get bid to prices higher than the initial price intended by the company. This is what happened with Snowflake, for example, the cloud-data start-up.
• Second, an entrepreneur does not stop at a single great business idea. This is not solely about being a serial entrepreneur, one who comes up with back-to-back business ideas, but is also about execution.
That is, an entrepreneur with great business ideas is able to turn those ideas into operational business ventures. Moving on to the next great business idea, therefore, is a natural evolution in the entrepreneurial process. The latter includes the expansion of existing operations geographically or into other areas of business, as well as the development of a totally unrelated business idea.
• Third, an entrepreneur contributes to job creation. This may as well include that of the business founder.
Putting a measure
The main takeaway here is that entrepreneurship feeds into the importance of small and medium Enterprises (SMEs) in any country’s economic diversification efforts, in addition to its economic growth trajectory. Hence, it is important to ensure that great business ideas are not lost in translation between establishment and takeover, and that there is a chain effect of job creation that takes place all along the entrepreneurial value chain.
This way, true entrepreneurial contribution is measured by its impact on the economy, and not only by potential takeover or IPO value.
To summarise, an entrepreneur is someone with a brilliant and genuine business idea that has potential. Such potential can be measured by the success of a takeover or a public listing.
Also, an entrepreneur is someone who can execute, turning any business idea into a tangible venture with substantial operations. Being a serial entrepreneur, i.e., starting multiple businesses back-to-back, is also a reflection of what it means to be an entrepreneur as long as those multiple businesses possess the right success metrics.
Finally, an entrepreneur has a positive, sustainable impact on the economy through job creation and growth. The last thought that I want to leave you with: What qualifies as a great, or brilliant, business idea?
- Abdulnasser Alshaali is a UAE based economist.