A person who launches, develops and runs a new business venture, with all its associated risks, is called an entrepreneur. These are the people who turn ideas into reality, often putting their own cash on the line in the hopes of a profit. Entrepreneurship does not have just one meaning, however. There are as many different types of entrepreneurs as there are people, since one of the great joys of being an entrepreneur is the ability to operate outside the box.
The Characteristics of Entrepreneurship
The characteristics of an entrepreneur are many and varied. Passion, ambition, self-confidence, determination and resourcefulness spring to mind, but so do risk-taking and a tolerance for sleepless nights. It can be so challenging to keep going when the customers don't materialize and the funding doesn't come through. While it's certainly possible to succeed without the entrepreneurial spirit, you likely will have less luck in terms of the commercial success of your business.
Perhaps the main feature of entrepreneurship is a willingness to take risks. It's no secret that only half of small business startups survive beyond the fifth year. If you're not willing to take chances – to the point of putting your own financial security on the line – then you may not get your idea off the ground. Determination goes hand in hand with risk-taking. In the early days, it's just you, trying to get your idea to fly. You must have the nerve to take the lead and communicate intelligently as you stand before lenders, investors and the press.
One of the more underrated entrepreneurial characteristics is perspective. It's one thing to be passionate about your business, but quite another to keep going, day after day, without losing sight of the things that matter most. Many entrepreneurs choose this lifestyle for the freedom and autonomy it offers. These things are pretty meaningless if the work-life balance is all wrong and you lose your relationships along the way.
Classical Entrepreneur: Hands-On in the Business
We don't often think of restaurant owners, store owners, plumbers, auto mechanics and hair stylists as entrepreneurs, but these people are the backbone of the entrepreneurial community. The classical entrepreneur has usually worked in their industry for some years and feels it is time to start a small business of their own. There's often no need for too much planning since the entrepreneur already knows how to do his job. It's just a case of finding a location, staff and customers to get the business up and running.
Traits that distinguish a classical entrepreneur:
- Usually works in a business that has been around for years.
His work function is easy to describe –
he would call himself a "joiner" or "baker" or a "small business owner" rather than an "entrepreneur." Plays an important role in the day-to-day management of the business. The entrepreneur knows everything about the job, but may need help with the strategic and governance parts of the business (choosing the right location, marketing, expansion, making the best use of technology, financing, tax returns and so on). His main goal is to feed the family, serve the customers well and create jobs. Development and growth may not be a huge priority and change may not occur until a younger generation takes over.
Innovative Entrepreneur: The Next Big Disruptor
If you have an idea for the next Facebook, Dropbox or My Fitness Pal then you probably fall into the category of innovative entrepreneur. These people think mainly of building a business that will scale up quickly so they can sell it to one of the big corporations for millions of dollars. They often come from a science or technical background and are adept at spotting new technologies and consumer trends. Their approach is to rapidly develop ideas and products to meet these new requirements.
Traits that distinguish an innovative entrepreneur:
- Business ideas often (but not always) fall in the fields of software, apps, communication, marketing, business intelligence and similar fields.
- Innovative entrepreneurs may be straight out of graduation and/or have little practical experience in the business area they're innovating.
- There's a strong focus on trend-spotting, marketing and scalability. Few have direct contact with customers.
A big part of the role is looking for investors
these businesses are not usually suitable for bootstrapping.* The entrepreneur is motivated to blaze new trails and imagine new ways to create value.
Social Entrepreneur: Doing Good in the World
Social entrepreneurs are driven by a desire to create positive change in their communities and society at large. They start businesses to help people and be a force of good in the world – they do not measure success in terms of profit alone. A good example is Grameen Bank, the "bank for the poor," which provides collateral-free micro-loans to the poorest of the poor in Bangladesh. Founder Muhammad Yunus received a Nobel Prize for his work in 2006.
Traits that distinguish a social entrepreneur:
- Driven to achieve large-scale social change.
- Operate from a "triple bottom line" perspective of people, planet and profit.
- Combines elements of innovation to find and act on an opportunity and elements of classical entrepreneurship as the entrepreneur tends to be hands-on with the business and the cause it's supporting.
- Profits tend to be reinvested in the enterprise rather than distributed to shareholders.
- Social entrepreneurs are motivated to find meaning in their work and make a difference to others.
Serial Entrepreneur: Launches Businesses Repeatedly
The serial entrepreneur's sole job is entrepreneurship. She will have created several companies – some successful, others not – and is constantly looking out for the next big opportunity. These entrepreneurs do not get invested in their businesses over the long-term. Rather, they launch and grow businesses to cruising speed then sell them and use the profit to start a new venture. Virgin founder Sir Richard Branson and media star Oprah Winfrey fall into this category.
Traits that distinguish a serial entrepreneur:
- Launches businesses repeatedly.
Is skilled in the art of business creation –
developing a strategy, securing investment, manufacturing or distributing a product, mobilizing teams and setting up the operational and management function. Plays little or no role in the day-to-day management of the business. The main difference between a serial entrepreneur vs entrepreneurs of other types is the exit strategy. Serial entrepreneurs plan to exit their ventures before they even start them, according to a predetermined strategy, either by selling the business or handing it over to managers.
Solopreneur: The Lone Wolf
Solopreneurs are one-man bands who operate their businesses alone and manage all aspects of the business themselves. Freelancers fall into this category. Many work a conventional job in a service-driven industry before launching out on their own in the hopes of better hours, clients and pay. Others – so-called lifestyle entrepreneurs – choose a business that reflects their passion. They are focused on creating the lifestyle they want for themselves such as time for a hobby, travel or preserving time with family.
Traits that distinguish a solopreneur:
- Works alone.
- Usually sells his professional skills as a service (graphic designer, transcriber, PR consultant).
- May not think of himself as an entrepreneur or as a business, but rather as someone who earns money in a different way to an employee.
- The business often reflects what the solopreneur finds interesting and gives him the lifestyle he desires.
- The motivation to start the business may be dissatisfaction with the conventional work experience or the desire to take back control.