What Really Defines an Entrepreneur?

What is it that motivates some people to forge their own paths? Here's a look at the unique set of characteristics that successful entrepreneurs possess.
November 12, 2014

Ask many small-business owners why they risk job security and what may be their life savings to start a business, and the answer isn’t always money. After all, there are easier, more predictable roads to building a nest egg that include a steady paycheck and a matching 401(k) plan.

By their very nature, entrepreneurs have a different mindset than lifetime employees—a mindset that causes them to jump in head first. And while each entrepreneur’s story is different, one common denominator is the desire to drive their own ship and effect changes themselves.

Social entrepreneur Melanie St. James explains why she takes the necessary risks to be an entrepreneur: “I’m driven to change the things I can’t accept. Entrepreneurs take risks, because the alternative is unacceptable.”

St. James is founder of Empowerment WORKS, a global sustainability think-tank that hosts biennial Global Summits, including this year’s summit in San Francisco from November 16 through 18. Her goal is to connect the world's culturally rich, yet economically challenged communities with resources.

Early Interest in Entrepreneurship

Like many business owners, St. James started on the entrepreneurial path early. “My father was an inventor who created an electrically heated ice-cream scooper that I sold door-to-door while in high school,” St. James says. In 1994, she decided to pursue global social change after a semester abroad in mainland China, followed by an international education in sustainable development studies.

Marcy Hogan also embraced the lure of entrepreneurship early on. “I've always had the entrepreneurial spirit, which I attribute to my mother. She spent many years as an entrepreneur and got me involved when I was young in helping her build her different businesses.” Hogan currently wears several entrepreneurial hats, including as a freelance musician, private music teacher, and fitness and exercise industry professional. She's also co-owner with her husband of the greeting card and gift business Send Out Cards.

Desire to Control Their Destiny

For Hogan, being an entrepreneur is well worth the risk that comes with controlling her own destiny. “Having your own business gives you the ability to create the life you want," Hogan says. "It establishes accountability because if something doesn’t get accomplished, you have only yourself to blame. As your own boss, you have control over how you structure your business, and when your business flourishes, you have a real sense of accomplishment.”

Entrepreneur Matt Richter-Sand previously worked for a Fortune 500 company but knew he wouldn't last there. “I could practically see the next 20 years of my life playing out," he explains. "How boring! Being an entrepreneur introduces you to the excitement of uncertainty and the unknown.”

Richter-Sand started his first business—building websites for small businesses—in high school when interest in the Internet was exploding. Today he regularly starts new companies and is also a clinical assistant professor at Loyola Marymount University in Los Angeles where he teaches entrepreneurship. "I'm fascinated with the process of new product development," he says. "Creating innovative products that solve real world problems is fun, rewarding and incredibly challenging.”

His interest in entrepreneurship even inspired him to research what drives some of the world’s most successful entrepreneurs, and he subsequently wrote the book The Agile Startup: Quick and Dirty Lessons Every Entrepreneur Should Know after he was done with his research. "There's no such thing as a standard entrepreneurial personality type," Richter-Sand says, "but there are some common traits that the best entrepreneurs share."

Willingness to Venture Into the Unknown

Risk and uncertainty are inherent in the entrepreneurial process, and anyone venturing in needs to understand and accept that. “The job of the entrepreneur is to take uncertainty and convert it into certainty,” Richter-Sand says. “When you're certain you can acquire customers for a specific cost and that they'll convert into a certain amount of revenue, you can be sure you have a feasible business idea. If there was little uncertainty, then there probably isn't an entrepreneurial opportunity. Entrepreneurs must be willing to venture into the unknown, to make leaps of faith and move forward without full information.”

That said, the best entrepreneurs don't seek risk—they seek to contain risk. “Risk is the enemy of the entrepreneur, because the more uncertainty and risk you take on, the more likely you are to fail,” Richter-Sand explains. “Instead, the best entrepreneurs de-risk their startups by testing assumptions and proving hypotheses.”

Ability to Face Reality

Successful entrepreneurs are able to face reality and accept its truth. “Your initial business idea is often a bad one,” Richter-Sand says. "You have your own perspective and bias, and the way you initially try to solve the problem is probably quite different from what customers want.

"The best entrepreneurs objectively listen to the market and react to what the customer says," he adds. "Your business is your baby, and it's hard to hear that your baby is ugly, but the best founders are able to objectively evaluate their business and react to the reality they're experiencing. If it's not working, they face that head on and focus instead on building something that will work.”

Richter-Sand points to the initial idea of PayPal as an example of business founders who had to acknowledge and accept reality. “Their first idea was to transfer money over Palm Pilots, which they realized was a terrible idea [after getting] negative feedback. So they used their technology on the Web instead. The rest is history.”

Sticking to Their Vision

As they strive to reach their goals, most entrepreneurs run up against setbacks and naysayers. But successful entrepreneurs understand that it’s important to keep moving forward. During preparation for the 2012 Summit, for instance, St. James experienced a great deal of resistance when the venue they were scheduled to use went bankrupt.

“We didn’t have a location just days before the event," she says, "and I was strongly advised to cancel it, but I didn’t want to do that after working on preparations for a year. I vowed we’d find a place, and I kept putting one foot in front of the other. At the last minute, I ended up finding the perfect venue, and it all worked out.”

Despite the hurdles that entrepreneurs face on the road to business success, their desire to steer their own course, often into the unknown, and remain true to their vision helps them stay strong even in the toughest of times.

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