There are a lot of people running around these days calling themselves entrepreneurs. They introduce themselves as such at networking events. They include the title in their social media profiles. Some even put it on their business card and email signature line. Many of these people are not actual entrepreneurs, they are wannapreneurs. How can you tell the difference and why does it matter?
The dictionary defines an entrepreneur as, “A person who organizes and manages any enterprise, especially a business, usually with considerable initiative and risk.” The operative words are manages and risk, explained in more detail below, along with other tell-tale characteristics.
A wannapreneur is an aspiring entrepreneur – an entrepreneur-in-waiting or in-training. They have not yet taken the plunge, though they may be dancing all around it. This term is in no way meant to be negative or derogatory. (In fact, there are a number of websites and incubators expressly dedicated to wannapreneurs.)
ALL entrepreneurs, great and obscure, were once wannapreneurs. When I was first starting out, thrashing around for a good idea, my parents would introduce me to their friends: “This is our son, Michael. He’s an entrepreneur. That’s a fancy way of saying he’s unemployed.” I wasn’t an actual entrepreneur. I was, in fact, a wannapreneur.
All entrepreneurs were once wannapreneurs, but most wannapreneurs will not become entrepreneurs.
To be perfectly CLEAR, wannapreneurs may be, and probably are,entrepreneurial. So are lots of people who work for universities, corporations, government agencies and non-profits. But that does not make them entrepreneurs. In the same vein, there are a lot of aspiring actors and hobby musicians in the world. If they aren’t doing it for a living, or have never been paid for it, it’s a stretch to call it their profession.
Here’s a short list to tell the difference between entrepreneurs and wannapreneurs:
- Has a working product or service.
- Has a business and is working full time in the business. Probably has a team.
- Has assumed considerable risk.
- Is addressing a sizable market with a coherent strategy and business model.
- Has an idea, or is looking for an idea.
- Does not have a business (but maybe a company) and is working part-time or full-time for someone else. Probably flying solo.
- Has assumed little or no risk.
- Has a vague notion of the market, no strategy for addressing it, and is not sure how they will make money.
Why does it matter to know the difference between entrepreneurs and wannapreneurs? Very simply, time and attention. Whether you are looking to invest, provide services, or join a startup team, you need to know whether or not someone presenting themselves as an entrepreneur has actually made the plunge, and how committed they are. I spend most of my time with entrepreneurs, but I always make time for serious wannapreneurs. I only invest my money, however, with entrepreneurs.
The next time someone introduces themselves to you as an entrepreneur, ask them 4 questions:
1. Do you have a working product or service and is anyone buying it (or at least using it)?
The one exception to this tell-tale sign is the person who has a successful track record as an entrepreneur and is working full-time on his or her next company. Don’t fall into the trap of thinking that just because someone was once an entrepreneur, they are now an entrepreneur. It is not a title for life. Just as someone who once practiced law is no longer a licensed attorney, someone who once started and ran their own business is not necessarily an entrepreneur today.
(Note that I do not use the title on my Linkedin profile even though I started and ran several businesses, because I am not currently a practicing entrepreneur. I used to be an entrepreneur. I am currently a proud wannapreneur, researching and testing ideas for my next venture.)
2. Do you have a duly incorporated business and are you working in the business full time?
Be careful with this one, the answer can be misleading. There is a big difference between having a business and a company. See this post to distinguish the difference between the two. The tell-tale sign is whether or not they are working in the business full-time and are fully committed to it, not working for someone else or looking for a job and calling themselves an entrepreneur in the meantime.
3. How much have you personally invested in the business and how much have you raised from family, friends or outside investors?
The amount and type of risk is an important tell-tale sign. The dictionary definition characterizes it as “considerable” risk. I like to think of it as “material” risk. Even if an entrepreneur has no money of their own at stake (probably because they had no money or credit to start), they will have assumed material and fiduciary risk. They took money from others. They signed a lease with a personal guarantee. They have significant skin in the game.
4. What’s the size of your market and how are you addressing it?
The tell-tale sign here is size and scope. In my opinion, someone who is selling creative or development services on an hourly basis is a freelancer, not an entrepreneur. Someone who has a lawn-mowing business or runs a local market is a small business owner, not an entrepreneur. Size and scope determine the amount of initiative and risk that meets the classic definition of an entrepreneur.
A true entrepreneur has a plan, a strategy, and a validated business model. They are crystal clear on how they are going to make money and provide a return to investors. Wannapreneurs are still trying to figure these things out.
The entrepreneurial journey is exciting, all-consuming, and fraught with substantial risk. Lots of people want to take it beyond a few steps, but most people do not. The best way to test the waters is by joining an accelerator like theFounder Institute, that does not require you to give up your day job. Being a serious wannapreneur is the first step on the journey to becoming a successful entrepreneur. For those of us looking to invest, provide services, or join a startup venture, it’s prudent to know exactly where those leading it are on this journey.