Advising Entrepreneurial Graduates
2.0 What is an Entrepreneur?
The word ‘entrepreneur’ is often mis-used, and there are mis-conceptions about the relationship between small businesses and entrepreneurs.
This section seeks to clarify the meaning of entrepreneurship in the broader context of venture creation and small business management.
2.1 A common mis-conception about entrepreneurs
2.2 Enterprising attributes, entrepreneurship, and intrapreneurship.
2.3 New venture creation, business start-up, and self-employment
2.4 Small business management
2.5 Can Entrepreneurship be taught?
2.6 Driving forces for business start-up or self-employment
2.7 Implications for Careers Advisers
2.1 A common mis-conception about entrepreneurs
There is a common mis-conception that all entrepreneurs start up businesses, and that all people running businesses are entrepreneurs.
People with strong entrepreneurial tendencies play an important role in all walks of life, for instance small businesses, large businesses, social enterprises, educational institutions, government and the public service. Wherever they are working they are the people who create new opportunities that generate benefits fro the organisation.
Conversely, most people who start-up and run small businesses are enterprising, but not necessarily strongly entrepreneurial. Business entrepreneurs are likely to be associated with very novel start-ups, and with fast-growing businesses, but the majority of small businesses are not very novel, and are not fast-growing.
This section explores these issues in more detail
2.2 Enterprising attributes, entrepreneurship, and intrapreneurship.
People use these three terms in many different ways. This material uses them as follows, which is more or less consistent with general use.
Enterprising attributes
Everyone needs to be enterprising, whatever career they decide to follow. That’s why ‘enterprise’ is now on the agenda of most Universities. It is often taught by using business start-up as a case study, but it’s not just for people starting their own businesses. It’s for everyone.
‘Enterprising attributes’ include:
People with these attributes should do well in any organisation. In the right circumstances they can also set up and run successful businesses, but they are not necessarily entrepreneurs.
Entrepreneurship
There is no single agreed definition of an entrepreneur, but a good practical description is ‘A person who is committed to identifying new opportunities, and converting them into value’. In a business the value would normally be extra profit, but in other types of organisation it would be something else – eg social benefit.
Entrepreneurs are usually strong on all the enterprising attributes, and especially the bottom five in the list. They do not always fit well into an existing organisation; instead they will want to be more independent and to control their own destiny. They are strongly goal driven individuals.
Sometimes a narrower definition is used that entrepreneurs are people who start new ventures (or new businesses). However, this is misleading as there are entrepreneurs in all walks of life, and many businesses are successfully started by non-entrepreneurial people.
Intrapreneurship
Most existing organisations cannot easily cope with entrepreneurs as employees, and eventually eject them do their own thing. This is perhaps especially true of public sector organisations that are typically heavily process-based and risk averse.
However, some organisations do make good use of them as ‘intrapreneurs’. These are entrepreneurs who are prepared to work within the overall objectives and culture of the organisation. They push hard at the boundaries, to good effect. They challenge the status quo, continually seek new opportunities, and often rise to high levels in the organisation.
A typical example would be a person who works in a large company for a few years, then goes elsewhere create a new business unit for them.
2.3 New venture creation, business start-up, and self-employment
'Self-employment' is a special case of 'business start-up', which in turn is a special case of 'new venture creation'.
New venture (or new enterprise) creation
The terms ‘new venture’ or ‘new enterprise’ are often deliberately used to include not just the creation of new commercial businesses, but also the creation of new social businesses or other organisations. Entrepreneurs usually aim to achieve their personal goals by setting up new ventures.
Business start-up
Business start-up is a special case of new venture creation. It is the most common one discussed, and is usually the one in the mind of entrepreneurial students.
Students who tend to be very entrepreneurial, will be ambitious to start a business that grows rapidly. They will not be averse to taking risks, if the rewards seems significant and achievable. To succeed they will need to develop a viable business plan, and get the resources needed to start the enterprise.
However a great many students will initially seek the less risky self-employment option for business start-up.
Self-employment
Not all new businesses are started by people who have strongly entrepreneurial tendencies. Many with special skills will set up in business on a ‘self-employed’ basis, selling their personal skills and time, and with no immediate intention to grow it beyond this level.
Some sectors work mainly like this. For example, students hoping to enter some ‘creative’ sectors may find that self-employment is the only viable option. Similarly, computer science students have the option to join an existing organisation as an employee, but might instead decide that it is more interesting to sell their skills on a self-employed basis.
2.4 Small business management
The majority of small businesses do not grow rapidly, if at all. They have reached a size and shape which meets the needs and aspirations of the owner. Most people who manage established small businesses are not especially entrepreneurial, though they need to continue to be enterprising to ensure that it continues to succeed.
Indeed many entrepreneurs quickly get bored with their new business, unless it has the potential to grow rapidly, and they need to move on quite quickly to their next project. They may hand over most of the reins to a manager who will consolidate the business and keep it running successfully. The entrepreneur, if he or she stays involved, may have an important role to play in ensuring that the business does not lose momentum, and in identifying the next opportunity for business growth.
2.5 Can Entrepreneurship be learned?
This is a perennial question, which has not been fully answered. However, the answer is a qualified 'yes'.
A key component of being a successful entrepreneur is to have strong enterprising attributes. A recent study of twins has shown that these are largely inherited. However, the behaviours associated with the attributes can be definitely be learned.
For instance someone who is not very extrovert can still learn to be good at networking, even though it does not come naturally. There are many anecdotal examples of such learning being observed in those graduate who are motivated to succeed.
Other components of being a successful entrepreneur include family, social and economic factors which either encourage or discourage entrepreneurial behaviour. Helping students to recognise these factors will enable them to deal with them if they appear to be preventing them from moving forward.
Good business advisers and trainers are able to help students with these issues and assist them to improve their entrepreneurial behaviour. However they cannot transform everyone into an entrepreneur.
The other issue that advisers/trainers can deal with is helping students to realise that if they have sale-able skills they may be able able to set up a successful business, perhaps initially on a self-employed basis, without being especially entrepreneurial.
2.6 Driving forces for business start-up or self-employment
There are many situations in which students who are not strongly entrepreneurial may decide to opt for business start-up or self-employment, for instance:
If graduates like these have good ‘enterprising attributes’ they should be successful in achieving their objectives, which are usually initially quite modest. They may not be entrepreneurially driven to grow the business rapidly, or take many risks. They usually aim to reach a satisfactory level of business which meets their personal objectives.
If they are actually quite low on entrepreneurial skills they may be vulnerable to competition, and a changing business environment, as they lack some of the abilities needed to seek and develop new opportunities. They need to be aware of these risks and have plans to deal with them, for instance by forming a partnership with some-one more entrepreneurial, or developing the missing skills.
Although self-employment may seem to be a rather low-key version of start up, it is a good entry point to the world of business, and has often led on to the creation of larger businesses as the person’s skills and resources grow.
2.7 Implications for you
Nearly all students can start a new venture (eg a business) if they have marketable skills or knowledge. They don't necessarily have to be strongly entrepreneurial. You will meet students with a wide range of enterprising and entrepreneurial attributes, and with an equally wide range of personal aspirations and circumstances. By understanding the range of options open to the students, you can help them decide on the best course of action.