Entrepreneurship refers to the concept of developing and managing a business venture in order to gain profit by taking several risks in the corporate world. Simply put, entrepreneurship is the willingness to start a new business. Entrepreneurship has played a vital role in the economic development of the expanding global marketplace.
An entrepreneur is someone who is willing to work for himself and by himself. There are several different meanings of the term entrepreneurship.
Sir Richard Charles Nicholas Branson is an English business magnate, investor, author and philanthropist. He founded the Virgin Group, which controls more than 400 companies
William Henry Gates III is an American business magnate, investor, author, philanthropist, and humanitarian. He is best known as the principal founder of Microsoft Corporation
Steven Paul Jobs was an American business magnate and investor. He was the chairman, chief executive officer, and co-founder of Apple Inc.; chairman and majority shareholder of Pixar
Alan Michael Sugar, Baron Sugar is a British business magnate, media personality, politician and political adviser. According to the Sunday Times Rich List
Mark Elliot Zuckerberg is an American technology entrepreneur and philanthropist. He is known for co-founding and leading Facebook as its chairman and chief executive officer
Oprah Gail Winfrey is an American media executive, actress, talk show host, television producer and philanthropist. She is best known for her talk show The Oprah Winfrey Show
Winfrey is an American media executive, actress, talk show host, television producer and philanthropist. She is best known for her talk show The Oprah Winfrey Show
Taking risks and seizing opportunities:
Being an entrepreneur isn’t easy, but it isn’t meant to be easy in the first place which is why as an individual you’ve got to challenge yourself by going out of your comfort zone and believing in yourself to take risks and face any fears you may have because at the end of the day if you didn’t try then you’ll be imagining what could have been. Jeff Bezos said it helped to know that he wouldn’t regret failure itself, but he’d regret having not tried in the first place.
Success doesn’t happen overnight, and things rarely go to plan so it is important that as an aspiring entrepreneur you’re patient and don’t dwell on things not going as you expected them to because with resilience you often bounce back stronger.
On top of taking risks aspiring entrepreneurs should aim to seize opportunities whenever they arise and grab them with both hands as taking the steady and more reliable route isn’t necessarily the road to success as competitors could be taking bold risks and opportunities and it may be paying off for them yet you’re not growing as much as they are.
Always be prepared to learn. Entrepreneurs will likely already have substantial knowledge about the industry that they’re setting up a business in, but ultimately they will not know everything which is why it is important to have an open mind and always ask questions along the way to improve your knowledge so that not only you as an individual and an entrepreneur can improve but so that your business can too benefit from which is the most important point.
Mistakes and criticism are positive, not negative:
Mistakes aren’t negatives, for entrepreneurs they’re positives because at the end of the day you can look at what went wrong, why it went wrong and how you can make sure that it doesn’t happen again by acting wherever needed which in turn will help your business move that step closer to success.
Another important tip for aspiring entrepreneurs is to fully take onboard any complaints and criticism whenever your business receives any. The reasoning for this is that they can help you find errors or wherever something isn’t right so that you can then rectify it accordingly. It is also important that you know your target audience well because not knowing what their demands and requirements are can potentially seriously damage your business. Knowing them well can be the difference between them going to your business or going to a competitor’s business.
Making sure that you don’t burnout:
Whilst entrepreneurs are worried about their business failing an aspect that many forget about is making sure that they make sure that they still have free time and rest away from their business because if they don’t then they’re likely to experience burnout and the stress that comes with it. Having rest away from your business both helps avoid burnout but also maintain the passion and drive that you had within the first place when originally setting up the business.
Advice from mentors is invaluable:
When setting up a business the thing that entrepreneurs are most likely to be lacking is the relevant experience in running a business and that’s where mentors come into the fold. Mentors can help aspiring entrepreneurs in that they can offer guidance from their own past experiences which can provide invaluable as you will not make the same mistakes. Not only that however but the support that mentors provide can make decisions easier in a sense that you someone experienced working beside you to give you their opinion on important matters.
Sources of finance:
When pursuing a business idea, aspiring entrepreneurs will need sources of finance to get their business up and running and there are a wide variety of sources of finance that they can look to. Firstly, entrepreneurs need to ask themselves questions such as how much finance is needed, when and how long is it needed for, what security can be provided and whether they’re prepared to give up some ownership of business in return for investment. Aspiring entrepreneurs also need to consider the following financial needs of the business such as: set-up costs, starting investment, working capital and finally finance for growth and development of the business. Sources of finance are divided into whether they are an internal source of finance such as from within the business and personal or an external source of finance coming from outside of the business.
Personal: Personal sources of finance are when aspiring entrepreneurs finance the business themselves. This can be done through various forms such as from personal savings – which can include general savings or from mortgaging private properties or the businesses properties which of course comes with its own risks. Entrepreneurs investing their own money within their business is a sign of commitment which in turn can help secure external sources of finance down the line. Other methods of personal finance include borrowing from friends and family which can be both quick and cheap however when having this source of finance, you have the added stress of repayments when the business may be struggling for example. Another way of personal finance is from credit cards which is also the most common source of finance for small businesses.
Retained profits: Retained profits is money, usually from business profits, where instead of the profits being divided out amongst shareholders, the profits would be reinvested into the business usually for growth and development. However, given that it is profits that would be used for reinvestment this wouldn’t specifically immediately apply to small businesses who are maybe seeking to break even in their first year for example, so short to medium term instead of short term.
Share capital – invested by entrepreneur: If as an entrepreneur you’ve invested within the business and are the sole investor then you’d have full (100%) control of the business. As more investors invest within the business your share will gradually go down accordingly and then each shareholder will receive dividends from the profits that the business makes, or if it is ever sold then a percentage of that value.
Bank loans: Bank loans provide aspiring entrepreneurs looking to start a business with long term finance (typically over a few years or more) where the bank will state the fixed period, the rate of interest payable and the amount of repayments until the loan has been repaid. Banks will typically ask for a guarantee that you’re going to pay back the loan which is usually just an aspiring entrepreneur pledging that they’ll pay it back in full with supporting documents such as a cash flow forecast for example that will reaffirm to the bank that you’re financially stable to loan to. Banks tend to offer their own respective conditions to businesses such as with regards to what APR rates are charged and what benefits they will give you as a business for choosing them.
Enterprise Finance Guarantee: The Enterprise Finance Guarantee (EFG) is a guarantee scheme to facilitate lending to business that have been turned down for a loan elsewhere due to inadequate security or your track record. However, the EFG will only guarantee finance if they are satisfied that the business is viable and are able to keep up with repayments. The EFG is managed by British Business Financial Service, a subsidiary owned by British Business Bank plc which is in turn owned by the government via the Department for Business, Energy and Industrial Strategy. The EFG provides a guarantee for 75% of the loan which can be between a value of £25,001-£600,000 over a period of 3 months-10 years or £600,000-£1.2m over a 3 month-5-year period.
Bank overdrafts: A bank overdraft is short term finance that banks give to businesses when they exceed zero in their bank accounts where high interest rates are charged. Overdrafts are a flexible source of finance in that they’re only used when they’re needed. Overdrafts specifically are good for small businesses in that if a company has any short-term financial issues such as struggling more in one month than usual or waiting for a customer to pay then businesses still have a source of finance that they can rely on.
Business grants: Businesses can secure grants from the government and organisations however these come with conditions and are extremely competitive in that the loan you receive doesn’t have to be paid back. For example, the government runs an agency called Innovate UK which is effectively apart of UK Research and Innovation an executive non-departmental body that invests in science, research and technology within the UK. Another example is The Prince’s Trust which is a scheme that offers mentoring, support, funding and grants in some scenarios to entrepreneurs aged between 18-30. However, it’s not just for profit businesses that are eligible to receive support, there are organisations such as The Big Issue Invest that aim to financially support social enterprises, community organisations, charities and businesses that are socially-driven with loans between £20,000 and £3m.
Asset finance: Another way that businesses can access sources of finance is through asset finance. Asset finance helps businesses fund the purchase of an asset through regular repayments which means that as a business you don’t have to use working capital to pay a lump sum fee for the asset which in turn will help your business preserve capital.
Share capital – invested by outside investors: Similarly, to share capital invested by the entrepreneur but for outside investors to acquire shares within the business. However, tensions and differences may arise between shareholders, so it is important that their respective interests are managed as much as possible to not cause fall out or so on.
Business angels: Business angels are investors, often highly successful entrepreneurs themselves, who typically invest within businesses with high prospects. Along with the investment that business angels will make to your business, they will also bring their own skills, contacts and expertise to the business which can massively help the future growth of your business as an aspiring entrepreneur, however it comes with a cost in that you’ll have to be prepared to give up a percentage of the business.