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15 Characteristics of Entrepreneurship

 , January 28, 2019
Entrepreneurship is the pursuit of opportunity beyond your means. The term is associated with small businesses that seek to conquer large markets by being more creative and faster than incumbent firms. The following are the basic characteristics of entrepreneurship.

Small

Entrepreneurship is about challenging far larger organizations for control of a market. It is possible for large firms to fund entrepreneurs and profit from entrepreneurship. However, large market incumbents are the opposite of entrepreneurs. Large firms may invent things and innovate but they typically use significant resources in the process such that they aren't seeking opportunity beyond their means.

Ambitious

The term entrepreneurship is often incorrectly applied to small businesses that are seeking a regular return on their capital and labor. Starting a sushi restaurant in a neighborhood filled with sushi restaurants is not entrepreneurship. Entrepreneurs seek to win large markets with relatively few resources.

Creative

Generally speaking, it is impossible for small firms to displace large firms without a few extremely non-obvious and valuable ideas. For example, an entrepreneur may invent a new business model, technology or product.

Outsiders

In many cases, an entrepreneur is an outsider in a domain when they first begin such that they aren't indoctrinated into the status quo of an industry. For example, a computer scientist who takes on the airline industry.

Talent

Entrepreneurship requires unusual talent in some area. This may be a talent that is lacking at incumbent firms such that it represents a competitive advantage. For example, an artist who takes on an industry dominated by engineers.

Commitment

Launching and sustaining an entrepreneurial business is typically hard work that requires a high level of commitment.

Productivity & Efficiency

Entrepreneurial businesses require high productivity rates and efficient use of relatively scarce resources. For example, employees may have high throughput rates and demonstrate cost discipline.

Failure

Entrepreneurship has a high rate of failure. This is characteristic of any strategy that seeks an unusually large return on investment.

Risk

Entrepreneurship requires risk taking and benefits from risk management approaches that are adapted to an aggressive rate of change such as fail well.

Strategy & Vision

Entrepreneurs challenge firms that have more resources, relationships and status such that they have every advantage. Pulling this off requires a vision of how things will play out and how the future can change.

Niche Start

It is common for entrepreneurial ventures to start with a niche product and market. This is done to approach much larger competitors where they are the weakest.

Latent Need

The big idea behind an entrepreneurial venture is often a latent need that isn't current served by the market.

Time to Market

Entrepreneurial businesses often need to change more quickly than the competition such that time to market is usually a focus.

Rule Breakers

Entrepreneurs may break rules and upset the status quo. This can create a large number of risks as the status quo tends to defend itself.

Creative Destruction

By challenging the way things are currently done entrepreneurs may destroy existing organizations, markets, systems, processes, practices and professions. The compensation here is that entrepreneurs create new organizations, markets, systems, processes, practices and professions that may be more efficient or better serve customer needs. Entrepreneurs also represent a dread competitive threat that gives incumbent firms incentive to improve in areas such as sustainability, customer satisfaction and quality.
Overview: Entrepreneurship
Type
Definition
The pursuit of opportunity beyond your means.
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References

Stevenson, Howard H. A perspective on entrepreneurship. Vol. 13. Cambridge, MA: Harvard Business School, 1983.
Baumol, William J. "Entrepreneurship: Productive, unproductive, and destructive." Journal of business venturing 11.1 (1996): 3-22.

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