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An entrepreneur is an individual who accepts some sort of risk — usually financial — in the pursuit of new ventures. The word can apply to any person organizing a new project or opportunity, though it is most often used in a business context. A person in this role is often characterized as innovative, independent, optimistic, creative, and hard-working.
In some circles, entrepreneurs are described as "creative destructionists" of products and services. Although they may reinvigorate an existing industry by using new methods, whether of production, organization, or structure, they also work to tear down the existing companies and ways of doing business by developing entirely new products or services that make older variations obsolete or irrelevant. An example of this is the creation of the automobile, which slowly made most parts of the horse-drawn carriage industry obsolete.
Risk is perhaps the primary characteristic of entrepreneurship. This does not necessarily mean that the entrepreneur has an infinite tolerance for risk; instead, it means that the successful entrepreneur is able to determine how much risk is appropriate for a particular endeavor. He or she must accept enough risk to innovate and create, but not so much that the business or activity is not profitable.
Financial risk is the most common sort of risk entrepreneurs face. They often have to contribute their own money as well as that of other parties to a particular project. Failure may cost not only their own livelihood and savings, but that of other investors too. If the venture is successful, however, the financial rewards may be great.
Other types of risk exist as well. Entrepreneurs may face social risk if their innovations challenge societal norms, or they may face psychological risk as their hard work affects their or their families' peace of mind. Many find that the independence, notoriety, and feeling of contributing something valuable to society that often come with being an entrepreneur outweigh these dangers — though these rewards are seldom immediately apparent.
Additional characteristics of many entrepreneurs include spontaneous creativity and a willingness to make decisions in the absence of solid data. He or she may be driven by a need to create something new or build something tangible. As new enterprises have low success rates, a person in this role must also have considerable persistence. He or she may have the greatest chance of success by focusing on a market niche either too small or too new to have been dominated by established businesses.
Many societies value entrepreneurs and the entrepreneurial spirit. To encourage their activity, governments and other entities may arrange access to inexpensive capital, tax exemptions, and management advice. For example, many universities establish "business incubators" for entrepreneurs hoping to turn leading-edge research into marketable products. The invention of these new technologies can lead to the development of industries that provide jobs and revenue.
Entrepreneurship vs. Business Management
Entrepreneurship is not always the same as running a business, though the two may overlap significantly. Most entrepreneurs are highly independent, which can cause problems when their ventures succeed. In a small company, they are usually able to personally manage most aspects of the business, but this is often not possible once the company has grown beyond a certain size.
Management conflicts can arise when an entrepreneur does not recognize that running a stable company is different from running a growing company. The entrepreneur is usually seeking to innovate and take chances; the manager of a stable company, however, may have a different focus, such as building sales and establishing a brand. The problem is often resolved by the entrepreneur either leaving to start a new venture, being forced out by shareholders, or adjusting to a new set of priorities.
Innovation from Within
This is not to say that large businesses cannot innovate. An intrapreneur is an individual who acts like an entrepreneur but from inside the confines of a large organization or corporation. This person continues to invent and create, but with the focus of either updating an organization's methods or creating new offerings that the organization can promote and provide. The idea is that the company benefits from the creativity and forward-thinking that is characteristic of an entrepreneur, while the innovator gets the support and funding he or she needs to try new things.