- Of the several types of entrepreneurship, each has its own distinct goals, aspirations and measures of success.
- Some types of entrepreneurship focus on innovation or societal change, others strive for rapid expansion or growth from an existing business model and still others generate profits to support the entrepreneur’s lifestyle with no plans for expansion.
- Understanding the different types of entrepreneurship, and which one(s) align with your business aspirations, can help you make more informed decisions about the future of your company.
For those with an entrepreneurial spirit, often nothing is more exciting than embarking on a new business venture. New entrepreneurial ventures promise excitement, the chance at success and the opportunity to realize a new vision.
While each entrepreneur is unique, many share at least a few core characteristics that help them succeed:
Characteristics of Entrepreneurs
Entrepreneurs may share several overarching characteristics, but the type of entrepreneur you are — or aspire to be — could look very different from someone else's and may influence your goals, as well as shape the future of your business.
Here, we’ll discuss the five types of entrepreneurs and how their respective priorities and goals create unique businesses and distinctly affect consumers.
1. Social entrepreneurship
Driven by a desire to give back to the community, social entrepreneurs seek to offer solutions to important social problems, which may include:
- Addressing social inequality
- Engaging with environmental concerns
- Supporting more equitable economic development
Some social entrepreneurs may start a nonprofit, whereas others pursue profitable business ventures that give back to the community.
Social entrepreneurs have a strong vision for the world, and the financial goals of social entrepreneurs are centered on the company’s mission, often with a focus on effecting social change. As a result, a social entrepreneur’s markers of success can heavily weigh on positive progress toward an issue, instead of financial markers, such as profit generation.
Thus, the intent of social entrepreneurs differs from that of scalable startup entrepreneurs, who are concerned with rapidly expanding their business.
2. Scalable startup entrepreneurship
Scalable startup entrepreneurs dream big, focusing on innovative ideas that can expand their business and generate as much profit as quickly as possible.
Most scalable startup entrepreneurs:
- Find a gap in the market and focus on filling that need
- Seek to create a scalable business that’s ready to expand and serve a larger market
- Have high margins, as well as a lean and agile staff prepared to pivot as the business grows
With a large profit incentive, scalable startup entrepreneurs often seek to attract venture capital that will help with their rapid expansion. As well, scalable businesses are often favored by venture capitalists, because they can quickly gain a return on their investment. Because the focus is growth, key metrics for success may include gross margins, customer retention and conversion rates.
3. Small business entrepreneurship
Small business entrepreneurs are focused on creating and running their own business, either on their own or with the help of family members. This group of entrepreneurs includes many owners of mom-and-pop shops and boutiques, as well as trade workers and consultants.
Small business owners:
- Seek to make a living from their business activities and generate enough profit to support their family and lifestyle
- Typically aren't focused on rapid growth and expansion
- Instead of courting investors, they may choose to get a business loan for financing
Small business entrepreneurship has the potential to grow into large company entrepreneurship when the company grows rapidly, is bought by another larger company or if a family member takes the helm of the company and aspires to grow the company.
4. Large company entrepreneurship
Some businesses naturally grow over time, and large company entrepreneurship aims to grow a large company from an existing business model.
Large company entrepreneurship:
- Concentrates on generating profits, a focus that allows the business owner to sustain their lifestyle, as well as support the continued growth of the business
- Aims to continue growing the existing business model, a factor that distinguishes it from innovative ownership, which seeks to bring a completely new idea to the market
As a businesses customer base grows and evolves, a large company entrepreneur may acquire an existing company offering innovative services. This allows the larger company to meet new customer needs and potentially reach new markets.
5. Innovation entrepreneurship
Innovation entrepreneurs create their businesses with the intent of bringing completely new products or new ideas to market.
- Are creative problem-solvers that invent new products, services and solutions to improve their customers' lives
- Are often driven by a mission or vision for the world
- Focus on how their idea or product will change society
- Are sometimes called disruptors as they can change the business landscape in their industry or even create new technologies that affect society
Each type of entrepreneurship comes with its own set of goals, priorities and measures of success. Understanding the different types of entrepreneurship will ensure that you cater to your business model and practices accordingly.
The bottom line
Regardless of the type — or types — of entrepreneurship you pursue, launching a new business or nonprofit involves taking big risks. Whether an entrepreneur is trying to bring a completely new idea to market, launching a nonprofit or anything in between, funding is an integral part of starting and growing a business.
As you explore entrepreneurship and find the path that feels right for you, understanding your business funding options can help you make more informed decisions about how to launch and grow your business. Contacting a financial professional to review your business funding options can help your new venture come to fruition.