Becoming an entrepreneur requires passion, perseverance and fervor. Whether you are just starting out and opening a business, or developing an existing one, understanding the different types of entrepreneurship is an important part of your journey to success and business ownership.
By focusing on the unique differences of entrepreneurship, you’ll be able to address your business’ challenges with a deeper awareness of how you should handle them and what types of resources you’ll need. From picking which type of venture you want to develop, to creating a business website that targets the right audience, there are many steps you’ll need to take to become a successful entrepreneur.
What are types of entrepreneurship?
While the basic principles of entrepreneurship are the same—planning, starting and operating a business—the distinct nuances and skills needed vary depending on the type of business you plan to start. Becoming an entrepreneur requires the ability to define these differences, and pinpoint the unique elements that are needed.
Traditionally, entrepreneurship is categorized into four main types: small businesses, scalable startups, large companies and social entrepreneurs. These models cover the fundamentals of starting business ownership and focus more on the company itself, rather than the qualities of the entrepreneur. However, just as the world continues to change, so do businesses. This means new opportunities for risk-taking and innovative game changers to pave the way in diverse entrepreneurial ways.
With this in mind, even though there are quite a few similarities when it comes to the challenges that all business owners will face, there are certain types of entrepreneurship defined by the skills, characteristics, and personality traits of the entrepreneur. At the end of the day, it is the way you choose to run your business that makes them differ from one another.
10 most common types of entrepreneurship:
01. Small business entrepreneurship
This type of entrepreneurship refers to any kind of small business that has been created by one person, without the goal to expand or franchise. For example, if you were planning to open a nail salon, a general store or a taco truck your goal would be to launch a single store. You’d likely plan on hiring local employees or even family members to get your business off the ground and would need to invest your resources directly into the business.
In this type of business, you only make a profit if your company does, meaning you need to be very driven, responsible and committed to your vision. In 2020, there were 33.7 million small businesses in the United States, accounting for 99.9% of companies, proving that small business entrepreneurship is on the rise.
02. Scalable startup entrepreneurship
Rooted in the idea of changing the world, scalable startups focus on how to create a business model that is both repeatable and scalable (more sales with more resources). From the get go, this style of entrepreneurship begins with the hope of rapid expansion and big profit returns. Many startups have a similar ‘garage to riches’ narrative, beginning with a simple idea that is brought to life by the tenacity of entrepreneurs with the support of investors. Amazon, Google and Apple are all examples of trailblazing startups that have changed the world.
In order to establish a successful startup, you need to pay attention to the amount of money you have (which is often supported by venture capital investors) and the human resources behind your business. The key to starting this type of business model is knowing the long-term plans for profitability and the ways in which your company will grow, both for the sake of your investors, and your own.
Unlike an entrepreneur, who is also the founder, designer and manager of a business, an intrapreneur is a self-motivated, and action-oriented employee who thinks out of the box and works as an entrepreneur within a company. Intrapreneurship is a way that companies can support and encourage employees that have entrepreneurial spirit.
Shutterstock, for example, hosts an annual 24-hour hackathon which lets employees pursue innovative ideas that will benefit the company. Another example of an intrapreneurial innovation is Facebook’s ‘Like’ button which was also created in a similar hackathon event, which is now an integral part of the brand.
04. Large company entrepreneurship
Large company entrepreneurship refers to companies like Disney, Google, Toyota, and Microsoft who have finite life cycles, as in, they keep innovating and offering consumers new products that are variants around their core product-line.
A distinguishing feature of this type of entrepreneurship is that it is not starting a new business, rather creating new products or subsidiaries within an existing company, or acquiring smaller businesses (like when Facebook bought Instagram and WhatsApp). More specifically, these divisions are focused on reaching new markets, expanding the customer base and growing the business - sometimes via new company sites.
Another component of large company entrepreneurship is a commitment to building company culture, ensuring that as a company expands all employees are a part of the growth.
05. Imitative entrepreneurship
Imitation is the best form of flattery, and an imitative entrepreneur (also referred to as an adoptive entrepreneur) is one who copies what successful innovative entrepreneurs have previously done, most often with lower financial risks and limited resources.
If you are using an imitative entrepreneurship style, in essence you are copying an idea but finding ways to improve it. By taking note of others' mistakes and finding creative ways to make a business better, you can become a lucrative entrepreneur.
06. Innovative entrepreneurship
Innovative entrepreneurs, as the name suggests, are constantly trying to come up with the next big thing. If you have groundbreaking ideas of how to start a business or specific services and products that can become business ventures, you might be an innovative entrepreneur.
As an innovator, you know you must always be aware of the current market conditions to find original and creative ways to disrupt them. Innovation refers not only to product ideas but also the ways in which business is conducted. Innovative entrepreneurship is all changing the status quo and pushing boundaries.
07. Buyer entrepreneurship
You’ve probably heard the saying “money makes money”, and for a buyer entrepreneur this definitely rings true. Instead of figuring out how to raise money for a business, a buyer entrepreneur purchases either a developing or well-established company and helps them thrive.
Unlike investors, a buyer entrepreneur is involved both financially and personally in the business, remaining active and directly helping the investment to grow. It is not uncommon for buyer entrepreneurs to hand off their leadership to someone else at some point, but they always maintain an active part in the businesses they purchase.
08. Researcher entrepreneurship
Researcher entrepreneurs rely on facts, data and the belief that with the right preparation and knowledge will be more likely to succeed. If this sounds like you, this is exactly what research entrepreneurship is all about—a great business idea paired with academic research, and an understanding of how to stretch limited resources to the max.
Take a look at Nobel Prize winner and physicist, Theodor Hänsch, a researcher entrepreneur who co-founded MenloSystems, taking his winning optical frequency comb technology and using it to make products for the market.
09. Hustler entrepreneurship
Don’t let the name throw you off, a hustler in business refers to a self-starter, a highly motivated person who is driven to succeed. This type of entrepreneurship style grows directly from the entrepreneur, who must be confident, fearless and have rigorous work ethic.
If you are the type of person who can sell anything to anyone, is always aware of the next big thing and is able to recognize opportunities, you might just be a hustler after all.
10. Social Entrepreneurship
Social entrepreneurs are innovators whose main goal is to create products and services that both benefit the world, and make money. Social entrepreneurship relates to nonprofit, for-profit, or hybrid companies that are committed to social or environmental change. Some examples include educational programs, microfinance institutions, and companies that provide banking services in undeveloped countries.
Toms shoes was a pioneer of social entrepreneurship, starting in 2006 offering a one-for-one sales model that gave a pair of shoes to a child in need for every pair of shoes sold. What separates social entrepreneurship from other types is the measure of success, in that the goal is not focused solely on financial gain but also on the social impact.