An entrepreneur is someone who develops a business model, acquires the
necessary physical and human capital to start a new venture, operationalizes it and
is responsible for its success or failure. Note the emphasis of the phrase
“responsible for success or failure” as the entrepreneur is distinct from the
professional manager in the sense that the former either invests his or her own
resources or raises capital from external sources and thus takes the blame for the
failure as well as reaps the rewards in case of success whereas the latter or the
professional manager does the job and the work assigned to him or her for a
monetary consideration. In other words, the entrepreneur is the risk taker and an
innovator in addition to being a creator of new enterprises whereas the professional
manager is simply the executor.
Moving to the skills and capabilities that an entrepreneur needs to have, first and
foremost, he or she has to be an innovator who has a game-changing idea or a
potentially new concept that can succeed in the crowded marketplace. Note that
investors usually tend to invest in ideas and concepts which they feel would
generate adequate returns for their capital and investments and hence, the
entrepreneur needs to have a truly innovative idea for a new venture.
Apart from this, the entrepreneur needs to have excellent organizational and people
management skills as he or she has to build the organization or the venture from
scratch and has to bond with his or her employees as well as vibe well with the
other stakeholders to ensure success of the venture.
Further, the entrepreneur needs to be a leader who can inspire his or her
employees as well as be a visionary and a person with a sense of mission as it is
important that the entrepreneur motivates and drives the venture. This means that
leadership, values, team building skills, and managerial abilities are the key skills
and attributes that an entrepreneur needs to have.
An Entrepreneur is a Risk Taker
Having discussed what entrepreneurship is and the skills and attributes needed by
entrepreneurs along with how they engage and indulge in creative destruction. This
does not mean that all entrepreneurs are successful as the fact that they can
become victims of creative destruction as well as due to lack of the other traits
means that a majority of new ventures do not survive past the one year mark of
their existence. Now, when ventures fail, the obvious question is who takes the
blame for the failure and whose money is being lost. The answer is that the
entrepreneur puts his or her own money or raises capital from angel investors and
venture capitalists which means in case the venture goes belly up, the entrepreneur
and the investors lose money. Note that as mentioned earlier, the employees and
the professional managers lose their jobs and unless they are partners in the
venture, their money is not at stake. Therefore, this means that the entrepreneur is
the risk taker in the venture which means that the success or failure of the firm
reflects on the entrepreneur.