the business ladder

By Fabio Del Piero (First published 18.01.08 - updated 29.09.08)

At The Business Ladder we’re often asked to share our ideas on entrepreneurship, and how we envisage the active role of the entrepreneur in society.

Some people see this role as just a matter of setting up or running a business. That’s very important, of course, but there’s much more to it than that. For example, does running a company owned by someone else, implementing other people’s ideas, make you an entrepreneur? Or is that merely being a manager? What other factors go into the equation besides running a business?

Being a true entrepreneur involves a variety of interrelated concepts. Here are the key elements of our vision, which we hope you will explore further on your own as you delve deeper into the field of enterprise.

1) Wealth creation

On a fundamental level, entrepreneurship involves producing the goods, services and jobs that a country and a society need to prosper.

The objective of ‘making money’ has taken plenty of criticism over the years, suffering from negative stereotyping due to the actions and attitudes of some individuals and groups. But despite this, the goal of wealth creation remains an absolutely necessary one, and bold entrepreneurs who start businesses and create jobs deserve recognition for their role in boosting national prosperity. Their ideas lead to useful, productive activity which the economy and the country profit from.

The benefits of such productive activity to society are well-known, through the effect on employment and the satisfaction of both domestic and international market demands. To do this, entrepreneurs must deal with concepts such as market need, profitability, price, production costs, competitiveness etc. on a daily basis, all of which focus on selling a good or service for a profit. This emphasis is crucial because, quite simply, if a business fails to generate a sufficient profit it will fail and shut down.

2) Taking control of your future

In business you will sometimes find it advantageous to get together with partners, and you can perhaps have teams of entrepreneurs working together as equals. But there’s no manager or supervisor to order an entrepreneur around. You run your own affairs, without a boss checking up on your progress or results, or ordering you around.

Ultimately, you answer to no one but the market, or in cases where you’ve received investment capital, to your investors as well. You have to decide what strategies to implement, what your objectives are, what results you want, whether you’re on the right path to achieving them, and so on. No one else decides for you.

It undoubtedly requires tenacity and confidence to be in control of your own business, to shoulder responsibility, to thrive in situations where your decisions carry real weight. Entrepreneurs see this as a challenge to be overcome using their talents and abilities, by working hard and working smart. Moreover, the extra pressure is amply counterbalanced by the special rewards of independence, in terms of freedom and lifestyle, which are denied to the employed.

3) Risk-taking

In many spheres of life, you need to take a risk to obtain the rewards you want. Likewise, entrepreneurs will organise their activity around taking calculated risks. That means evaluating the commercial viability of an idea or product, and carefully considering whether the gain will outweigh the risk of potential losses. There are mathematical formulae for supposedly assessing risk in a highly complex manner, but often the best method is simply doing research and analysing the options with your own mind.

The essence of entrepreneurial risk-taking is combining prudence with daring, caution with ambition, to create your own business style. Some entrepreneurs are known for being willing to take a significant risk, while others may be slightly more conservative. Whatever your attitude to risk in any situation, however, it’s important not to be emotional, and to be capable of calmly fixing problems or cutting your losses if a risk has unfolded unsatisfactorily.

That’s why evolving a good business strategy is so important, in order to minimise risk and maximise reward at every opportunity. It may sound easy, but it’s not! Even seasoned entrepreneurs take their time weighing up as many contributing factors as they can… and occasionally even they make mistakes. The important thing in business is to be right (much) more often than you’re wrong.

4) Generating ideas and using them effectively

The starting point for an entrepreneur’s risk-taking will typically be an idea. The development of new technologies and the knowledge economy has rendered ideas even more powerful in recent times, allowing many previously implausible ones to flourish with unprecedented ease.

Entrepreneurs tap into their creativity, originality and innovation to come up with effective new ideas for products and services. As with scientific discoveries and inventions across the centuries, you may sometimes conceive something entirely new or alternatively devise a unique improvement on an existing idea. This will usually follow or coincide with a phase of observation or analysis, during which you look at a particular market and spot a profitable gap that you can fill.

The interplay between spotting opportunities and creating ideas is perhaps the most stimulating, exciting part of entrepreneurship for many. However, it is very important not to get carried away with simply ‘being clever’ for its own sake, and to keep an eye firmly on commercial viability and usefulness at all times. Although ideas are valuable in themselves, they become priceless through how effectively you use them.

5) Managing and inspiring others

Even if you work alone, as an entrepreneur you will often find yourself in a position where you need to manage, inspire or influence others. People-management isn’t exclusively limited to the field of enterprise, of course; but entrepreneurs must all engage in it to take their businesses forward.

The people you deal with can include those working or performing a task for you, or outsiders such as investors, advertisers, members of the media, etc. Most importantly of all, you will need good communication skills to deal with your customers and clients, because they will likely be the primary source of your business’s profitability.

Therefore it’s important to have a solid understanding of how people think and act. Understanding practical psychology helps to manage and motivate people in the right ways as the circumstances require, and also assists you in sharing your ideas and products better. There’s a reason they say the best salespersons really ‘know people’, because that knowledge ensures that they speak and act persuasively. This applies equally to entrepreneurs of all stripes, as they seek to get the best out of others and share or publicise their ideas.

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These are the main components of The Business Ladder’s vision of productive enterprise. But as you gain experience in the field of business, you can add other elements to your entrepreneurial strategy if you want: for example, by looking at ‘social entrepreneurship’, which is aimed at achieving social goals rather than financial profitability. That means lessening the importance of wealth creation and substituting the concept of ‘doing good’.

However your personal vision develops, as an entrepreneur you will encounter great potential for both risk and reward through your endeavours. Therefore it’s important to grasp what can lead to a successful approach in this type of business career path, in order to make wise choices. With an understanding of practical business concepts, solid ongoing training and a well-researched strategy you will be well-placed to embrace the opportunities and responsibilities.

© Copyright 2008 The Business Ladder (UK) Limited

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