What is an Entrepreneur?


by Judith Kautz

There are many differing views on what makes someone an entrepreneur and what is an entrepreneurial venture. In a sense the definition itself is evolving as the field itself comes into the mainstream of American business. While we speak of many of the originators of businesses in the past as entrepreneurs, it was not until the mid-1970's that the concept became a prevalent enough part of our economy that definitions even were necessary. Consequently, we see in the literature a wide variety of possibilities for what this field really is.

Looking online, the Hypertext OnlineWebster defines an entrepreneur as "one who creates a product on his own account." That sounds a trifle stuffy, is very limited and doesn't fit for many of the people widely known as entrepreneurs. Does just creating a product make you entrepreneurial if you never do anything with it? What if you take someone's product and make it a success? That is not entrepreneurial? Investorwords, a set of definitions of financial terms, defines an entrepreneur as "an individual who starts his/her own business." At what point then are you no longer an entrepreneur? When are you no longer starting up? From The International Society of Entrepreneurs comes another Webster definition: "a person who organizes and manages a business undertaking, assuming all the risk for the sake of the profit." Assuming risk certainly fits most entrepreneurs. This definition is definitely richer, but assumes that the motivation is purely profit.

Moving from formal definitions, Ashoka, an organization that promotes social change, calls for "social entrepreneurs," people who open up major new possibilities in education, health, the environment, and other areas of human need, "just as business entrepreneurs lead innovation in commerce, social entrepreneurs drive social change." The concept of business entrepreneurs leading innovation is appealing because it denotes more than just starting a business. An entrepreneur herself, Daile Tucker, provides her thoughts on what it takes to be an entrepreneur in "Are You an Entrepreneur?" She defines an entrepreneur as "a person who has decided to take control of his future and become self-employed whether by creating his own unique business or working as a member of a team, as in multi-level marketing." She identifies work ethics and several character traits of successful entrepreneurs, ending with "Entrepreneurs compete with themselves and believe that success or failure lies within their personal control or influence." This begins to touch on motivational aspects for being an entrepreneur that may distinguish the type of person drawn to being an entrepreneur.

In an Entrepreneur Magazine feature article in 1995, Dare to Be Different, Gayle Sato Stoddard takes Tucker's definition a step further, acknowledging innovation, but also providing alternatives. Stoddard suggests that to be an entrepreneur you don't particularly have to be daring. Many entrepreneurs are perfectly content to sell tried-and-true products, bringing a steady income without the intensity of launching a new product. She labels these "lifestyle entrepreneurs." They want to be their own boss and make a good living, but they don't need to be on the cutting edge. Many such people buy franchises or an established business.

An Academic Perspective

Our academic colleagues have become much more interested in entrepreneurism as a viable field of study in the past 15 years. Much of the impetus for this interest is laid at the feet of David Birch of MIT who in 1979 shocked the academic world with his research indicating that the Fortune 500 had stopped creating jobs. According to Birch, the source of new jobs now came from what he called "growth companies" - what are now called entrepreneurial ventures. Current research looks at more precisely defining entrepreneurs and what makes them successful. For example, Michigan State University in a study entitled "The Guiding Principles for Entrepreneurial Success" identifies Entering entrepreneurs (private owners and heads of non-subsidiary manufacturing companies with annual sales under $2.5 million), Emerging entrepreneurs (private owners and heads of non-subsidiary manufacturing companies with growth rates of at least 20% and annual sales of between $2.5 million and $20 million), and Emergent entrepreneurs (private owners and heads of non-subsidiary manufacturing companies with growth rates of at least 20% and annual sales of at least $30 million). Their study is concerned with what factors influence an entrepreneur's success at crossing the barrier into becoming an Emergent entrepreneur. In other words, why do some entrepreneurs stall out and eventually fail and why do some eventually succeed. The other aspect of their study of interest is that it has the beginnings of a handle on how long remains an entrepreneur. The limiting factor of this study is that not all entrepreneurs are in manufacturing - and certainly $2.5 million is a large number for many of us not in the manufacturing business. Different milestones may apply for different types of entrepreneurial ventures, but there do seem to be definitive stages one goes through in an entrepreneurial venture.

Harvard professors Hart, Stevenson and Dial also looked at success in entrepreneurship in "Entrepreneurship: A Definition Revisited." They based their work on a five stage model, from Existence to Maturity, focusing primarily on the first three stages: Existence- "the period when the venture is developing products and/or services, finding customers, operating as a simple flat organization," usually lasting from 0-3 years, Survival - "the stage at which the organization is delivering product, becoming more concerned with cash flow and revenue generation while producing marginal returns," usually between years 1-5, and Success - "the stage at which the organization has established a market position and is achieving at- or above-market returns," usually from 3-10 years. They, too, are interested in what takes an organization over the wall between these stages - why some fail and some succeed.

Both these studies indicate there is a success point when the company evolves into a more traditional business model. So entrepreneurism can be considered, by these models, as limited either by failure or by the success of the company in that it either goes out of business or becomes a mature company. Many of these companies at the point of maturity worry about losing their entrepreneurial spirit. Many larger corporations with a long period of maturity experience the same fear. From that has evolved intrapreneurship, nurturing of innovation within large corporations, another new field of study and development. The goal is to continue the "spirit of entrepreneurism" into the maturity phase of a business.

The Evolution of the Professional Entrepreneur

Tom Richman in "Creators of the New Economy" hypothesizes that what has really occurred is that entrepreneurism has changed dramatically from amateurism to what he terms the professional entrepreneur.

What he is seeing is an evolution in entrepreneurism, not only because motivation from downsizing is putting more talented people out of work, but also because of the opportunities available from globalization and the virtual marketplace. Many very skilled people are joining the entrepreneurial ranks, raising the level of business knowledge and skill.

He distinguishes the following differences between the two:

Amateur Entrepreneur

Professional Entrepreneur



Snap Decisions




Lone Ranger






Knows the Trade

Knows the Business







Pro-phobe (dislikes professionals)



Start-up or Whatever

Organizationally Orthodox

Organizationally Innovative

Trade Association Member

Web Surfer



Think Small

Think Big

Small-business Founder



Business Plan





Supportive Spouse at Home

Spouse Runs Own Business





Research Backwater

Research Mainstream

Price Takers

Value Makers

Personal Financial Plan is the Business

Business is Part of Personal Finance Plan



Equity= Control




The clear conclusion from all this is that entrepreneurism is a dynamic, developing part of the economy at this time in history. Entrepreneurism itself is emerging and maturing. What it will be as a mature contributor to the economy is yet to be determined, but certainly innovation, knowledge and globalization are important factors.

To quote Tom O'Malia from his introduction to the book, Been There, Done That, "Entrepreneurs are about loving their journey, not their destination." For me, this sums up the excitement and fun of being an entrepreneur. And that is why it is not synonymous with being a small businessperson. The entrepreneurial mind set can operate in all sizes and types of businesses.

Does this fit with who you are? Then you have found the right place. Bookmark the Entrepreneurs page and become part of our vibrant community. Sign up for the newsletter and join us in the Entrepreneurs' Forum for discussions about these and other issues. That is what we are here for: to share, to encourage, to learn, to achieve our goals. I look forward to meeting you and learning about your hopes and dreams as an entrepreneur.

Copyright 1999 Judith A. Kautz. All rights reserved.