When you hear the word “entrepreneur,” you might think of someone starting up a tech company in their garage and taking it to a multi-million dollar enterprise. However, there are many different types of entrepreneurship, and some remain rather small throughout the lifetime of the company.
Wearing many different hats is common in today’s global, digitized economy. Your business model or dream may not fit perfectly into a single entrepreneurship type. They might serve many different types of customers. One example is a publishing company. They serve both the authors they publish, making them a business to business (B2B) entity and they sell books to readers for their business to consumer (B2C) portion.
Those who start their own businesses have a passion to change the world around them. According to the Small Business Administration (SBA), there are approximately 31.7 million small businesses in the United States. Of course, some entrepreneurs start out large thanks to investor backing. The vast majority, however, begin on a miniscule budget.
What Is Entrepreneurship?
The term “entrepreneur” can be a bit hard to define, because it covers a lot of different roles. In a nutshell, if you make money from something you create, sell or invest in, you may be an entrepreneur. You likely have an independent spirit and vision for the future.
Entrepreneurship is about building something, but your product or service isn’t always tangible. Entrepreneurs are creative, determined and have a vision no one around them does. They tend to be leaders in their communities, families and at work.
What category do you or your idea fall into? In general, entrepreneurs start and run a business. However, there are different ways to get there. There are many basic types of entrepreneurship. We’ll look at a few, but you may even fall into a subcategory of one of these.
1. Small Business
Probably the most common of the types of entrepreneurship is the small business model. This would be any business with typically less than 500 employees. There is some variation, depending upon the industry. If you’re unsure, check with the IRS to see how they classify you and talk to your local SBA office.
Did you open a bakery in your town? Now you’re considered a small business. If you eventually start your own manufacturing and employ 10,000 bakers, your classification changes. A small business entrepreneur knows they will need the support of their family, community and good old-fashioned work ethic.
Small business owners work hard and often wear many different hats. You’re likely the cashier, accountant and marketing guru in your store. Growth typically occurs in spurts and when the owner opens additional locations.
One of the biggest challenges small business owners face is learning to delegate tasks. Early in the life of the business, they likely did most things. However, as the company grows, their energy is better used toward spurring innovative ideas. Farming out tasks such as marketing and bookkeeping becomes necessary to success.
Some entrepreneurs come up with a completely new way of doing things or a concept no one else ever thought of. If you’re an inventor or you have a truly unique idea, you may be an innovative entrepreneur. Inventors fall into this category, always finding a better way to overcome problems.
Some examples of innovative entrepreneurs would be Bill Gates, who invented the Windows Operating system, taking computers from something where you had to know DOS coding to use to a what you see is what you get (WYSIWYG) environment. Mike Lindel of the My Pillow fame, took a common item and added his own twist to it. You can likely think of other examples of improvements to ordinary products.
No one can keep up with an innovator, because they have unique products and ideas the rest of the world doesn’t offer. Other companies might knock off something you invent, but you’ll have five other ideas in the pipeline. You’ll need to navigate the world of trademarks as an innovator.
One of the biggest challenges you’ll face is figuring out how to get others on board. How can you show them your vision? Use computer aided design, 3D models and presentations to open your world up to investors and support staff.
Another of the types of entrepreneurship is the hustler mentality. This is a person who might not have a unique idea or even an unusual product. They simply work harder and smarter than anyone else. They might find a product they believe in and share it with the world.
The hustler business owner tends to start small, such as a local real estate agent who began in the industry, started buying rental properties and flipping houses, and eventually worked her way up to a multi-million dollar a year income. However, they can own any type of business you might think of. Some sell products out of their trunks or at local fairs and trade shows.
The advantage of a hustler is that no one will outwork this person. They also can start on a shoestring without waiting for investors and build something out of seemingly nothing. They don’t have to spend years in development of a new product. The hustler simply take what’s already been created and hustle their way into profits.
Reselling is a popular trend at the moment. These entrepreneurs fall into the hustler category. They might go to a local garage sale, buy something they feel they can flip for a profit and list it on one of the third-party selling platforms such as Depop.
Hustlers do best when they specialize in a category and learn values and trends. The more this entrepreneur knows, the better deals they can find to resell.
4. Buyer Entrepreneur
Most people will not fall into this type of entrepreneurship. The buyer is already wealthy. They look for opportunities to invest in companies they feel will be successful, acquiring them and letting them continue business as usual with a few tweaks.
If you’ve ever watched Shark Tank, you are familiar with this concept. People present an idea and the sharks decide whether to invest or not. The idea must be a solid one with potential for profit both for the business owner and for the shark. Otherwise, there isn’t a reason to invest in the startup.
In order to invest in other companies, the buyer entrepreneur must already be successful or have the backing of rich investors. An example of this type of business would be Google, who has acquired many smaller companies and gobbles up the competition and unique new ideas.
Becoming a buyer is pretty risky. You must understand business inside and out before investing your money in another entity. You also give up a lot of control while someone else runs the business, so you better be sure they have a similar work mindset to yours.
They say imitation is the sincerest form of flattery, but it doesn’t seem that way when someone takes your business idea and does it better. Out of the types of entrepreneurship, imitators may be the most controversial. The imitator sees a business idea they like and immediately starts wondering how they might improve it.
An example of an imitator would be someone who likes Uber’s model, so they start their own ride sharing app. They don’t like a few things Uber does, so they tweak their policies to improve on the idea. They learn from the original business’s mistakes, add their own twist to it and sometimes steal business from the original company.
If this type of entrepreneurship appalls you, consider how you might protect your business from imitators. What is proprietary about your product or service? Unfortunately, many small businesses are easily copied, so you’ll have to really think outside the box if you want yours to be unique enough to stand out.
Also, understand that it is hard to compete against an established business with money and a positive reputation. Why should a customer choose you when they already have someone offering the product or service? Unless you can bring something new to the table, save them significant money or improve on the other business model, you may have an uphill battle.
The researcher entrepreneur studies many different ideas and fully vets all aspects of starting a new business. They know the statistics and the odds of success before they invest a dime. They may even have a list of the potential pitfalls and what trouble areas they’ll run into as the business goes.
Researchers understand the risks involved before they open a company and are likely to be highly successful. However, a big disadvantage of a researcher entrepreneur is they may not have a passion for what they’re doing. They simply choose the least risky venture.
If you plan to study the market and go with whatever has the best prospects, figure out how to tie your passion into the business. You don’t want to toil at a business model you despise. Is there something you can get excited about, even if just adopting a secondary cause.
One advantage of researcher entrepreneurs is that they don’t tend to let emotion drive their decisions. Everything is measured and tested and the best decision possible made.
One example might be Bombas socks. It’s hard to get overly excited about selling socks. However, because they tied the business model with helping others, the idea of every sock sold suddenly gives them purpose.
Some people start businesses as a side hustle. They have no desire to quit their day job, but they want a little extra money on the side. They may have a passion for art or some other craft and want to share it with the world. The solopreneur is a one-man or one-woman show. They don’t have any staff and they don’t want to grow beyond a certain point, because they don’t have the time to bother with scaling up.
The solopreneur is one of the types of entrepreneurship which falls into other categories as well. It could be defined as a small business, tech or fall into any other category. The advantage is you can start a solopreneurship inexpensively. The disadvantage is that you’re unlikely to grow past a certain point until you change your model.
One example might be a fashion video blogger. It’s going to be difficult for the vlogger to grow past a certain point because they are the face and product of the brand. They make their money off video views. No one else can quite do what they do because it’s all based on their individual personality.
How could a one-person business expand? You could bring in other personalities and train them. Guest vloggers might spur even more views. You could hire a videographer to film and edit for you, as those tasks can be time consuming. Another idea is paying someone to upload your videos and promote them.
Overcoming the habit of doing everything yourself isn’t easy. Solopreneurs may choose to intentionally keep a business small to utilize it as a side hustle. Others want to grow but aren’t sure how.
One possibility it starting a small one-person business, but as it starts to grow, bringing in more helpers. Of course, you’re no longer a solopreneurship when you hire employees, but you can move beyond where you thought possible. Who knows? You may even wind up quitting the day job and turning your side hustle into a main gig.
8. Social Entrepreneurship
One of the most interesting types of entrepreneurship is social. This is a business that starts because the founders see something in society that needs changed. Perhaps they notice local school children go hungry in the summer. They want to set up a program to feed those kids, so they start a business selling personal chef services and donate the profits to meals for school children.
Some examples of social entrepreneurship include companies such as Cuddle + Kind, where they feed children and give jobs to women in impoverished countries. Boombas, as mentioned above, is also an example of a company that started to help provide socks to those in need of them. Every time they sell a pair of socks, they donate a pair.
This particular type of company isn’t in it only for the profit, but also to help make the world a better place. The owner tends to be idealistic and involved in many aspects of a cause they care deeply about. They may care less about high profits and more about improving the world around them.
One of the biggest challenges with this type of entrepreneurship is not getting so set in your ways that you lose sight of the big picture. You must also adapt as society and surroundings change. Understand there are various viewpoints other than your own and be respectful even when you disagree.
Why Type Matters
Understanding what kind of entrepreneur you are helps you know what your strengths and weaknesses are. There are dozens of ways to define a business owner. The ones above are some of the most common models of company structure. What do you relate most to and how can you apply your knowledge toward growing a thriving organization?
For many small business owners, they’ll start with one type of entrepreneurship and grow into another. The ability to adapt and find agility can be the difference between success and failure.