By Caroline Appel, Luisa Bonin and Andrew Devenport
Gustavo Carvalho, an entrepreneur from Brazil
To celebrate the 10th anniversary of Aliança Empreendedora, the Brazilian member of Youth Business International which has supported 19,000 low income microentrepreneurs, we have compiled 10 arguments which deconstruct myths many people have about becoming an entrepreneur.
This article presents the final five reasons - read the first five reasons in last week's column.
6. Entrepreneurship is not necessarily related to making profit
If you look for the word "entrepreneur" in the dictionary, you might find a definition similar to this:
A person who organizes and manages any enterprise, especially a business, usually with considerable initiative and risk (Dictionary.com).
The concept of entrepreneurship is a broad one and starting your own business is only one way of becoming an entrepreneur.
For example, you may have an idea that would solve a social problem and impact society positively, like a social entrepreneur; you may start a project inside the company you work at or maybe create a new way of executing some tasks, like an intrapreneur or a corporate entrepreneur.
You may even act within your social circle (school, community, neighborhood, church, family, university) to start new things or projects.
7. Borrowing money is not always bad for business
The word "debt" has a lot of negative connotations, especially when you talk about making debts to pay for everyday expenditures (credit cards, personal loans, etc). But, whenever a debt is the result of a well-planned loan that will be used in order to increase a business' revenue, then it is vital for the business' development.
Many microentrepreneurs are so afraid of acquiring debts that rule it out before even thinking about how it could help the company grow or overcome a challenging moment.
One of the entrepreneurs supported by Aliança Empreendedora, Edinaldo Souza, owns a bike shop located in the metropolitan area of Curitiba (south of Brazil).
He started his business with little money and knowledge and, since he didn't have working capital in order to stock the supplies he needed to fix bicycles, whenever a new bike came in, he would go to the suppliers to buy the parts he needed. In order make his business grow, Edinaldo borrowed around US$350 (£270), which allowed him to buy more parts at a better price.
That, in turn, made him save time because he didn't have to go to the suppliers as frequently. In other words, his business was immediately affected by the loan.
8. Entrepreneurs don't necessarily wait or look for opportunities, they create opportunities
Once again from Saras D. Sarasvathy. During her research, she found out that expert entrepreneurs do not start their ventures writing up a business plan as it is taught at business schools. This means to say that the entrepreneurs do not look for a "good opportunity" to start a venture, according to pre-existing market parameters.
Sarasvathy says that, in reality, expert entrepreneurs do not believe in market research. They actually believe that the future is driven by human action, which is intrinsically unpredictable and not measurable. Therefore, they prefer to try to control and model the future instead of predicting it with studies and researches.
In short, the entrepreneur develops their business from the moment they decide to become an entrepreneur and adapts the business model according to the feedback they get from the market.
For that reason, successful entrepreneurs are, mostly, innovators. They create businesses that meet needs we couldn't even predict we would have one day.
Wait a second... the business plan doesn't work?
Yes, it does, but mostly as a good secondary planning tool. Because of Sarasvathy's study, we know today that the success of a business is not only and exclusively related to how good the business plan is.
9. Entrepreneurship is about having doubts (and knowing how to deal with them), instead of being sure of everything
Sarasvathy's study shows that expert entrepreneurs overcome uncertainty by treating unexpected events as opportunities to exercise their control when faced with emergencies. In order to maintain a successful business for a long period of time the entrepreneur must overcome failures, collect successes and learn from both situations.
The expert entrepreneur knows that it is impossible to predict the future, so they do not spend energy on that. They know that what happens tomorrow may depend mostly on their own actions, and they see the market as a network of people that may be influenced, not as something distant or static.
10. You can start a business related to something you love
You might think it too much of a luxury to start a business based on a hobby, or a passion of yours. But not so. Sarasvathy argues that expert entrepreneurs create and start new businesses based on three elements:
- Who I am: entrepreneurial qualities, biography, preferences, passions, etc.
- What I know: knowledge and abilities that may be used in making a product, providing services or managing a business
- Who I know: people in the entrepreneur's network that may be used in order to favour the business
Businesses should be related to the entrepreneur's likes and passions, instead of being something with which he/she cannot relate. It is also essential that the entrepreneur is not only passionate about something, but also curious about an area, and keen to learn more about it.
After all, the combination of technique and experience will make a difference when an entrepreneur goes from theory to practice.