The statement by Thompson shows the broadness and complexity of entrepreneurship that warrants deep research. Entrepreneurship is a complex area that has attracted many definitions and studies. Equally, it has attracted many studies seeking to clear the myths about entrepreneurship and bring to light facts that people who are seeking to understand entrepreneurship should know. Focus has also been put on defining an entrepreneur that has led to different definitions that have substantial differences. Some definitions explain an entrepreneur as a person who works for him/ herself. In other words, an entrepreneur is a person who takes the initiative to set up a business thus avoiding employment. Although this definition is true, it fails to give a comprehensive definition of an entrepreneur. According to Collins, Hanges & Locke 2004, an entrepreneur is a person who is committed to innovation aimed at improving the business process and also provides a sound leadership to ensure the business remains committed to its course. These are only a few of the many definitions that seek to describe an entrepreneur and entrepreneurship. The concepts of independence and innovation feature prominently in most definitions of entrepreneurship. It implies that an entrepreneur must portray some degree of independence. This independence relates to thinking differently and being ready to challenge the existing norms. Innovation takes a central role in different definitions of entrepreneurship. Innovation is concerned with introducing new ideas through research. Most definitions seem to agree that entrepreneurs introduce a new idea or improve the existing ideas. A good majority of entrepreneurship definitions recognize business success as a feature of entrepreneurs. In other words, people who have made it in business are considered entrepreneurs. There are different types of entrepreneurs, but they seem to have some common characteristics.
Intense research has been directed to investigating the different types of entrepreneurs. This research has led to the identification of many types of entrepreneurs depending on the researcher’s criterion of classifying entrepreneurs. Understanding the different types of entrepreneurs provides a sound basis for understanding entrepreneurship. The following five types of entrepreneurs feature in most literature that seeks to discuss entrepreneurs.
Sceptical entrepreneurs are those that criticize the work of other entrepreneurs. They seek to provide a different approach to doing things that lead to the establishment of a business. Sceptical entrepreneurs believe in themselves and assume that they can deliver better results than other entrepreneurs (Müller & Gappisch 2005). Although the assumption is not always true, they are critical in improving business processes as they are always in a fault finding mission. Their activities lead to the identification of shortfalls in systems, processes, and products that provide a basis for improvement.
Innovators are committed to research and development aimed at solving problems in the business environment. They seek to provide solutions that are commercially viable that leads to profitability. This breed of entrepreneurs is ready to commit their resources and time in research and development even when the outcomes of the investment are unclear (Müller & Gappisch 2005). Sometimes they introduce breakthrough technologies that disrupt the business environment.
Serial entrepreneurs establish a new business with the aim of selling it once it attracts investors. They derive satisfaction from establishing new businesses without necessarily being concerned about its long-term success. Serial entrepreneurs have a clear exit strategy when opening a new business. IPO is one of the most effective exit strategies implemented by serial entrepreneurs. They commit themselves to developing a business until it is ripe for an IPO (Westhead, Ucbasaran, & Wright 2005). The value of a company can increase rapidly after an IPO after which the investors dispose of their stake.
Successful entrepreneurs have an impact on not only their loves but also to the society at large. Governments and key stakeholders in the society seek to grow entrepreneurs as well as creating the right environment for the entrepreneurs to enhance their ability to influence the society positively. It is essential to understand the features of successful entrepreneurs to support comprehension of entrepreneurship as well as providing a reliable perspective to developing essential traits in entrepreneurs.
Successful entrepreneurs are risk takers, and this enables them to venture into unfamiliar territories where other people are unwilling to place their money. The business environment is characterized by uncertainties where unpredictable condition can lead to losses for new and established businesses. Stories of business failure are many where entrepreneurs incurred huge losses having a permanent financial dent in their lives. Entrepreneurs are confronted with risks such as operations risk, financial risk, market risk, and legal risk among other risks. Failure to manage these risks properly leads to business failure. According to Beugelsdijk & Noorderhaven 2005, successful entrepreneurs take calculated risks that reduce their chances of losses. They conduct a comprehensive cost benefits analysis aimed at identifying all the relevant risks and benefits aimed at ensuring the actual benefits are attractive enough to warrant the assumption of the concerned risk. Operations risk emanate from interference with operations that can limit the organization’s ability to meet customer demands. Prudent entrepreneurs measure operations risk objectively and implement the necessary measures to avert or mitigate this risk. Financial risk is associated with the organization’s inability to meet monetary targets such as profit or revenues. The realization of financial goals is influenced by factors emanating from the internal and external environment, and this makes it difficult to accurately estimate the financial outcome of a business process. According to Felício, Caldeirinha, & Rodrigues 2012, a business is an open system that interacts with the environment making it difficult to give an accurate projection of its output. The market risk is concerned with uncertainties linked to the transactions with clients. Changing customer needs and competition are main forces behind market risk. Analyzing the two forces and implementing versatile strategies enables successful entrepreneurs to avert the market risk. Legal risk is a threat to entrepreneurs, and it emanates from the failure by the entrepreneurs to comply with the existing legal framework. Successful entrepreneurs are not deterred by the legal risk as they analyze the legal environment with the aim of identifying the relevant risks (Beugelsdijk & Noorderhaven 2005). Risk identification is followed by efforts to position the business favourably in the face of legal risks.
Successful entrepreneurs are good planners. Planning is concerned with setting goals and determining how these goals will be accomplished. Successful entrepreneurs establish sound plans showing how the business is to realize its short term and long term aspirations (Beugelsdijk & Noorderhaven 2005). Analyzing the environment is an important part of the planning process as it enables an entrepreneur to understand the opportunities and threats confronting an organization. A good plan enables a business to benefit maximally from the opportunities and at the same time implementing safeguards against risks. Having understood the environment, an entrepreneur sets goals that are in line with the environmental realities. Goals can be broadly classified into three classes which are short term, medium term, and long-term (Beugelsdijk & Noorderhaven 2005). Successful entrepreneurs start with setting clear long-term goals that define where the organization wants to be in the long run. The long-term goals include the mission and vision and other long-term aspirations. Successful entrepreneurs set a legalistic vision that articulates the firm’s future aspirations. They also create an accurate mission statement that shows the roadmap for actualizing the vision. Long-term plans cover a period exceeding five years implying that successful entrepreneurs can see decades ahead regarding what they aspire for their business. An entrepreneur breaks down the long-term plans into medium-term plans that cover a period of above one year but below five years. These plans detail the subsidiary goal that needs to be pursued to support the realization of the long-term plans. After forming the right medium-term plans, entrepreneurs then establish short-term also referred to operational plans that define the specific activities in an organization that needs to be performed to ensure the organization remains on its course. It is clear the ability to make effective plans is one of the core characteristics of a successful entrepreneur.
Being visionary is an element that is found in successful entrepreneurs. They are visionary leaders that who use their leadership skills to not only make their businesses successful but also to develop talents. According to Delmar & Davidsson 2000, a visionary leader sets clear goals, communicates them to the subordinates after which these subordinates are given space to innovate concerning how best to achieve the goals. Visionary leadership is a crucial ingredient when building a successful business. Successful entrepreneurs know that growing a business needs diverse talents and this reality requires emphasis to be put on growing talents. They also understand that their capacities are limited making delegation and empowering the subordinates a necessity. An entrepreneur who applies the visionary style of leadership gives room for subordinates to make mistakes as they try innovations in the business process. In such an environment employee development is certain and this gives an organization long-term success. Visionary leadership also motivates the employees increasing their output. The entrepreneur is, therefore, able to reap maximum benefits from human resources leading to business success. Visionary entrepreneurs also understand that their capacities are limited and therefore need to create effective teams. By doing so, they can realize synergy in operations leading to business success.
Successful entrepreneurs adapt easily to changes in the environment. The business environment is dynamic, and this poses threats and opportunities to businesses. Business success depends on the extent to which a business can adapt to changes in the environment (Chaganti & Greene 2002). Successful entrepreneurs stay close to the environment to enable them understands how changes specific factors affect operations. They implement versatile strategies and organic structures that enhance the ability to respond to changes in the environment. Rigidity in the business process can lead to business failure as it makes difficult for a business to exploit emerging opportunities. It also impedes effective risk management since the ability to mobilize resources to deal with risks is compromised. The fact that successful entrepreneurs are good planners does not imply that they stick to the plans despite the changes in the environment. According to Beugelsdijk & Noorderhaven 2005, business proposals and plans drawn by entrepreneurs are subject to revision in line with the emerging opportunities and threats. Successful entrepreneurs emphasize on creating flexible systems, structures, strategies, and plans. Concerning systems, a successful entrepreneur focuses on established internal systems to ensure the company can react to changes in the internal and external environment. For instance, they adopt flexible human resource systems to ensure the company reacts swiftly to changes human resource needs. They also emphasize on flexibility when designing an organization where they alter the organization structure whenever a need arises. A strategy refers to a game plan showing specific goals are to be realized. Entrepreneurs keep revising strategies to enhance the strategy’s efficiency and effectiveness.
Entrepreneurs have a strong drive towards realizing entrepreneurial goals. Motivation is a drive that makes people behave in a certain way. It is caused both internal and external factors that give a person’s behaviour a certain direction (Verheul, Thurik, Hessels & van der Zwan 2010). Entrepreneurs have the internal motivation that stems from their passion for doing something. For instance, an entrepreneur in an IT product may have a passion for developing technology products. This person enables them to sacrifice their time and money in the name of improving their products. They are also motivated by external factors such as prestige, wealth, or impacting the society. Some entrepreneurs are motivated by prestige where they derive satisfaction from creating a product or a business that is esteemed by other people (Verheul et al. 2010). For instance, a unique product that has unmatched characteristics can motivate entrepreneurs. Wealth also motivates entrepreneurs as they seek to make a profit and increase the size of their enterprises. Some entrepreneurs derive satisfaction by having an impact on the society. Their operations may, therefore, be directed towards solving social problems. Regardless of the source of motivation, a strong internal and external force drives entrepreneurs towards realizing their goals.
It is evident entrepreneur is a broad topic that has attracted vast theories and studies. Some studies have focused on explaining the different types of entrepreneurs with the aim of supporting understanding entrepreneurship. Some of the common types of entrepreneurs include sceptical entrepreneurs, serial entrepreneurs, and innovators. The sceptical entrepreneurs criticize the businesses of other entrepreneurs and seek to correct the shortfalls of other entrepreneurs. They end up forming businesses in the process of striving to prove others wrong. Serial entrepreneurs establish businesses with the aim of selling them. These entrepreneurs end up opening many businesses in the course of their lives as they embark on opening a new business after a successful sale. They, therefore, open a new business with a clear exit strategy. Sometimes they use the IPO as an exit strategy where they dispose their shares after the IPO and leave the company in the hands of buyers. Innovators are entrepreneurs who dedicate their lives to research and development aimed at introducing innovation in the business process or introducing new products.
Studies show common characteristics that are found in entrepreneurs. These characteristics include risk taker, good planners, innovative, adaptive, visionary, and motivated. Entrepreneurs take a calculated risk and are willing to attempt things whose outcomes are characterized by uncertainties. Good entrepreneurs are expert in planning. They identify organizational short term and long term goals lay down strategies for realizing the goals. Entrepreneurs apply innovation in their businesses that lead to process improvement as well as the introduction of innovative products. Entrepreneurs are also adaptive where they seek to implement adaptive systems, structures, and strategies to enhance agility in responding to changes in the environment. Entrepreneurs are visionary leaders who articulate the directions of a business clearly and leave the subordinates to innovate on how best to realize organizational goals. Lastly, entrepreneurs are motivated towards realizing entrepreneurial goals. They are both internally and externally motivated to take a particular direction in business. Although these characteristics provide a general idea of the common characteristics of successful entrepreneurs, they do not define successful entrepreneurs in totality. There are many more characteristics identified in different sources of literature.
Based on the literature reviewed, persons aspiring to be successful entrepreneurs should observe the following:
- Embrace open-mindedness– aspiring open-mindedness is essential for one to be a successful entrepreneur. Open-mindedness supports viewing challenges and opportunities in different perspectives. An entrepreneur should be ready to try new ways of doing things to support process improvement.
- Being innovative– one should invest in research aimed at acquiring essential information as it provides a basis for evaluating new ideas.
- Create the right teams– an entrepreneur can only succeed when surrounded by the right teams. It is, therefore, necessary to empower employees to enhance their ability to contribute to organizational goals.
Set clear and realistic goals– goal setting should be given the right emphasis to ensure goals set are achievable. Emphasis should also be put on making the goals clear to the relevant stakeholders
5.0 List of references
Beugelsdijk, S. & Noorderhaven, N., 2005, ‘Personality characteristics of self-employed; an empirical study.’ Small Business Economics, vol.24, no.2, pp.159-167.
Chaganti, R. & Greene, P.G., 2002, ‘Who are ethnic entrepreneurs? A study of entrepreneursapos; ethnic involvement and business characteristics.’ Journal of Small Business Management, vol.40, no.2, pp.126-143.
Collins, C.J., Hanges, P.J. & Locke, E.A., 2004, ‘The relationship of achievement motivation to entrepreneurial behavior: A meta-analysis.’ Human performance, vol.17, no.1, pp.95-117.
Delmar, F. & Davidsson, P., 2000, ‘Where do they come from? Prevalence and characteristics of nascent entrepreneurs.’ Entrepreneurship & regional development, vol.12, no.1, pp.1-23.
Felício, J.A., Caldeirinha, V.R. & Rodrigues, R., 2012, ‘Global mindset and the internationalization of small firms: The importance of the characteristics of entrepreneurs.’ International Entrepreneurship and Management Journal, vol.8, no.4, pp.467-485.
Müller, G.F. & Gappisch, C., 2005, ‘Personality types of entrepreneurs.’ Psychological reports, vol.96, no. 3, pp.737-746.
Verheul, I., Thurik, R., Hessels, J. & van der Zwan, P., 2010, ‘ Factors influencing the entrepreneurial engagement of opportunity and necessity entrepreneurs.’ EIM Research Reports h, 201011, pp.1-24.
Westhead, P., Ucbasaran, D. & Wright, M., 2005, ‘Decisions, actions, and performance: do novice, serial, and portfolio entrepreneurs differ?’ Journal of small business management, vol. 43,no.4, pp.393-417.