explaining the business

one of the challenges of being an entrepreneur is explaining what an entrepreneur does?

Most people think it is about how much a entrepreneur makes - financially - rather that is the 'how much' and not the 'what he does'?

For most people being an entrepreneur is about being in business, but what is business, rather what makes the business tick, why choose a particular business, where to set up a business and when to set up a business?

For others it has something to do with investing, financial management, manufacturing, and labor. But these are again just drivers of a business but not the essence of business.

However, business is about the study of how to get the most out of life — the choices we make, given that we can't have everything we want. It is the study of infinite wants and finite means, the ability to bridge the two and own a market niche.

For the layman this is something that he is not able to identify with much less understand, so he equates a business to revenues. However what he needs to look at is the ability that can generate revenues not just for today but for the future.

And since business is about choices, about the finite means to achieve the infinite want, it is about what it costs to achieve the infinite with the finite - the opportunity costs.

It is not just about the opportunity cost but also the ability to choose an investment despite the opportunity cost such that the returns from the investment far outweigh the opportunity cost it bore initially.

On a simpler note it is why we get ourselves educated so we can get better jobs. While we are educating ourselves we are losing out on an income (opportunity cost) but our education (investment) we hope will get us a better return than without an education.

The other attribute about being an entrepreneur is about specializing in an activity.
By specializing in a very small set of skills, selling those skills in the marketplace and relying on the skills of others who have specialized in activities we don't do or cannot do. (Adam Smith - Wealth of Nations)

We try as far as possible to specialize only in that activity where players are fewer so we can get a greater reward whereas we leave out or outsource those activities that does not render a greater reward to us by being self sufficient.

We specialize because the costs of self-sufficiency or rather the costs of doing everything is high, so we specialize only in those activities where we can generate a greater reward - as we have finite means.

We are all given just so much time here, getting the most out of life means using that precious time wisely. Using that time wisely means using and understanding opportunity cost and that ability to choose one opportunity over the other.