Types of Entrepreneurship: How to Become an Entrepreneur

An entrepreneur is an individual who begins a new business from scratch and then stays on to manage that business. Entrepreneurs often take a financial risk when they start new businesses. But if they have innovative ideas, a strong business plan, and adequate funding, they can enjoy meaningful success and reap the financial rewards that come along with it.

When you think of successful entrepreneurs, your mind might jump to the tech industry. However, you can find entrepreneurs beyond Silicon Valley, like in the arts, medical field, and nonprofit space.

There are four different types of entrepreneurs. Here is how each kind of entrepreneurship functions in the broader marketplace:

1. 1. Large company entrepreneurship: Large company entrepreneurship starts with a new business spun off from an existing conglomerate. One example is BAMTech, a digital streaming company that Major League Baseball created. BAMTech powered the streaming of Major League Baseball games and serviced other streamers. MLB later spun off BAMTech as its own company.
2. 2. Scalable startup entrepreneurship: A scalable business starts small but seeks to become a large company. These kind of businesses require the kind of entrepreneur who not only has a great new idea but also has a passion for expansion and building market share. An example of a scalable business is a grocery store that begins with a single location and later—via expansion, mergers, and acquisitions—becomes a regional or national chain.
3. 3. Small business entrepreneurship: This type of entrepreneurship focuses on a single business with no distinct ambition to expand. Examples include small business owners like hairdressers and plumbers, as well as owners of retail stores with a single location.
4. 4. Social entrepreneurship: Social entrepreneurs start new companies to address societal problems and promote social change. They typically organize their businesses as nonprofits. These types of businesses aspire to bring in as much money as required to fund their charitable initiatives.

In simple terms, entrepreneurship features five major stages:

1. 1. Idea: Entrepreneurial ventures begin with a business idea, often involving new products, new technologies, improved services, or a solution for social problems.
2. 2. Plan: The entrepreneur then drafts a business plan for their new venture, proposing a business model and a set of goals.
3. 3. Funding: Next, an entrepreneur seeks venture capital to fund the fledgling business. This can come from professional venture capitalists, from small business loans, from crowdfunding campaigns, or from angel investors like family members and friends.
4. 4. Operations: With an idea, a business plan, and funding, the entrepreneur can launch their business. Unlike passive investors, entrepreneurs stay involved with their companies or nonprofits. They often serve as the initial CEO or they chair the company’s board of directors.
5. 5. Growth, stability, or dissolution: A successful business can spend many years in the startup phase. Eventually, it settles into long-term stability, expands, or dissolves.

Whether you strive to become a small business entrepreneur, a scalable business entrepreneur, or a social entrepreneur, you need to employ a few key tactics to reach your goals:

• Accept a degree of risk tolerance. Being your own boss and launching a startup business involves a strong amount of risk-taking. Startup entrepreneurs may choose to invest their own money in their business ventures while foregoing income from a day job. While understandable, risk aversion may not mesh with an entrepreneurial mindset.
• Ask for help. Aspiring entrepreneurs should seek mentorship from established figures in their field. Look to the founders and cofounders of companies you admire. Ask them to review your business plan and provide you with honest feedback. Keep an open mind to what they say, even if it bruises your ego. Learning from the best can go a long way toward propelling your business success.
• Build your financial literacy. Entrepreneurs often manage their own companies’ economic development. They need a working comfort with money—from fundraising to managing cash flows to accounting to tax compliance. They also need to hire trusted partners who understand corporate finance in their own right. Many innovative ideas die on the vine because the inventor lacked the monetary savvy to bring their products to the world.
• Develop an understanding of markets. Many business entrepreneurs create innovative products that solve problems they experience in their own lives. When the entrepreneur’s pain points align with the broader marketplace, it bodes well for the new product. Your venture might fail if your business or product does not consider what the general public wants.
• Embrace hard work. The prototypical entrepreneur is a bootstrapping hustler, a person who works hard to staff and fund their company.
• Hone your connections to money. Access to capital is the secret behind most startup successes is access to capital. This shuts out people who don’t travel in wealthy social networks. But even if you don’t know people who can write you a big check, you can cultivate interest through crowdfunding campaigns, networking opportunities, and cold calls to investors.

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