An entrepreneur is an individual who creates a new business, bearing most of the risks and enjoying most of the rewards. The motivations that drive an entrepreneur to take this risk can be broken down into two main categories: financial and non-financial.

Financial Reasons for Starting a Business

For many entrepreneurs, the main motivation is financial, driven by the potential to earn more money than they could as an employee. The two key financial motivations are:

• Profit Maximisation: This is the traditional goal of aiming to make as much profit as possible. For example, a successful chef might leave their job to open their own restaurant, believing their unique menu will allow them to earn a much higher profit for themselves.
• Wealth Creation: This is a longer-term ambition to build a valuable business (an asset) that can eventually be sold for a large capital gain, creating significant personal wealth. An example would be a software developer who quits their job to turn a popular app into a full-time business, with the ultimate aim of selling the company.

Non-Financial Reasons for Starting a Business

Many entrepreneurs are driven by personal goals and values that are more important to them than just making money. These non-financial motivations often lead to profit satisficing, where the owner aims for a satisfactory level of profit that is just enough to achieve their other goals, rather than the maximum possible.

Key non-financial motivations include:

• Independence: The desire to be your own boss, have control over your work, and make your own decisions.
• Flexibility & Work-Life Balance: The ability to choose your own working hours and location.
• Fulfilling a Passion: Many businesses are started by entrepreneurs who want to turn a personal hobby or interest into a full-time occupation.
• Making a Difference: Some entrepreneurs create a social enterprise, which is a business with the primary goal of tackling a social or environmental problem. For example, The Big Issue magazine was founded to provide an income for homeless people.

The Rewards vs. Risks of a Start-up

Entrepreneurship involves a significant trade-off between potentially huge rewards and very significant risks.

Potential Rewards

• Financial Gain: The potential for profits and wealth can be far greater than a traditional salary.
• Autonomy: The freedom and personal satisfaction that comes from being your own boss.
• Sense of Achievement: The pride and fulfilment of building something successful from nothing.

Potential Risks

• Financial Loss: A high percentage of start-ups fail, meaning the entrepreneur risks losing all of their personal investment.
• Stress and Long Hours: The responsibility of running a business can be extremely stressful and often involves working much longer hours than a typical 9-5 job.
• Uncertainty of Income: There is no guaranteed monthly salary, particularly in the difficult early years of trading.