The expression “entrepreneur” normally applies to rather common and generally unimpressive undertakings. Historically for example it pertained to self-employed people such as water-carriers, brewers, hat makers, chimney sweeps and so forth. Today it broadly includes almost anyone who “undertakes some responsibility and pursues a goal with self-motivation” and certainly does not necessarily reflect a merchant but also includes service providers and professionals such as doctors, lawyers and accountants. Some however take a narrow view of the word and restrict its application to those who have special characteristics above being new and small; that is, they create something new or different; they change or transmute values.
What most entrepreneurs have in common is “making decisions about obtaining and using resources while consequently admitting the risk of enterprise” ; or, as it has been suggested more succinctly, “entrepreneurs pay known costs of production but earn uncertain incomes”. Perhaps the business process was best described by Jean-Baptist Say (1803):
An entrepreneur is an economic agent who unites all means of production – land of one, the labour of another and the capital of yet another and thus produces a product. By selling the product in the market he pays rent of land, wages to labour, interest on capital and what remains is his profit. He shifts economic resources out of an area of lower and into an area of higher productivity and greater yield.
More recently the meaning of entrepreneur has widened to reflect the underlying temperament of the entrepreneur:
1934: Schumpeter: Entrepreneurs are innovators who use a process of shattering the status quo of the existing products and services, to set up new products, new services.
1961: David McClelland: An entrepreneur is a person with a high need for achievement. He is energetic and a moderate risk taker.
1964: Peter Drucker: An entrepreneur searches for change, responds to it and exploits opportunities. Innovation is a specific tool of an entrepreneur hence an effective entrepreneur converts a source into a resource.
1975: Albert Shapero: Entrepreneurs take initiative, accept risk of failure and have an internal locus of control. The appellation today implies a bootstrap operation and some degree of both innovation and financial risk.
To put it another way, most entrepreneurs consider themselves singular and have a horror of working under the command of others. This disjunctive aversion can at times produce unfortunate results. Speaking for myself (the inveterate small businessman that I am), I vividly recall my summer employment at the office of the Judge Advocate General while completing my law school studies. JAG offered me payment of my entire law school tuition, summer employment for the duration of my law studies and immediate employment as an Officer upon completion of Articles and having been called to Bar. The sole condition was that I agree to remain in the employment of JAG for five years.
As you might have guessed, I turned down the offer. In retrospect I wonder at times what I was thinking! Nonetheless it requires but a mere scratch of the surface to disclose the underlying metal of the person I then was and still am (something which admittedly may upon reflection be a small compliment). By way of illustration, allow me to recount to you a brief tale which also transpired while I worked at the office of the Judge Advocate General. We were a contingent of about four law students employed by JAG. One morning we received orders to take ourselves to Headquarters. We were not told the reason, merely told to be there. Upon our arrival we were herded into a relatively small room with a number of other young people who, like ourselves, turned out to be students employed by the Federal Government for the summer. A gentleman addressed us, informing us that we had been summoned to consider the invaluable purpose of donating to the United Way fund-raising campaign which was now underway in the public service; and he conveniently provided a calculation of the extent of our proposed magnanimity which approximated a week’s salary. It readily became clear that we students had been corralled without ready escape for the accomplishment of this worthy purpose. Nonetheless my hackles arose and so did I. As I made my way to the door, the lecturer attempted to retard my exit but without success. I recall having informed him that when it came to charitable donation I would make my own decision on my own terms.
When I arrived back at the office, to my surprise I was immediately invited to attend upon the Judge Advocate General himself. Naturally I considered myself condemned. What however transpired was quite unforeseen. When I bowed my way into the General’s office and slid my shoes across the sheen of the Persian rug for what I thought was going to be my last time, the General appeared almost sheepish and was decidedly supplicant. In a nutshell, the General apologized for the enforced congress of students at Headquarters and quite agreed that my charitable inclinations were my own business. This alone would have been sufficient vindication but my wildest expectations were exceeded when the General informed me that the entire scheme for the whole public service had been abandoned!
It was as I say a Pyrrhic victory. I have many times since admonished myself for not having stifled my sense of personal integrity and unwillingness to submit to the will of others in favour of what I am certain would have been a very satisfactory career with the Judge Advocate General, not to mention the undoubted prospect of a timely retirement and an acceptable pension. As it is, I continue to this day to fulfill that peculiar mandate of the entrepreneur which is to suffer perpetual financial risk.
Of course, being so bloody-minded that I am, it would take me years before I realized the error of my ways and by that time the retrospective was nothing more than hollow entertainment. Even after I was called to the Bar and had secured employment with a prominent and sizeable law firm, I persisted in my stubbornness. On that occasion, one of the partners approached me and asked whether it were true that I was sending copies of letters which I had prepared to the Client to whom the matter related. Seeing no fault in keeping my Client informed, I answered in the affirmative. To this the partner replied, “You realize that postage stamps cost 12 cents!”
In truth there were many other features which pushed me onto the street and out on my own. The cautionary restraint of family and friends did little to dissuade me, though I admit to this day that my mother’s summary conjecture was correct: “It’ll give you a headache!” Nonetheless it takes a lot more than rationality and clear thinking to deter one such as the entrepreneur who savours the taste of control. The odd thing though about the entrepreneur’s passion for control is that it doesn’t translate into the control of others, rather only into the control of one’s self. Thus it was that in the interests of controlling my own destiny I felt obliged to join the ranks of water carriers and chimney sweeps who had preceded me. As I am fond of saying, I am merely a servant to the rich! I never make the brainless mistake of aggrandizing my job in life as anything transcending the trades for whom I have the greatest admiration and respect, particularly when it seems only they are lucky enough to secure employment in this mad world. Not every entrepreneur will enjoy the fate of the founders of Google and Facebook but the certainty is that such people will endure. There will forever be the entrepreneur who imagines that he or she can cook a better meal or provide a better service than any other. There is obviously an arrogance which accompanies such a posture but the lack of foresight of the risk is as critical to the entrepreneur as boldness is to the hero. Besides, nothing will change the heart of the entrepreneur who is swept up by the “gale of creative destruction”. While it is tempting to portray entrepreneurs as mavericks, risk takers, innovators, extroverts and deal makers, the likely truth is that they are little more than the guy or gal next door who simply thought, “If he can do it, why can’t I!”
From time to time I have pondered what if anything I would do differently if I could do it again. Such imaginativeness is of course dangerous territory because too often we gloss over the compelling features which existed at the time we made our initial decisions. Even if that alone were not persuasive enough I readily admit that in being an entrepreneur the good times have outweighed the bad. Sure, if one were addressing a pack of young people, there is value in encouraging them to get a job with a pension and benefits, but for the person who is an entrepreneur at heart, that amounts to arrant capitulation.
Statistically the number of entrepreneurships has declined significantly. Those who begin their own “start-ups” often do so as freelancers or consultants and employ no hired workers. For many, becoming an entrepreneur is a last resort. The increasing exit of people from entrepreneurships is hastened by industry consolidation or economies of scale which are now commonplace for mega-companies such as Walmart. Add to this that the opportunity costs in starting a business can be prohibitive. In the result the quest to create a new venture and build it into a successful business is on the decline. We have lost some of our entrepreneurial spirit.