Entrepreneurship is the process of starting a business or building upon an existing one. The goal of entrepreneurial processes can be to make a profit, make a meaningful impact on society, contribute to social good, or combine the two.
The process can be risky and uncertain, requires long-term determination and persistence, and, often, acceptance of failure. Despite this, many people set out to be entrepreneurs as successful ventures can improve lives, change the world, and contribute to overall feelings of personal success.
While you may associate entrepreneurship with cut-throat venture capitalists, there are various reasons and end goals that inspire people to set out on an entrepreneurial journey. In this post, we’ll discuss eight different types of entrepreneurship and give examples of businesses that expertly model each category.
Eight Types of Entrepreneurship
While all types involve innovation and ingenuity, different focus and overall intent distinguish some entrepreneurial ventures from each other. Below we’ll go over seven different types of entrepreneurship models.
Small Business Entrepreneurship
Small business entrepreneurship involves starting a business, usually local, that an entrepreneur believes can benefit the city or town they operate in. It’s a common type of entrepreneurship, as most businesses are small businesses. In fact, the U.S. The Small Business Administration says that 99.9% of all companies are small businesses.
Small business entrepreneurs usually own their business, sometimes along with family members, and the initial intent usually isn’t to achieve extremely high profit margins. However, a small business entrepreneur may undoubtedly try to grow their business into a larger enterprise after periods of significant success.
These businesses typically employ residents of their town and sometimes family members. Some examples of small businesses you may interact within your community are non-franchise salons, restaurants, lawn service providers, or your favorite pet groomer.
Bonita Hair Salon and BlowDry Bar, a Boston-based hair salon, is an excellent example of small business entrepreneurship. Nailah Montalvo, the owner, identified a local need and created a business that welcomes and celebrates a diverse clientele group. Montalvo says that her goal is to provide premium service to all her customers and create an environment that feels friendly and familial, an often-referenced experience with small, local businesses.
Large business entrepreneurship is the opposite of small business entrepreneurship. The term denotes larger businesses with a series of lifecycles from consistent innovation (which we’ll touch on below) by creating new products and services to meet evolving customer needs and demands. These businesses are already established and can grow from smaller companies. Still, the difference lies in that the founders, or entrepreneurs, are experienced business people with access to capital and resources that make it possible to grow.
These entrepreneurial ventures sometimes involve purchasing smaller businesses that can meet the needs of existing target markets.
Alphabet, the parent company for Google, is a great example of a sizeable entrepreneurial business. Between 2010 and 2011, the company averaged one acquisition per week of smaller businesses, and many Google services originated as products first sold by these companies.
Alphabet still purchases other businesses, like 2Web Technologies in 2016 to create Google Sheets and a recent deal with FitBit, a health-equipment company. Overall, the business has acquired and integrated 244 businesses and their systems.
Scalable Startup Entrepreneurship
Scalable startup stems from existing businesses, and their founders believe the company has the potential for infinite growth after identifying a market opportunity. Scalable business entrepreneurs also have access to funds or obtain funding from venture capitalists and angel investors. These endeavors also focus on rapid growth and big profits.
Tech companies, like Facebook, are typical examples of scalable startup entrepreneurship. The social network powerhouse of today began as a small platform for Harvard students to connect with their on-campus friends. It’s since grown into a large-scale, for-profit business that still accommodates human-to-human connection in addition to business advertising.
Although not a tech company, Starbucks can be seen as a scalable startup. The coffee company began as a small business in Seattle that was eventually purchased by a previous employee, Howard Schultz, after international travel. Schultz visited Venice and noticed the city’s coffee-culture and felt as though he could replicate it in the United States. He created his own company, purchased his previous employer, and built a powerhouse. At present, Starbucks has 15,000+ locations in the United States and 16,000+ abroad.
Social entrepreneurship is different from other models on this list, as its overarching goal is to address a social need and less to generate profits. A social entrepreneur wants to address social problems with their products or services and genuinely impact and improve people’s livelihoods. These problems can be environmental, cultural, social, and economic issues.
The resulting businesses can be for-profit, non-profit, or a hybrid, but acquired funds typically support operations, and extra capital is redistributed into the community. They can be small businesses and large, scalable companies that grow and operate in different parts of the world.
Social entrepreneurship is unique because, unlike other ventures, end products don’t always follow the traditional business structure. For example, mutual aid funds and community fridges are community-organized. They exist to meet a social need but are run by volunteers and don’t always follow a hierarchical structure.
195essential is owned by a father-daughter duo in Massachusetts and came to market during the coronavirus pandemic to support essential workers. The owners recognized a need and crafted an entrepreneurial venture dedicated to supporting their local communities’ essential workers.
While 195essential is an example of social entrepreneurship, the founders have also stated an interest in expanding to donate to different charities for various social justice issues, which can apply to scalable business entrepreneurship.
TranSanta is another great example of social entrepreneurship. You can’t technically call it a business but rather a community-led movement to deliver gifts to transgender youth in need. It runs out of an Instagram account, where trans youth submit stories and requests (shown below), and community members can visit their Target wish lists and anonymously send them gifts.
While social, scalable, and large and small business entrepreneurship are the main types of entrepreneurial ventures, there are additional models that we’ll discuss below.
Additional Types of Entrepreneurship
Innovative, imitator, researcher, and buyer entrepreneurship are not alternative models but rather additional descriptors of the entrepreneurs who start different ventures. We’ll outline them below.
Innovative entrepreneurs are continually coming up with new ideas, products, and services that they believe will benefit a target market. They can be small business owners, CEOs of scalable startups and large businesses, or community organizers hoping to address evolving social needs in their communities.
Imitator entrepreneurship uses existing business ideas as inspiration with the intent to improve upon them and provide additional value to customers. Imitator entrepreneurship is less risky, as there is already an established path to follow.
Researcher entrepreneurs could be involved in any of the four main types of entrepreneurship. These people establish business ventures after a long-term research process that relies on facts and data. They’re cautious and detailed and create in-depth business plans to guide their processes.
Buyer entrepreneurship involves business people with access to significant capital to support their processes. These entrepreneurs buy companies or absorb smaller businesses because they think they can achieve long-term success or supplement existing products and services.
For example, Google has acquired many smaller businesses that it believes are valuable additions to its existing products.
All Business Ventures Hope To Solve A Need
Regardless of their type, all entrepreneurs are entrepreneurs because they care about and believe in the businesses and organizations they want to create. The differences lie in their focus areas, business strategy, and their end goal, like solving a local social issue or generating enough capital to create a large-scale enterprise.
Originally published Feb 1, 2021 8:30:00 AM, updated February 01 2021