Successful entrepreneurs such as Mark Zuckerberg, Lord Alan Sugar and Sir Richard Branson have plenty in common. Explore the skills and characteristics that you'll need to follow in their footsteps
What's the difference between an entrepreneur and a small business owner?
While all entrepreneurs are self-employed, not all self-employed individuals are entrepreneurs - some are better categorised as small business owners.
There are differences between the two. Entrepreneurs typically:
- devise untested ideas
- make high-risk decisions that have a potentially significant long-term impact
- delegate management to experts, meaning that the company can easily continue to function without the entrepreneur's input if and when they move on
- aim to generate buyer interest in their business.
In contrast, small business owners typically:
- solve existing and sometimes obvious local problems
- make low-risk decisions that ensure short-term security
- manage their employees closely, meaning that the company may struggle to function without the small business owner's input
- have little or no intention of ever selling their business.
How do entrepreneurs devise new ideas?
Entrepreneurs' ideas often grow from their skills, interests or personal circumstances, and are usually formed in response to an unmissable market opportunity.
However, while all entrepreneurs require an inventive mind in order to identify trends and possibilities, not all entrepreneurs create completely new products.
Similarly, a product's inventor may work alongside an entrepreneurial individual who can help to market their product and create a successful business.
What characteristics does an entrepreneur need to succeed?
Five skills to succeed in business - creativity, knowledge, leadership, organisation and self-belief - are further discussed in is self-employment right for you?
However, the differences between being an entrepreneur and a small business owner mean that entrepreneurs also need to be:
- Decisive - Entrepreneurs are confident self-starters with the resilience to overcome any problems and belief that they'll learn from any mistakes they make.
- Multitasking - Most entrepreneurs initially assume multiple functions within their business, in areas including sales, recruitment and product development.
- Passionate - Entrepreneurs must have a genuine love for their product or service, not to mention their customers.
- Results-orientated - Entrepreneurs don't simply achieve their targets, they also continually seek to raise the bar.
- Risk-taking - Entrepreneurs take calculated risks, but never reckless ones. However, they characteristically sacrifice short-term income to maximise long-term gain.
- Visionary - Entrepreneurs don't simply dream big. Their actions turn ideas into reality and they're savvy enough to identify future business opportunities.
Most importantly of all, entrepreneurs are wise enough to ensure that any shortcomings that they may possess are compensated for. This usually requires them to recruit other individuals and the ability to attract external support is a key skill in itself.
How do entrepreneurs finance new ventures?
Even the most small-scale enterprise requires huge effort and dedication. Entrepreneurs will often work extremely long hours initially, spending as much time on their plans as possible.
As described in how to start a business, funding possibilities for start-up businesses do exist. However, nobody will help you before you've completed plenty of market research and written a successful business plan. Indeed, the majority of entrepreneurs self-fund most of their initial costs, usually through their savings.
However, entrepreneurs can take several financial shortcuts. For example, many ventures begin at home rather than in business premises - and cash flow can become a big problem once the organisation outgrows the home working environment. At this point, expenditure may well temporarily outweigh income.