Entrepreneurship is an extremely broad category, and investors want to bet their money on someone who not only understands this but embraces it. Your business plan needs to reflect the kind of entrepreneur that you are or plan to be, which in turn influences the later development of your idea.
Understanding what you want out of the business from the very beginning can give you a solid growth plan and indicate to investors what they should expect in the months or years to come. Of course, you cannot identify which entrepreneur you are without knowing the different types. Some of the key types of entrepreneurship that you may identify with include the following:
1. Small business
A small business entrepreneur has more conservative resources and tends to be willing to wear several different hats and put in a lot of effort. In this world, innovation is not often the driving force of the business. Instead, innovation involves putting a new twist on something that already exists. This distinguishes your product or service from others that are on the market and helps you attract customers.
With this type of business model, most of the income goes toward paying employees rather than being reinvested to drive expansion. Another way of looking at it is that the point of small business entrepreneurship is to serve the community, not grow into a larger organization. Frequently, small businesses are staffed by friends and family members. Some great examples are restaurants, corner stores, and dry cleaners. These businesses all meet an extremely important need in the community while generating enough income to support the lives of the people who work there.
2. Big business
Big business entrepreneurs are driven to secure a large share of the market and continually grow the company. However, businesses tend to grow more slowly as they get larger. As a result, they are often driven by mergers and acquisitions, which can help them maintain a competitive advantage in the marketplace. Commonly, innovation is delegated to acquisitions, and much of the profits of the company are reinvested for continued research and development.
Big businesses leverage limited product and service life cycles to drive profits. Examples of these types of companies are Google and Microsoft, although plenty of smaller corporations would still count as a big business entrepreneurial venture. Since these companies aim for expansion from the beginning, they often require a lot of money to get off the ground.
The concept of social entrepreneurship is rooted in solving the problems facing society. Entrepreneurs of this ilk tackle issues like access to food, education, and money.
These companies turn a profit, but their driving mission is to make the world a better place. As such, much of the profits are reinvested into the community. While the ultimate goal of all businesses is to make money, investing in the community as well is an important part of the social entrepreneur’s plan. Nonprofit organizations can fall under this umbrella, but they will reinvest all profits into the community and have a much different relationship with investors. Socially conscious businesses can grow rapidly and become quite large, but they are not quite small or large business operations since they are focused on something completely different.
While innovation has already been discussed, there is a type of entrepreneur who is deeply rooted in invention. This type is more focused on ideas than business.
The venture follows from the idea. These companies change how people live fundamentally by offering products and services that are revolutionary and accomplish what other people have not. A great example of this is Apple, which introduced products like the iPhone that completely changed how people interact with technology. Innovative products alter how people think about their daily lives. Unlike big business entrepreneurs, innovative entrepreneurs are focused on creating new products themselves rather than acquiring other businesses to help drive innovation.
One of the newer varieties of entrepreneurship focuses on scalable business. This type of entrepreneurship has generated a lot of excitement in the investment world, becoming more common as a result.
The scalable entrepreneur focuses on lean operations at first. This means that not a lot of investment is required in the beginning. However, the company is designed to scale easily, which means that profits can increase sharply. Venture capitalists will invest in scalable businesses in the hopes of a massive return. Investors can bring in skilled managers to help with the scaling process to make sure everything goes according to plan. A key example of this type of entrepreneurship is Uber, which uses a simple app and was able to secure a massive market share in a matter of years.