What is an entrepreneur?
An entrepreneur is someone who starts or owns a business. Whether it’s in farming, retail, manufacturing or in the service sector, entrepreneurs are businesspeople who find their success by taking risks. In their pursuits, they often become disruptors in established industries.
Yet beyond this simple definition, coming up with a definitive answer to “What is an entrepreneur?” can be a difficult exercise, explains Étienne St-Jean, Canada Research Chair in Entrepreneurial Careers and a Professor at the Université du Québec à Trois-Rivières.
He says some in his field define an entrepreneur as someone who launches their own business, others will consider you one if you’ve started to pay employees, while some will only give you the entrepreneur designation—rather than a business owner—once your business is recording growth.
His definition of an entrepreneur? “Someone who creates, or owns and manages, a business,” he says, explaining that this would include small- and medium-sized business owner-managers, including those who bought the business from someone else. “As long as you have control over the firm’s strategic orientation, you’re an entrepreneur.”
Being an entrepreneur means carving your own path. “It’s a career choice. You’ve chosen to not work for a salary,” says St-Jean.
As long as you have control over the firm’s strategic orientation, you’re an entrepreneur.
What makes someone an entrepreneur?
Passion, perseverance and resiliency are traits by which many entrepreneurs define themselves, says BDC economist Isabelle Bouchard, who co-authored a 2019 study on entrepreneurship in Canada. “Those are the keywords that we find when we do surveys and interviews with entrepreneurs. They’re going through numerous challenges and obstacles, but they feel they’re going to persevere and make it happen—because they’re so passionate.”
For Brian King, a professor at HEC Montréal in the Department of Entrepreneurship and Innovation, the characteristics that define a good entrepreneur are the same traits that define a high-performing athlete, journalist or physician. “All the traits that drive people to success, you see them in an entrepreneur.”
Three other characteristics—independence, autonomy and flexibility—motivated almost three-quarters of those surveyed to become entrepreneurs, according to the 2019 BDC study. It found that close to half of all entrepreneurs are inspired by passion and self-fulfillment. Women and young entrepreneurs cite that in even greater numbers, at 59% and 75%, respectively.
Women and young entrepreneurs are also more likely to say they are starting businesses to positively contribute to society, according to the study.
King has seen this type of social motivation in his student entrepreneurs: “I know somebody who’s thinking about launching a mental health start-up. It’s not because they want to make a billion dollars, but because they think there’s a strong need for young people to help other young people.”
Bouchard says pursuing a passion means many have the patience to wait for their businesses to become profitable. “Entrepreneurs are willing to wait a bit longer for that return on investment.”
Successful entrepreneurs surround themselves with people who can handle important tasks.
How to become an entrepreneur
There are natural skills you’ll need as an entrepreneur, some that you can develop through experience or training, and others that will be part of the skillset of a trusted member in your new venture.
There are also steps to take, such as choosing the right product or service, and establishing networks, that will help you develop and bring your ideas to market.
Figure out if entrepreneurship is right for you
Before you decide to become an entrepreneur, you may want to look at your skillset and personality type.
Generally, you are well suited for entrepreneurship if you find yourself…
- constantly needing to learn
- taking on difficult projects
- looking for solutions
- tolerating ambiguity
- needing to take action
- wanting to be your own boss
Are you unsure about your suitability for a career in entrepreneurship? Want to help confirm it could be the right path for you? Try BDC’s free Entrepreneurial Potential Self-Assessment to assess your entrepreneurial traits.
When you get your results, remember that while personality traits are important, personal circumstances, milieu and experience, as well as the timing of your venture, can be key factors in predicting the success of a would-be entrepreneur.
Get the skills to become a successful entrepreneur
As an entrepreneur, you will feel more confident and less stressed with the right skills to manage your business. Highly skilled entrepreneurs are more likely to have higher sales, profit and employment growth than their peers, according to the above-mentioned BDC study.
That study found that a one-point increase in managerial skills raises the probability of being a high performer by 3.1%, while a one-point increase in technical skills increases this probability by 2.9%. You may therefore think about investing in your own development to help your business grow.
Managerial skills include:
Technical skills include:
Delegation is another key skill for entrepreneurs. King says many successful entrepreneurs recognize that they can’t do it all—as do investors. “Whenever a solo entrepreneur tries to raise venture capital, they generally aren’t very successful.” King suggests that solo entrepreneurs seek out a group of people with complementary skills to help them build their business.
Bouchard, too, has seen entrepreneurs who have tried to handle everything themselves but have failed because of their lack of knowledge in certain areas. “Successful entrepreneurs surround themselves with people who can handle important tasks.”
Training and networking for entrepreneurs
Many colleges and universities now offer programs that are specifically designed for business owners. The courses are typically focused on fundamental business skills and tailored to fit the schedules of busy entrepreneurs.
Chambers of commerce and other business organizations also offer courses, seminars and networking events where you can meet other entrepreneurs who are facing similar challenges and learn what solutions they’ve found.
“It’s really important to get out from behind your desk, meet people and get ideas about how you can improve,” says Michelle Feder, Director Small Business, BDC, Advisory Service. “Even if you are already quite skilled and confident in your knowledge and abilities, fresh perspectives can stimulate new ideas and ways of doing things.”
(From A Nation of Entrepreneurs: The Changing Face of Canadian Entrepreneurship, BDC 2019)
Find an innovative niche
BDC’s Isabelle Bouchard says those looking to become entrepreneurs need to ask themselves if their product or service stands apart from the crowd. “You need to find your niche and come up with an idea that has real value. Don’t go and do something that everybody else is doing,” she says. “Adding value to the product is where you’re going to find your margins.”
St-Jean agrees. “You need to be innovative and different. Starting a restaurant when there’s already a lot of restaurants in your city, that’s not very innovative.”
There are a number of organizations that budding entrepreneurs can take advantage of, including Futurpreneur, business accelerators, business incubators and seed funds.
King suggests approaching successful individuals for advice. “Reach out to people who are in your industry; they will actually help you.” He says you’d be surprised how many people are ready to aid new entrepreneurs.
Not every business owner will face the same challenges when setting up a new business, says St-Jean, who studies the process of launching ventures. “For some, it’s straightforward: they build the plan, they have the contacts, they have the capital. In just a few steps they’re in business. But for others, it’s a lot of trial and error and building up competencies.”
“Some entrepreneurs have the information and resources to move forward. But for those that don’t, they’re always navigating between having a plan and trying to execute the plan. They’re doing what is called effectuation, which is dealing with what they have at the moment,” says St-Jean.
King says most students should wait until they have some experience in the field before becoming entrepreneurs. “I don’t encourage our undergraduate students to launch themselves into business right from school. I suggest to them that they’re better off working for somebody and learn the necessary skills.”
He gives the example of a student who worked for a large company and became adept at digital marketing. When she spotted a tech opportunity, she convinced two people close to her to take leadership roles. She generated business by way of her new talents. “She was the person who was able to reach out through social media and really connect and get people excited about the company.”
A part-time or hybrid entrepreneur is someone who starts a new venture while still involved with their previous occupation. For example, you might decide to quit your salaried position as a robotics engineer once your new AI start-up becomes viable. Or perhaps you’re a new mom pursuing your passion for baby shoes while on maternity leave and those early sales eventually turn into a profitable business. Some refer to these as businesses on the side, side hustles or part-time businesses.
Part-time entrepreneurs are starting from a safer place, financially. “For some people, the new business is a way to complement their salary. Some will remain part-time and just want the new revenue from the entrepreneurial activity,” says St-Jean. He brings up the example of his friends who began a gin distillery, and, a year and a half into the business, sales are going well. However, some of the partners are still working in their day jobs. “Before they quit, they want to be sure that the business is running well.”
Entrepreneurship in Canada is large and diverse
Entrepreneurs make up a large part of the Canadian economy and represent a wide selection of the population.
There are more than 1.1 million small- and medium-sized businesses (SME) in Canada. Together, they account for 90% of all private-sector jobs, employ 10.7 million Canadians and contribute roughly $1 trillion to Canada’s gross domestic product.
Every year, tens of thousands of Canadians, young and old, some with formal education, others having learned their entrepreneurial skills on the job, and many from diverse backgrounds, decide to launch a business.
In its 2019 study, BDC estimated that 39% of all entrepreneurs were women, with one in four business owners being newcomers to Canada, higher than the proportion of newcomers in the population (21.9%).
Canadians under 35 have been the fastest growing entrepreneurial cohort—42% of millennials surveyed said they were interested in starting a business—while the number of entrepreneurs 55 and older was also increasing.
The ability to become an entrepreneur should not be limited by gender, race or age. At BDC, we tailor advice for entrepreneurs who may face particular challenges not experienced by the general population. See the kinds of support you can receive if you are a:
Entrepreneurs and risk
Becoming an entrepreneur is not for the faint of heart. One-third of all new businesses fail within five years, and only one in two companies are still open after 10 years, according to the BDC study.
Why do so many new businesses fail? The reasons range from macro-economic issues, such as the domination of markets by large players, to the micro-economic, such as an individual who may not be ready to start a business.
St-Jean sees some problems with many would-be entrepreneurs having unrealistic expectations. “People think ‘I’ll work for myself, no boss, make a lot of money.’ They think of Elon Musk and Mark Zuckerberg.”
Most experts agree that doing research in advance, seeking out mentors, forming a good team and gaining a variety of experience before going into business will raise your chances of success when starting a new business.
The challenge is always coming up with an advantage over your competitor, and one that they just can’t immediately copy.
Entrepreneurs and stress
Three-quarters of entrepreneurs say they deal with financial insecurity and overwhelming stress. According to a study by the Canadian Mental Health Association commissioned by BDC, reports of mental health problems are nearly triple that of the general population. Woman entrepreneurs and start-up owners were found to be more at risk of experiencing poor mental health.
Attaining a healthier work-life balance is one of the top mental health challenges faced by entrepreneurs. In an April 2022 study by BDC, 48% of entrepreneurs said they would need better support with work-life balance.
Despite those numbers, 90% said they felt professionally satisfied. Respondents scored high in self-reported questions on the satisfaction they felt in managing their business, their daily motivation and the progress of their company.
St-Jean understands how those two seemingly opposing feelings can co-exist. He says there are many stressors for a small business owner, but, for “those who decided to become entrepreneurs, they are more satisfied because it really fits with their personality.”
King agrees. “It’s stressful when you have to do something like sign a personal guarantee on a loan. But, on the flip side, there is more satisfaction for taking on that engagement.”
King also sees a more fundamental stressor for entrepreneurs. “It’s inherently hard to disrupt the status quo. The challenge is always coming up with an advantage over your competitor, and one that they just can’t immediately copy.”
How entrepreneurs help the economy
Bouchard says entrepreneurs have become the economic engines of Canada. “They represent such a big share of all the businesses. They are the creators of so many jobs.”
St-Jean says entrepreneurs also help spur innovation and growth. “When you have a new business that starts something more innovative, it forces the established businesses to change, to take on this new competitor. So, it’s a driver of innovation, which is a driver of growth.”
But there can also be a negative side to all this entrepreneurial activity.
“There are some highly skilled entrepreneurs who would otherwise be welcomed by established businesses. But they’re too busy trying to get their own businesses off the ground,” says St-Jean.
He adds that there are currently a lot of small- and medium-sized businesses that need more employees and would better develop in an atmosphere where qualified workers, some of them being struggling entrepreneurs, were more available.
The larger economic challenges facing entrepreneurs
Entrepreneurs face some strong headwinds.
There have been steady rises in wages and lowering of unemployment, which can keep people from making the jump into entrepreneurship and make it more challenging to attract talent to a nascent company.
Globalization and higher market concentration in some sectors have also made it more difficult for many to compete, while technology and supply-chain disruptions have thrown a wrench into certain manufacturers’ ability to perform at their maximum.
Canada stands out for its entrepreneurial activity
Canada ranks high among countries surveyed in the 2021/2022 Global Entrepreneurship Monitor (GEM).
In 27 of the 47 economies studied, less than 1% of adults were starting or running a new business and anticipating 25% of revenue or more from outside their country. Canada placed among the highest levels, with 5.9%.
It was also a standout country in terms of the proportion of adults in an economy who are either introducing products or services, or using technologies and procedures, that are at least new to the area.
For more on running a successful new venture, see BDC’s collection of articles on entrepreneurial skills.