The 7 Different Types of Entrepreneurship
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In the United States, 4.5 million entrepreneurs set up a new business in 2020. This was 23% higher than in 2019 and the biggest increase so far in one year.
Not all of these businesses succeed, with a large majority failing within two years, mainly due to lack of funding.
Being an entrepreneur requires constant determination, passion and persistence. It is also a risky and uncertain path.
On the other hand, it is rewarding and gives a feeling of real personal success. Many types of entrepreneurship also make a difference to society.
For many, the dream of setting up a business is equal to making money, which is why entrepreneurship is so popular, not just in the US, but globally.
There are different types of entrepreneurships, each reflecting different kinds of business and goals.
This article will look at the types of entrepreneurship and how to know which one is best for you. To do that, we will firstly define what entrepreneurship is.
Simply, entrepreneurship is conceiving of, starting and then running a business. It is creating a venture for financial gain that is completely new.
Businesses are all variable, so an entrepreneur could start up a big business or be a sole proprietor. Each type of entrepreneur will have different objectives and need to possess different skills.
Although the function of a business is to make profit, some entrepreneurs’ main motivation may be something else, such as making a positive social impact on society or creating a social conscience.
Knowing what type of entrepreneurship best suits you will help you in the creation of a business.
Here’s a selection of the most common ones.
Small businesses are on the rise, for example, people deciding to set up shop and run a business together.
The margins and resources are modest in comparison to bigger businesses, and profit is used as a wage for the entrepreneur and business owners.
A lot of hard work and endless hours will go into a small business, but the rewards will be unbeatable in terms of personal success and satisfaction.
The aim of a big business entrepreneur is to create a small business, but quickly upscale through expansion of products, more resources and increased investment.
Another way a big business can expand is to acquire other smaller businesses to add to their value of entrepreneurship.
Commonly, big businesses have a decent-sized capital investment to start with and are able to quickly scale the business. Sometimes, these businesses can fail soon after setting up if too many risks are taken to try and develop.
A social entrepreneurship is short for a socially conscious one. It is set up by entrepreneurs who want to change the world, with their business providing a product or service that does just that.
This kind of entrepreneurship will say its main objective is to make a difference, but the primary end goal still has to be making a profit.
An innovative entrepreneurship aims to change the way people live their lives with a completely new invention.
This will then make that business different to any other, as it has created an original product or service that no others offer.
This kind of entrepreneur is as it says – the person or people involved imitate an idea that has already been created, but expand or develop it to try and make it better or more profitable.
The imitator entrepreneur will want to work hard and eventually create something different but by using something that already exists initially.
A buyer entrepreneur will have money and use that to buy into a business they have interest in or think will be successful.
They may then change the business in terms of structure, services, ethos, objectives or a combination of these, with the goal of expanding.
The entrepreneur will be savv, only buying into already established businesses,and doing their research to ensure they are not taking a huge risk. Their money may come from owning a successful business themselves.
The hustler is your entrepreneur who will make a dozen cold calls to make one sale. They work hard, and have confidence and lots of belief.
A hustler entrepreneurship is motivated by ambition, rather than capital. It commonly starts with one person who wants to make the business venture big with very little investment, but plenty of hard work and determination.
Here are a few examples for each of the types of entrepreneurship mentioned above.
A small business entrepreneurship most commonly starts with one or two people, often related or known to each other, who want to run a small-scale business in whichever market they have chosen.
A mobile coffee van would be classed as a small business. It could be owned by a married couple who serve coffee to their local residents, and the couple live off the profits.
An example of a big business that aims to quickly upscale bigger is Facebook. Instead of competing with the likes of Instagram and WhatsApp, Facebook acquired them, letting them keep their status but owning rights and finances.
A big business like this would have capital invested from the start and would be able to invest more at the same time as expanding the team and resources.
Social entrepreneurship is for people who want to work towards helping the world, and one particular focus is saving the planet.
For example, a business is created by parents who are fed up with throwing away so much packaging when they buy food for their large families. They set up a business providing and delivering refill food and containers.
It may not make much profit, although the owners are possibly living off this wage, so it will need to make enough to fund them.
Innovation entrepreneurship is for those with creative minds and ideas. The idea may come before the business model, but the aim is to offer this innovative creation to the public, as it will make a difference to their lives.
The mobile phone is a good example of this. A simple idea was created, sold and has changed the lives of everybody.
An imitator entrepreneur will see a product or service and think how it can be changed. It may take time and research, and could need a few creators involved to work out how to reinvent the product.
An example of this is a company that has taken the original disposable breast pad and made one that is more comfortable and can be reused over and over. The material has changed to bamboo, and it can be washed.
The buyer with a wealthy pot of investment will do their research before buying another business, but it will be an already established one they can grow.
The buyer may own their own business, such as Google which has bought many smaller businesses, or a sole proprietor who wants to expand their portfolio – for example, a property investor.
A hustler entrepreneur could be the salesperson who has created a very simple product but wants to tell the world about it. They will go door-to-door and be at every trade show with the aim of getting a few sales and engage in networking.
As they have little capital, they may not give themself a wage until they have started making money.
An example of hustler entrepreneurship is Ray Kroc, a milkshake salesman who travelled across America and, when he saw the potential of the then small restaurant McDonald’s, was determined to make it a success.
Entrepreneurship is an ever-expanding area, and is likely to continue increasing each year.
It comes in all shapes and sizes, but the common factor is hard work, creativity, drive and determination.
If you are thinking of starting a business, you should firstly look at what type of entrepreneur you will be. This will help you to plan your path and achieve your goals.