An Entrepreneurship Definition for Economic Development Programs

The entrepreneurship definition we like is the process of becoming a successful business owner.

At a minimum an entrepreneur does something new, or in a new way, or at a new location.

Certainly it's also possible to become a business owner by accident, grow into the role, and be wildly successful.  Or sometimes entrepreneurs simply follow a successful formula and become quite prosperous. Franchises are examples.

However, this somewhat minimal level of risk-taking entrepreneurship isn’t what drives an economy forward, creates wealth for a community, or helps a national economy that's slumping.

Real economic progress requires innovation, an action orientation, and creativity.  Repeating someone else's success formula may work for a while for businesses, but today even a hyperlocal business such as a restaurant usually has plenty of competition.  Thus the need for continued freshening of the business concept if businesses are to thrive.

By now nearly everyone involved in community economic development, whether that is a businessperson involved in business recruitment, an elected official, a commission member, or staff member, has been told that entrepreneurship is important.  Often they don't fully appreciate why.

It all comes back to competition between neighborhoods, communities, and ultimately cities and regions.  The best, brightest ideas will bring more jobs, income, and the kind of positive publicity that encourages further business investment.

By the way, if you are in a lower income community, it's doubly important that you learn to understand and then cultivate entrepeneurship. That's because it's unlikely that you will attract outside investment, except by those who want to invest minimally to exploit your situation.  Grow your own businesses if and when you understand that you have a market and that your neighborhood is up and coming, even if the rest of the world doesn't recognize that yet.


What a Community Needs to Understand About Entrepreneurs

Not so long ago, when the truth became understood about the proportion of overall job growth that small businesses generate, economic development folks talked about entrepreneurship traits as if some people were born to start businesses, and others weren't.

Now we understand more.  Increasingly there's recognition that nearly everyone can be an entrepreneur. A thought leader in this field is Saras Sarasvathy, who thinks that we might be ignoring the largest category of folks—those who would like to be entrepreneurs but don't know how.

We'll stay out of that debate, but we do think it's useful for a community to understand the laundry list of abilities, natural or acquired, that would be important to an entrepreneur.  It includes:

  • General business knowledge
  • Knowledge of the particular business and its markets
  • Oral presentation and persuasion
  • Interpersonal skills
  • Knowledge of preparing and presenting a business plan
  • Being able to exert control
  • Organizational skills
  • Planning skills
  • Ability to motivate others
  • Capacity to handle stress and uncertainty
  • Ability to create, discover, or recognize an opportunity
  • Personal drive and energy
  • Ability to accept and deal with setbacks

At the community level, it's fine to discourage idealistic people who think they want to start a business but who exhibit few of these characteristics and behaviors. 

That's true because even when people have the right traits, it's easy enough to fail because of factors beyond local and individual control. So do encourage plenty of business start-ups.

Beyond the start-up decision, the community needs to provide ongoing entrepreneurship support if you want to broaden your economic base. As a general rule, the businesses with the best local support will reach profitability sooner, although of course superior business acumen might overcome even a hostile community attitude toward business.

We like the technique of providing an economic development incubator because of the networking and learning from one another, almost as much as the obvious economic advantages.

So if you need to define entrepreneurship, just make sure you include the elements of enterprise formation, newness in some respect (the newer the better, usually), and investing your own or someone else's money in a business.

But as a community improvement website, we hope that you won't stop at the definition--that you will learn to provide the risk-takers who start businesses with the kind of support that will enable them to succeed.


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