New business ideas are the source of so many advantages that we have today. Take a moment to think about your daily life and what entrepreneurs have contributed to it.

We’ve talked to hundreds of successful business owners about how innovation and entrepreneurship have helped their companies grow. We’ll share some of their insights and define what it means to be a good entrepreneur.

Keep reading or click on any of the links below to jump to the section that interests you:

What is entrepreneurship?

Entrepreneurship means that you’re pursuing a unique path to creating a new business. Aspiring entrepreneurs look for business opportunities that can change the world and lead to a healthy profit. These ventures often involve high risk in exchange for potentially lucrative returns.

Entrepreneurs tend to focus on three different types of opportunities:

• Innovative ideas
• New business models
• Solutions

Let’s take a closer look at each.

Innovative Ideas

Many companies develop new products by examining the challenges their target audience faces and solving them better than the current products on the market. They use creativity and problem-solving skills to change customers’ expectations about what’s possible.

Learn more about product development for small businesses.

Business Model

Developing business systems has become increasingly important for small companies. Major corporations are using innovation to expand their revenue per employee. That means small businesses need to employ similar strategies to stay relevant.

Business models like decentralized autonomous organizations rely on technology to fully manage as many processes as possible. The business model you choose also plays a central role in how you operate and oversee your business. If you’re not sure about the best structure, check out our blog on business models.

Innovative Solutions

Innovation entrepreneurship focuses on developing new software that helps companies perform everyday tasks more efficiently. Right now, artificial intelligence is one of the main focuses of innovation.

Companies of all sizes are figuring out how to use AI to increase productivity. New companies and startups have promised to increase productivity by 30% to 70%, but many of these claims have yet to be proven over time.

Case Study: Swoop Scoop®

William Milliken and Levi Swartz started Swoop Scoop® with just $174. William told us:

They decided on a pet waste removal business. William explained why:

Now, they make about $200K per month and have a 30% net profit margin. Find out how in the interview below:

Why is entrepreneurship important?

Nearly one in six people consider themselves entrepreneurs. In fact, 88% of millionaires built their wealth by coming up with innovative products and ideas.

However, questions still exist about whether innovation helps or hurts the overall economy. Developing new technologies and business strategies can impact society in both positive and negative ways.

Innovation tends to create winners and losers. In the last 20 years, we’ve seen an online bookstore make it much easier to buy almost any product, but department stores continue to go bankrupt.

Meanwhile, innovative companies like Uber and Airbnb made it easier for people to earn a substantial living by renting their vehicles and homes. Yet at the same time, these business ideas have also contributed to rising home and vehicle prices.

There are plenty more examples, but economic studies show innovative ideas and strategies tend to:

• Slightly increase productivity
• Have geographically uneven impacts
• Correlate with income inequality

If you’re drawn to entrepreneurship but you aren’t sure, take Oprah’s advice:

There are many ways for entrepreneurs to contribute to society while growing their wealth. Learning about the types of entrepreneurship below could inspire your next big move or a great idea.

Types of Successful Entrepreneurs

The following sections discuss some common types of entrepreneurs and how they approach their business ventures.

Builder

Builders focus on creating scalable businesses quickly. A builder normally creates a company that makes more than $5 million in revenue within five years, then continues to scale to reach $100+ million.

These entrepreneurs focus on building a strong organization by hiring the best talent and working with the most successful investors.

They’re often temperamental and demanding, which helps the company grow fast but may alienate people around them. Steve Jobs showed this type of personality when he started Apple.

Opportunist

Opportunistic entrepreneurs see an opportunity, jump in, and help bring the business to where they see it being reasonably valued. Then they exit when it’s reached the right valuation.

You most commonly see them in venture capitalist firms. The most famous opportunist is Warren Buffet, the founder of Berkshire Hathaway.

These entrepreneurs build wealth and profits whenever possible. They look for ideas that can earn them passive income or outsized gains.

Opportunistic entrepreneurs may be impulsive because timing is part of the opportunity. People who are risk averse may have trouble dealing with these types of individuals.

Innovator

An innovator creates a product or idea that doesn’t currently exist. Thomas Edison is the most famous innovator with over 1,000 U.S. patents. An innovator sees a problem, then creates a solution to fix it.

Innovators aren’t always the most practical with financial aspects of running a business. People in this group often need a partner to manage normal business operations so that they can focus on the creative side.

Specialist

Specialists are people who have developed a strong skill set through experience and education. They tend to plan ahead and avoid risk.

Specialists often build their companies through word of mouth and networking. This strategy leads to slower but more stable growth than some other types of entrepreneurs.

Tim Cook is a good example of a specialist. He’s led Apple since Steve Jobs’s death. The company has continued to grow steadily, but his focus has been on finance rather than product innovation. Tim once said:

Four Types Of Entrepreneurship

The type of entrepreneurship you pursue depends on what type of entrepreneur you are. A mismatch between how you think and the way you form your business may lead to poor results. Consider the different types of entrepreneurship below.

Type #1. Small Business Entrepreneurship

A small business is usually a single location that sells its goods or services without becoming a corporation or a chain.

Small business entrepreneurship is the most common type of entrepreneurship. These entrepreneurs start their new business venture with their own money and assume all the financial risk.

The business owner might have outside investors or a loan but only if it’s necessary to help the business grow. Many new businesses in this category are one-person small businesses.

Type #2. Scalable Startup Entrepreneurship

Scalable startup entrepreneurship is when your business can grow in response to market demand. These are normally tech companies with a unique business idea. They require investments from venture capitalists to succeed.

A subset of these companies act as intermediaries for other companies. In these situations, the entrepreneur creates a marketplace and works with other small businesses to create demand. Amazon and Uber are examples of a scalable startup.

As demand increases, the additional costs tend to be service and support staff. This type of company may lose money for years and then start making outsized profits as it grows.

Type #3. Large Company Entrepreneurship

Large company entrepreneurship looks for opportunities to capitalize on current industry trends.Established businesses use the financial backing of their parent companies to enter new markets and expand their customer base. They often operate similarly to business incubators.

Google’s parent company, Alphabet, has a moonshot laboratory that’s an example of large company entrepreneurship. These types of initiatives tend to protect the company’s foothold in their industry and protect the status quo.

Type #4. Social Entrepreneurship

Social entrepreneurship has the goal of addressing a societal problem like feeding the homeless or helping people get shoes. Companies still make a profit, but they use at least a portion of their profits to help good causes and have a positive impact on society.

Most of their marketing will be about their cause to help find prospective customers who share the same values. TOMS is an example of social entrepreneurship. When people buy their shoes, TOMS donates another pair to the less fortunate.

These companies normally register as benefit corporations. Learn about other popular B corps.

As you can see, there are many routes you can take to become a successful entrepreneur.

How to Become an Entrepreneur

Follow the steps below to become an entrepreneur:

1. Find a profitable business idea
2. Create a product or come up with a service.
3. Validate your product.
4. Write a business plan.
5. Get business funding.
6. Launch the business.
7. Grow your business.

We have articles about most business opportunities. Find small business ideas that could work for you.

Join the UpFlip Academy

The UpFlip Academy provides courses from successful entrepreneurs like William, a business ideas database, and forums to network with other business owners. Level up your business skills while learning from other entrepreneurs.

Entrepreneurship Financing

Entrepreneurship financing is how you secure the necessary funds to start, operate, and grow your business. Financing allows you to turn your ideas into reality and pay for marketing, hiring, and other essentials.

Each type of funding has its own advantages and drawbacks. Learn about the types of funding an innovative entrepreneur might use to pursue new ideas.

How do taxes work for entrepreneurs?

In the United States, entrepreneurs choose which business structure they use and follow the applicable tax code to deduct expenses and pay taxes. Common structures include:

• Sole proprietorship: With this model, all profits are taxed as self-employment income. You won’t need to separate your personal and business costs.
• Limited liability company: With an LLC, your business and personal assets are separate. This protects you in the event of a lawsuit. You can choose to have all income be taxed as self-employment income or opt for S corp status and get paid a salary with profits paid as dividends.
• Corporation: A corporation has the most options for how to treat income and tax it. It currently has a 21% tax rate, but both the corporation and personal income are taxed (double taxation).
• Partnership: Partnerships are considered personal income, but you have to fill out a special form for the partnership as well.

Characteristics of Entrepreneurs

There are all different types of entrepreneurs, but many people who succeed in business have certain traits in common, innovative entrepreneurs often have these characteristics:

• Risk taking: Entrepreneurs take calculated risks in the right circumstances even if there’s uncertainty about the final outcome.
• Recognizing opportunities: Entrepreneurs look for opportunities that others might overlook. They pay close attention to market research and unmet needs. This is a key part of having an entrepreneurial mindset.
• Vision and passion: Entrepreneurs know how to turn their ideas into business plans.
• Networking: Entrepreneurs know how to build a strong network of customers and suppliers. They use this network of professional contacts to stay in touch with the industry and gain support for new ideas.
• Management skills: Entrepreneurs effectively manage resources such as time and finances.
• Leadership skills: Entrepreneurs need strong leadership skills to guide their teams and make critical decisions about the future of the business.
• Creativity: Successful business owners are creative and support an organizational culture that allows employees to innovate.
• Flexibility: Successful entrepreneurs are flexible and open to change. They know when to adjust their plans based on industry trends or other information.
• Continuous learning: Entrepreneurs constantly look for opportunities to learn and gain more experience. They often attend conferences and participate in networking events to expand their understanding of the current market.

Entrepreneurship in Economics

In economics, entrepreneurs are one of the driving forces behind capitalism. Entrepreneurs take on risk and push the boundaries of what’s possible in the business world. Their decisions help create:

• Goods and services: Every business provides a product or service that consumers use to improve their lives.
• Jobs: Many successful entrepreneurs hire other people and create jobs.
• Economic growth: Entrepreneurs reinvest their money to boost the economy and their own businesses.
• Monetary velocity: Entrepreneurship helps money move faster. This is important because countries don’t keep enough cash on hand to cover every dollar of net worth. When money moves faster, it lowers the amount of cash that countries need to financially support their citizens.

New businesses are a cornerstone of our economy. That’s why the government provides entrepreneurship resources like small business loans to make business ownership accessible to more people.

Thinking about starting your own business venture?

There are numerous questions you’ll need to ask yourself before you start your entrepreneurship journey. We’ve created an entrepreneurship quiz to help you figure out whether you’re ready.

Entrepreneurship FAQ

What is an entrepreneur?

An entrepreneur is a person who starts or runs a business with higher risks and potential profits than typical business models. While every small business owner takes more risks than the average person, entrepreneurs often pursue an idea beyond what’s currently on the market.

What is the definition of entrepreneurship?

Entrepreneurship is turning a business idea into a successful business.

How many female entrepreneurs in the U.S.?

According to the Small Business Administration, there are 12.3 million female entrepreneurs. These women-owned businesses make a combined $2.1 trillion and employ 10.8 million people.

What doors will innovation and entrepreneurship open for you?

Innovation and entrepreneurship are two concepts that cross industries. You’ll need a specific skill set to start your own business enterprise and compete with existing businesses.

Take a close look at your mindset and interests before starting a small business. Entrepreneurs agree that just because you don’t know something doesn’t mean you can’t learn it. Check out our list of the best business books to learn how to become forward thinking and develop a winning business strategy.

What type of new venture do you have in mind? Let us know in the comments below.