Entrepreneurship is the process of planning, organizing, operating, and assuming the risk of a business venture. An entrepreneur is someone who engages in entrepreneurship. In general, entrepreneurs start small businesses. Small businesses are an important source of innovation, create numerous jobs, and contribute to the success of large businesses.

In choosing strategies, entrepreneurs have to consider the characteristics of the industry in which they are going to conduct business. A small business must also emphasize its distinctive competencies. Small businesses generally have several distinctive competencies that they should exploit in choosing their strategy. Small businesses are usually skilled at identifying niches in established markets, identifying new markets, and acting quickly to obtain first-mover advantages. Small businesses are usually not skilled at exploiting economies of scale. Once an entrepreneur has chosen a strategy, the strategy is normally written down in a business plan. Writing a business plan forces an entrepreneur to plan thoroughly and to anticipate problems that might occur.

With a strategy and business plan in place, entrepreneurs must choose a structure to implement them. All of the structural issues summarized in the next five chapters of this book are relevant to the entrepreneur. In addition, the entrepreneur has some unique structural choices to make. For example, the entrepreneur can buy an existing business or start a new one. In determining financial structure, an entrepreneur has to decide how much personal capital to invest in an organization, how much bank and government support to obtain, and whether to encourage venture capital firms to invest. Entrepreneurs can also rely on various sources of advice.

Several interesting trends characterize new business start-ups today. There are several reasons why some new businesses fail and others succeed.