Here’s what it takes to become an entrepreneur
An entrepreneur is an individual who initiates or owns a business. Whether it’s in agriculture, retail, manufacturing, or services, entrepreneurs are those who achieve success by taking risks, often disrupting established industries.
However, providing a clear-cut definition of an entrepreneur is challenging, as noted by Étienne St-Jean, a Canada Research Chair in Entrepreneurial Careers and a Professor at the Université du Québec à Trois-Rivières.
St-Jean explains that within his field, definitions vary. Some define an entrepreneur as someone who starts a business, others believe the title applies once you have employees, and some reserve the term for those whose businesses are growing.
His definition? “An entrepreneur is someone who creates, or owns and manages, a business,” he states, including small and medium-sized business owners, even those who have purchased an existing business. “As long as you have control over the firm’s strategic direction, you are an entrepreneur.”
Choosing to be an entrepreneur means forging your own path. “It’s a career choice. You’ve chosen to not work for a salary,” St-Jean emphasizes.
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What makes someone an entrepreneur?
Entrepreneurs often describe themselves using traits such as passion, perseverance, and resilience, notes BDC economist Isabelle Bouchard, who co-authored a 2019 study on entrepreneurship in Canada. “These are the key terms that emerge from our surveys and interviews with entrepreneurs. They face numerous challenges and obstacles but believe they will persevere and succeed because of their strong passion.”
Brian King, a professor at HEC Montréal in the Department of Entrepreneurship and Innovation, asserts that the qualities defining a successful entrepreneur are similar to those of a high-performing athlete, journalist, or physician. “The traits that drive people to succeed are evident in entrepreneurs as well.”
The 2019 BDC study also highlighted that independence, autonomy, and flexibility motivated nearly three-quarters of the surveyed individuals to pursue entrepreneurship. Additionally, about half of all entrepreneurs are driven by passion and self-fulfillment. This motivation is even more pronounced among women and young entrepreneurs, with 59% and 75% respectively citing these reasons.
According to the study, women and young entrepreneurs are more inclined to start businesses with the aim of making a positive impact on society. King has observed this kind of social drive among his student entrepreneurs: “I know someone who is contemplating starting a mental health venture. Their motivation isn’t to amass wealth but to address a significant need for young people to support their peers.”
Bouchard notes that following a passion often means that entrepreneurs are patient with profitability. “Entrepreneurs are prepared to wait a bit longer for their investments to yield returns.”
How to become an entrepreneur
As an entrepreneur, you’ll need a mix of innate abilities, skills that can be honed through experience or education, and expertise that a reliable team member can bring to the table.
Additionally, taking specific actions like selecting the appropriate product or service and building strong networks will be crucial in developing and launching your ideas successfully.
Figure out if entrepreneurship is right for you
Before embarking on the journey of entrepreneurship, it’s crucial to evaluate your skills and personality traits.
You might be a natural fit for entrepreneurship if you:
- Have an insatiable thirst for learning
- Embrace challenging projects
- Seek out innovative solutions
- Thrive in uncertain situations
- Have a strong drive to take action
- Aspire to be your own boss
If you’re unsure about whether entrepreneurship is the right career path for you, consider using BDC’s free Entrepreneurial Potential Self-Assessment. This tool can help you evaluate your entrepreneurial characteristics.
When reviewing your results, keep in mind that while personality traits play a significant role, other factors such as personal circumstances, environment, experience, and the timing of your venture can greatly influence the success of an aspiring entrepreneur.
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Get the skills to become a successful entrepreneur
As an entrepreneur, possessing the right skills can significantly boost your confidence and reduce stress when managing your business. Entrepreneurs with high skill levels tend to experience greater sales, profits, and employment growth compared to their less-skilled counterparts, as highlighted in a BDC study.
The study indicates that improving managerial skills by just one point can increase the likelihood of high performance by 3.1%, while a similar increase in technical skills boosts this probability by 2.9%. Therefore, investing in your own skill development could be beneficial for your business growth.
Managerial skills encompass:
- Organizational management
- Leadership and people management
- Innovation
- Networking
Technical skills include:
- Financial management
- Sales and marketing
- Human resources management
- Strategic planning
Delegation is another essential skill for entrepreneurs. King notes that many successful entrepreneurs understand their limits and recognize the importance of delegating tasks—something that investors also value. “Solo entrepreneurs often struggle to raise venture capital,” King explains, advising them to build a team with complementary skills to support their business.
Bouchard concurs, observing that entrepreneurs who attempt to manage everything on their own often fail due to gaps in their knowledge. “Successful entrepreneurs build a team that can handle critical tasks,” he says.
Before embarking on an entrepreneurial journey, it’s crucial to assess your skills and personality traits. You may be well-suited for entrepreneurship if you:
- Have a constant need to learn
- Take on challenging projects
- Seek out solutions
- Tolerate ambiguity
- Feel the urge to take action
- Aspire to be your own boss
If you’re uncertain about whether entrepreneurship is the right path for you, consider taking BDC’s free Entrepreneurial Potential Self-Assessment to evaluate your entrepreneurial traits.
When reviewing your results, remember that personality traits are just one aspect. Personal circumstances, environment, experience, and the timing of your venture also play critical roles in determining the success of an aspiring entrepreneur.
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Part-time entrepreneurs
A part-time or hybrid entrepreneur is an individual who launches a new business while still maintaining their current job. For instance, you might leave your full-time role as a robotics engineer only after your AI start-up proves successful. Alternatively, you could be a new mother turning your passion for crafting baby shoes into a thriving business during maternity leave. These ventures are often referred to as side hustles or part-time businesses.
Part-time entrepreneurs benefit from financial stability while starting their new ventures. “For many, the new business serves to supplement their existing income. Some will continue part-time and simply enjoy the extra revenue from their entrepreneurial activities,” explains St-Jean. He cites an example of his friends who started a gin distillery. A year and a half into the venture, sales are strong, but some partners are still holding onto their day jobs. “They want to ensure the business is running smoothly before fully committing to it.”
Entrepreneurship in Canada is large and diverse
Entrepreneurs are a significant component of the Canadian economy, representing a diverse cross-section of the population.
Canada is home to over 1.1 million small- and medium-sized enterprises (SMEs). Collectively, these businesses account for 90% of private-sector employment, providing jobs for 10.7 million Canadians and contributing approximately $1 trillion to the nation’s GDP.
Annually, tens of thousands of Canadians, both young and old, embark on the journey of starting a business. These new entrepreneurs come from varied educational backgrounds—some with formal qualifications and others with practical, on-the-job learning—and many hail from diverse origins.
According to a 2019 study by BDC, women constituted 39% of all entrepreneurs. Furthermore, one in four business owners were newcomers to Canada, a figure that surpasses the 21.9% representation of newcomers in the overall population.
Canadians under 35 have emerged as the fastest-growing group of entrepreneurs, with 42% of surveyed millennials expressing interest in launching their own businesses. Additionally, there has been a rise in the number of entrepreneurs aged 55 and older.
Entrepreneurship should be accessible to everyone, regardless of gender, race, or age. At BDC, we provide tailored guidance for entrepreneurs who may encounter unique challenges that differ from those faced by the general population. Explore the specific support available for:
- Black entrepreneurs
- Women entrepreneurs
- Indigenous entrepreneurs
- Newcomer entrepreneurs
Entrepreneurs and risk
Becoming an entrepreneur is not for the faint-hearted. According to a study by BDC, one-third of new businesses fail within five years, and only 50% survive after a decade.
What causes so many new ventures to fail? The reasons vary from macro-economic factors, like market domination by large corporations, to micro-economic factors, such as individuals not being prepared to run a business.
St-Jean points out that many aspiring entrepreneurs have unrealistic expectations. “People envision working for themselves, having no boss, and earning a lot of money. They look up to figures like Elon Musk and Mark Zuckerberg.”
Most experts agree that thorough research, finding mentors, building a strong team, and gaining diverse experience before starting a business can significantly increase the likelihood of success
Entrepreneurs and stress
Approximately three-quarters of entrepreneurs report dealing with financial insecurity and overwhelming stress, with mental health issues nearly three times more prevalent than in the general population, according to a Canadian Mental Health Association study commissioned by BDC. Female entrepreneurs and startup owners are particularly vulnerable.
Achieving a healthier work-life balance is a major mental health challenge for entrepreneurs. A BDC study from April 2022 found that 48% of entrepreneurs feel they need better support in this area.
Despite these challenges, 90% of entrepreneurs say they feel professionally satisfied. They express high levels of satisfaction in managing their business, their daily motivation, and their company’s progress.
St-Jean and King both understand the coexistence of stress and satisfaction for entrepreneurs. St-Jean notes that while there are many stressors, entrepreneurship often aligns with their personality, leading to greater satisfaction.
King adds that while stressful situations like signing personal guarantees for loans can arise, there’s also a sense of satisfaction in facing these challenges.
For King, a fundamental stressor for entrepreneurs is the inherent difficulty of disrupting the status quo. The constant challenge is to find a competitive edge that competitors cannot easily replicate.
How entrepreneurs help the economy
Approximately three-quarters of entrepreneurs report dealing with financial insecurity and overwhelming stress, with mental health issues nearly three times more prevalent than in the general population, according to a Canadian Mental Health Association study commissioned by BDC. Female entrepreneurs and startup owners are particularly vulnerable.
Achieving a healthier work-life balance is a major mental health challenge for entrepreneurs. A BDC study from April 2022 found that 48% of entrepreneurs feel they need better support in this area.
Despite these challenges, 90% of entrepreneurs say they feel professionally satisfied. They express high levels of satisfaction in managing their business, their daily motivation, and their company’s progress.
St-Jean and King both understand the coexistence of stress and satisfaction for entrepreneurs. St-Jean notes that while there are many stressors, entrepreneurship often aligns with their personality, leading to greater satisfaction.
King adds that while stressful situations like signing personal guarantees for loans can arise, there’s also a sense of satisfaction in facing these challenges.
For King, a fundamental stressor for entrepreneurs is the inherent difficulty of disrupting the status quo. The constant challenge is to find a competitive edge that competitors cannot easily replicate.
The larger economic challenges facing entrepreneurs
Entrepreneurs are encountering significant challenges. There has been a consistent increase in salaries and a decrease in unemployment rates, which can discourage individuals from starting their own businesses and make it harder to attract skilled workers to a new company.
Additionally, globalization and increased market dominance in certain industries have heightened competition, while technological advancements and disruptions in supply chains have hindered some manufacturers from operating at full capacity.