Defining entrepreneurship

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ICT Competence: Basic

English Language Skills: Intermediate

Action type: Simple actions that can be implemented immediately without requiring an investment

a) Entrepreneurship - from business to mindset

Level 1. Entrepreneurship = business venture

According to a widely-spread definition, entrepreneurship, in a narrow sense, refers to the act of creating a business to generate profit, by identifying or even creating a need and responding to it by means of the new enterprise.  This way of defining the term considers it is tied to the creation, launch and the running of a new business venture, together with the risks involved, in the aim for profit. Hence, it is commonly agreed upon that entrepreneur is almost synonym to businessman.

Level 2. Entrepreneurship = transforming any opportunity into capital

The field of Economics provides us with a broader sense for the term. In this perspective, an Entrepreneur is defined by the ability to find and act upon opportunities in order to transform inventions, technology, or situations into new products and commercially viable innovations.

Early 19th century French economist Jean-Baptiste Say also provided a broad definition of entrepreneurship, saying that it "shifts economic resources out of an area of lower and into an area of higher productivity and greater yield".

Level 3. Entrepreneurship = innovation and social entrepreneurship

One step further and into the realm of the entrepreneurial mind-set, we find that entrepreneurship can also be understood as a special mind-set which allows one to innovate or even revolutionise a specific field, market or industry. According to the Austrian economist Joseph Schumpeter, of the 1930s, an entrepreneur is a person who is willing and able to convert a new idea or invention into a successful innovation. Thus, entrepreneurship beyond economics and beyond businesses is an attitude, a set of characteristics not necessarily transformed in capital.

This is where social entrepreneurship comes in as a business whose main purpose is to bring about positive social change rather than simply make a profit, according to the Macmillan dictionary. The gradual shift towards social entrepreneurship has developed recently and this is becoming the preferred business model of the younger generations who are looking to make a positive change in the world rather than simply gain profit.

There are definitions of entrepreneurship for every level and it is still argued if the term should be bound to a certain type of business or it should allow for a broader spectrum of meanings. However, some definitions can apply to the whole spectrum, from company owner to a certain mindset, such as the one given by Professor Howard Stevenson, who teaches entrepreneurship studies at Harvard Business School, according to whom “entrepreneurship is the pursuit of opportunity beyond resources controlled”. This phrase can be considered a broad-spectrum definition since it conjures key elements of entrepreneurship: being able to find opportunity where others perceive a problem; taking risks; being creative, and open-minded in finding resources beyond what is already controlled.

We can summarise our conclusion by quoting from an article in Forbes Magazine, which says 'We are all entrepreneurs. It's a mind-set, not a business model.

In the following sections, we will pin down the specific traits needed and actions one has to undertake in order to become more entrepreneurial and, eventually, an entrepreneur - whether he is creator, manager, owner or employee of a company.

b) The Business Model Canvas vs. The Business Plan

Once you have decided to launch a startup, the fastest way to get from idea to action should start with working on your very own Business Model Canvas. If, on the other hand, you are at the point where you need to get to a next stage with an already existing business, then you should look into developing a business plan, which is much more complex. For the initial stage however, the Business Model Canvas is one of the easiest and fastest ways to give you a clear view of what your business would look like and it can serve as reference throughout the process of launching a startup.

The Business Model Canvas

This is a strategic tool, invented by entrepreneur and author Alexander Osterwalder in 2010, which now is being used by companies all over the world. It consists of a one page business plan, a very visual and concise outline of 9 key elements of a business venture, which are the following (according to Enterprising Oxford):

  1. Customer Segments: Who are the customers? What do they think? See? Feel? Do?
  2. Value Propositions: What’s compelling about the proposition? Why do customers buy, use?
  3. Channels: How are these propositions promoted, sold and delivered? Why? Is it working?
  4. Customer Relationships: How do you interact with the customer through their ‘journey’?
  5. Revenue Streams: How does the business earn revenue from the value propositions?
  6. Key Activities: What uniquely strategic things does the business do to deliver its proposition?
  7. Key Resources: What unique strategic assets must the business have to compete?
  8. Key Partnerships: What can the company not do so it can focus on its Key Activities?
  9. Cost Structure: What are the business’ major cost drivers? How are they linked to revenue?

You have to consider each of these nine building blocks from the MBC and here is a two minute video which will help you understand and learn how to fill in the canvas.

The Business Plan

A business plan is defined as a written document describing the nature of the business, the sales and marketing strategy, and the financial background, and containing a projected profit and loss statement, according to Entrepreneur Encyclopedia. This formal document comprises all the critical aspects of a new or existing company, it serves as reference for periodical evaluation and basis for growth. It can also serve as an argumentative document in order to get investors. This is usually a complex formal statement which implies a research period and a considerable amount of time and knowledge.

As this is a formal document, there are standard templates you can use and, usually, these cover 7 to 10 of the following sections of content:

  1. Executive Summary: the company’s mission statement, along with a short description of its products and services.
  2. Company Description: key information about your business, goals and customers, provided value and niche.
  3. Market Analysis: data and statistics about the history and future of the niche, how your company will fit into it. In addition, you’ll have to provide details about the consumers you’ll be marketing to.
  4. Competitive Analysis: a clear comparison of your business to your direct and indirect competitors.
  5. Management and Organization
  6. Products and Services
  7. Marketing Plan
  8. Sales Strategy
  9. Request for Funding (if this plan is aimed at getting investment)
  10. Financial Projections

Here is a 2 minute video, from Harvard  Business Review, on how to write a great business plan.

Positive and Negative Part of the Solution

Positive

Facilitating comprehension around terminology and a practical tool to get you started.

Negative

The Business Model Canvas is not a final product, but rather a work in progress so it needs to be acknowledged as such. The Business Plan requires considerable time and research.

Time required to implement a solution and when possible associated cost

Researching and understanding the terminology and completing the canvas should take a couple of days. The resources are widely available online and, up to a certain level of learning, they are free of charge.

Estimated Exploitation

A better understanding of the specifics of the business field is mandatory for any successful enterprise. It also constitutes the starting point and a first stage.

Informative Text (Sources)

Eisenman, Thomas R. (2013, January 10). Entrepreneurship: A Working Definition retrieved from https://hbr.org/2013/01/what-is-entrepreneurship?referral=03758&cm_vc=rr_item_page.top_right

Ferreira, Nicole Martins (2018, August 17). What is Entrepreneurship? Entrepreneur Definition and Meaning retrieved from  https://www.oberlo.com/blog/what-is-entrepreneurship

Fernandes, Paula (2018, February 19). Entrepreneurship Defined: What It Means to Be an Entrepreneur retrieved from https://www.businessnewsdaily.com/7275-entrepreneurship-defined.html

By the Mind Tools Content Team. Entrepreneurial skills retrieved from https://www.mindtools.com/pages/article/newCDV_76.htm

Entrepreneurship retrieved from https://en.wikipedia.org/wiki/Entrepreneurship

Linn, David (2014, September 23). Business Plan vs. Business Canvas: What’s the difference? retrieved from https://www.brevedy.com/2014/09/23/business-plan-vs-business-canvas-whats-difference/

Enterprising Oxford, Business Model Canvas Explained retrieved from https://www.eship.ox.ac.uk/business-model-canvas-explained

Dixon, Amanda (2018, May 21). Top 10 Components of a Good Business Plan, retrieved from https://smartasset.com/small-business/top-components-of-a-business-plan

Additional Resources

  1. Entrepreneur's Glossary
  2. Inspirational story and entrepreneurship lessons
  3. Understand the Downside of Starting a Business
  4. Business Idea Validation
  5. wikipedia/What is a Business Model Canvas and its' history
  6. Alexander Osterwalder's website - about the Business Model Canvas
  7. Classic Business Model Canvas Template
  8. Strategyzer is the complete resource on the Business Model Canvas
  9. Lean Canvas - a leaner version of the Business Model Canvas
  10. Step-by-step guide and elements of a business plan
  11. bplans.com/business-plan-template/free download

Cross Border remark

Though the knowledge comprised in this section is generally valid, entrepreneurship also reflects the development climate in a certain country and it is heavily influenced by the economy and political environment.