Entrepreneur: Meaning, types of entrepreneurs, pros & cons

Before a business transforms into a huge corporation, the business first has to be established by individuals. These individuals are referred to as entrepreneurs.

This article talks about all there is to know about an entrepreneur and how it works.

Meaning of Entrepreneur

Entrepreneurs are individuals or a group of individuals coming together to establish a business with the basic aim of profit-making while the risks and capital contribution is shared and provided by them. Entrepreneurs are significant persons to the creation and continuance of the business, with concentrations on excellent service delivery, innovation, best business practices, and novel ideas being the forefront skills every entrepreneur must have.

The act of establishing and running a business is called entrepreneurship. Entrepreneurs generally add to the overall growth of society by providing jobs, creating a business interest that assists the larger society, and solving problems of the society at large.

The entrepreneur benefits from the creation of the business are gaining in the profits derived from the business. Startup companies are usually set up by entrepreneurs and have found a strong bearing on increased productivity of raising funds for the growth of the startup in the future. If the startup is at a loss, then the burden is carried on by the entrepreneur.

The basic input of the entrepreneur on the business is the risk taken to see the business blossom.

Types of entrepreneurs

Entrepreneurs usually function with varying goals in mind, the basic similarity between all entrepreneurs is the desire to float a business. Below are the various types of entrepreneurs.

1. Opportunistic entrepreneurs

An opportunistic entrepreneur seeks in engaging in a business short time. The entrepreneur invests in the business, sees it grow, and then exits the business once the business is stable and starts drawing in profits. 

Opportunists see the business as the desire to an end (profits) and not the end itself. Opportunists are usually open to varying business ideas from people and cling to the idea, build it and sell their stake after the business reaches its earning point. These opportunistic entrepreneurs are usually venture capitalists. 

2. Specialist entrepreneurs

Specialist entrepreneurs are in business for a long period. The specialists are skilled in a particular sector or trade derived through education or some form of training and seek to establish a business to deliver services to the public using their skills.

Specialist businesses takes strong attention to ethics and trust and are usually made to network with clients or customers to build the business. Examples of specialist entrepreneurs are lawyers, architects, accountants, psychologists, and others.

3. Developers

Developers are also known as builders, these entrepreneurs are concerned with growing a strong business environment in the coming days using a technique that sees the company move from one growth level to another. The developers are the opposite of specialists, they invest small amounts into the business and call on the public to patronize the business.

To grow the business, the developers employ the best names in the industry to build the business into a scalable profit-making enterprise.

4. Innovators

Innovators are individuals that create and introduce new ideas into the industry that improves the general functioning of society. Unlike other entrepreneurs, innovators are more concerned with the introduction of an idea never thought of that helps society rather than the aim of profit-making. 

The innovator is guided by society and engages in a series of research and advancement to introduce the invention to society. Examples of innovators are Elon Musk, Thomas Edison, and Bill Gates.

How does entrepreneurship work?

Entrepreneurs are vital to the creation of the business. To build a startup, experts believe four attributes are significant, these are land, capital, labour, and entrepreneurship. The Entrepreneur is pivotal to getting the remainder of attributes and hence the overall business started. 

The entrepreneur creates a business plan, a capital expenditure, and a financial forecast, and source capital from investors. The entrepreneur is also pivotal to the management of the business going forward.

The success of the business depends on the business idea or the status of the business, for instance, investors would likely invest in a business idea brought by entrepreneurs like Dangote, Gates or Buffet and would also likely invest in businesses with excellent ideas that affect the public positively and solves varying problems that can create wealth in turn. 

How to get started as an entrepreneur

Being an entrepreneur is no easy task, experts have claimed that the task of entrepreneurship isn’t for all to engage in. To get started, an entrepreneur requires certain vital skill sets, these skills are outlined below.

1. Problem-solving

Perhaps the most important skill in entrepreneurship is the task of solving real-life problems of people in society. Entrepreneurs must think of varying ways to solve problems faced by people in society. 

2. Financial literacy

All entrepreneurs must have some form of knowledge on how to manage money. The knowledge need not be sufficient but has to be such that it can allow the entrepreneur to make lasting decisions that would improve the businesses financially in the future. To cater for this, most entrepreneurs hire Chief Financial Officers (CFOs) who will advise them on the finances of the business.

3. Patience

Patience is what sets an entrepreneur away from a non-entrepreneur. Entrepreneurs are patient enough to see the business grow, they wait for years, in some cases, over three years with the belief that all would pay off in the future. 

4. Risk-taking

Risks taking are another significant skill all entrepreneurs must have. The ability to go into a business without the assurance of success is in itself a risk. Entrepreneurs see risks taking as an opportunity worth taking for the benefit of the business.

Pros of being an entrepreneur

1. The profits: the profits of the business belongs to the entrepreneur only. Profits are derived after all salaries, running costs and other expenses inclusive of tax has been deducted.

2. Flexibility: Being an entrepreneur allows one the opportunity to be flexible. Entrepreneurs can shift and tweak an already decided position to suit present realities for the overall growth of the business. 

3. Skill development: As the job goes on, the entrepreneur skills get developed over time, with strong concentrations on the skills needed for the growth of the business.

Cons of being an entrepreneur

1. The loss: If there is a loss in the business, the entrepreneur carries all the loss made to the business. The employees receive their salaries after losses are made to the business.

2. The complexity: Running a business isn’t a walk in the park, it takes determination and strong willpower to run the business for future growth. The difficulty can be seen from the enormous responsibility in decision-making placed on the entrepreneur.

Conclusion

Most of the time, one or more individuals pool their private resources together to have the businesses floated; this action comes with varying risks, and challenges in the long and short run. 

In the world of business, the founder can ordinarily run the company or pass it on to another to run; the founders take the risk and share the profits from the successes of the businesses.

Frequently Asked Questions (FAQs)

Are entrepreneurs entitled to the return of the money used to set up the business?

Yes, under the Companies and Allied Matters Act 2020, entrepreneurs (known as promoters under the law) can recover all monies expended in starting the business if the board members approve and ratify such return.

What are the laws in Nigeria regulating entrepreneurship?

The CAMA 2020, the Investment and Securities Act, and the Nigerian startup Act 2022.

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Richard Okoroafor

Richard Okoroafor

Richard is a brilliant legal content writer who doubles as a finance lawyer. He brings his wealth of legal knowledge in corporate commercial transactions to bear, offering the best value that exceeds expectations.

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