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What is Entrepreneurship?
Entrepreneurship is a difficult concept to define. At its heart, entrepreneurship concerns starting or fostering the growth of a business. There are several types of entrepreneurship, or methods for starting or fostering the growth of a business. We discuss some of the primary methods below.
Back to: Entrepreneurship
Ideas for a New Product or Service
The purest idea of entrepreneurship involves the ideation of a novel product or service. The inventor comes up with a commercially viable product or service concept. If the inventor is entrepreneurial, she will seek to commercialize the product. In most cases, the inventor associates with an entrepreneurial person to build a business around the newly created value proposition.
This concept of entrepreneurship epitomizes startup ventures. A startup generally devises a novel product or services and seeks to commercialize it on a grand scale. The repeatable nature of the value proposition allows the business to scale to meet the need of many customers or clients with little additional effort in delivering the value proposition.
How to Turn an Idea Into a Business?
The process of commercializing a new product or service might follow the following steps (in any order):
- Developing a concept for a product or service
- Developing a model for a product or process for the service.
- Testing the product or service internally (known as a “alpha test”)
- Reworking the product to arrive at a “minimum viable product” (MVP)
- Testing the product on a small market segment (known as a “beta test”)
- Developing a plan for introducing the product or service into the market
- Securing resources to operationalize the process of delivering the value proposition
- Developing a revenue model based upon the nature of the value proposition
How to Leave an Employer and Start a Business?
Many entrepreneurs start businesses by splitting off from their employer. The employee provides a valuable service within a business. The employee might realize that she can start her own business and provide that service to the business for greater compensation. Likewise, the employee may realize that she can provide that service to any number of customers and clients.
In another scenario, the employee may realize that there is a customer/client need that is not being filled. The employee then steps away from the company to start a business that fills that customer/client need. Perhaps she will provide the same service as her employer, but she provides greater or unique value to the customer in rendering that service herself.
In both of these ways, the entrepreneur starts a business by splitting away from her employer.
What is Intrapreneurship?
Intrapreneurship is a unique form of entrepreneurship is the creation of a new business from within an existing business.
The employee uses the resources of the employer to create a unique or novel value proposition that the business did not previously deliver. This could include starting a new product or service line.
The company may seek to run the business internally, or it may split the business off into a separate subsidiary. Expanding in this way is an alternative to the common business practice of expanding by acquiring or merging with existing businesses.
What is Necessary to Start a Business?
As discussed above, there are numerous forms of entrepreneurship. The various forms of entrepreneurship do tend to have common attributes, such as:
- Recognizing a value proposition for a customer or client;
- Delivering that value proposition in hopes of receiving the amount and type of desired value;
- Planning the process for commercializing the value proposition;
- Securing resources necessary to commercial the value proposition.
These are just examples of common attributes that you may be able to identify among various types of new businesses.
What are the Legal Steps in Starting a Business?
There are several legal or procedural steps necessary to establish a new business. The most common steps are as follows:
- Securing intellectual property rights through patent, trademark, copyright, or trade secret.
- Registering a business entity through which to carry on business.
- Structuring ownership and control of the business entity.
- Getting the appropriate occupational and business licenses and permits.
- Establishing tax reporting and compliance procedures.
- Establishing a location for operations.
Each of these steps involve legal process.
Securing intellectual property can be a difficult undertaking, as it is a very complicated area of law.
Registering a business entity can be a simple or complex process. It depends upon the nature of the business and the business structure desired.
Structuring ownership and control of the business is done through the articles of incorporation, bylaws, shareholder agreements, subscription agreements, stock purchase agreements, etc.
Getting the appropriate occupational and business licenses and permits is largely regulatory in nature.
Every business has unique laws and regulations that govern its industry. Understanding the applicable regulations and the steps necessary to comply can be complicated.
Establishing tax reporting and compliance procedures may involve intricate tax planning, depending on the nature and objectives of the business.
Establishing a location for operations can involve all sorts of real estate law and procedures, such as property leasing or purchasing and zoning.
Later in the operational life of the business, any number of legal needs may arise.