What is entrepreneurship?
Entrepreneurship refers to the process of conceptualizing, launching and running a new business entity with the aim of fulfilling a need in society. Individuals who create and run these entities are known as entrepreneurs.
As an entrepreneur, your main responsibility is to organize and run the enterprise professionally while at the same time managing the risks involved. Do you own a business? What type of an entrepreneur are you?
These are key questions that you need to ask yourself. The moment you understand what motivates you into entrepreneurship, you will have unwavering zeal to grow your business to higher levels.
There are different types of entrepreneurs which are broadly classified based on;
- The type of business
- The stage of development
- The technological aspect
- Clarence Danhof study
- Motivational aspect
- Type of ownership
In this post, we are going to look at the above various types of entrepreneurs in details to help you understand where you fit in.
Classification of Entrepreneurs Based On the Type of Business
1. Business Entrepreneurs
They can come up with a new product or service with the aim of filling a gap that exists in a market.
Business entrepreneurs can further be classified as either small entrepreneurs (those with small entities) or big entrepreneurs (those with big business entities).
They are charged with crucial responsibility of managing their businesses right from production to marketing their finished products.
Examples of business enterprises that are operated by these type of entrepreneurs include; bakery, salon and beauty, and printing services.
2. Trading Entrepreneurs
As the name suggests, trading entrepreneurs specialize in day-to-day trading activities. They are not manufacturers of products but they concentrate more on distribution and marketing.
Trading entrepreneurs look for under-served markets and they supply their products and services to potential buyers. Once, they establish a demand they act as a link between the manufacturers and consumers.
Examples of trading entrepreneurs include; wholesalers, distributors and agents.
3. Agricultural Entrepreneurs
Agricultural entrepreneurs are those who focus on the agricultural sector. They are mostly involved in the production, marketing, and distribution of agricultural-related products and services.
You can find them selling agricultural produce, fertilizers, seeds and seedlings, agro-chemicals, gardening tools and equipment or offering extension services.
4. Industrial Entrepreneurs
Industrial entrepreneurs specialize in industrial and production of different products that are needed in a given market. They conduct a market survey and identify the specific needs of consumers. Once, they are certain of what the consumer wants, they manufacture targeted products.
Industrial entrepreneurs range from small manufacturing units to large industrial corporations. Examples include; Industrial-chemicals, consumables, and automobiles accessories.
5. Corporate Entrepreneurs
Corporate entrepreneurs are those entrepreneurs who specialize in offering high-quality innovative skills and strategies that help in effective operation and management of other corporate entities.
They offer professional services to either improve the system of governance, human resource capacity building or system upgrades. Examples of corporate entrepreneurs are consultancy firms or trust.
6. Retail Entrepreneurs
Retail entrepreneurs are small scale and customer-oriented. They focus on what their customers want and they bring those particular products to their customers.
Most retail entrepreneurs operate business enterprises such as a book store, mini-supermarket, or a departmental store.
7. Service Entrepreneurs
Service entrepreneurs are those individuals who offer specific services to their target market. Most of them specialize in one or two fields and they concentrate on clients of a particular class in society.
Examples of service entrepreneurs include; dry cleaners, carwash, and hotel business.
Classification of Entrepreneurs Based On the Stage of Development
1. Classical Entrepreneurs
For classical entrepreneurs, their main aim is to maximize profits at a constant level. They are less dynamic and they don’t focus more on expansion and innovation.
Classical entrepreneurs may experience little to no growth in their enterprises since their main focus is just business survival and maintaining the status quo.
2. First Generation Entrepreneurs
A first-generation entrepreneur is a skilled and innovative individual who uses his unique skills to create an enterprise.
He is the sole vision-bearer and he combines different factors of production to create a marketable product or service through his innovative ideas.
A first-generation entrepreneur is the first to establish a business of his own. Even if some of these first generations of entrepreneurs may have come from business-oriented families, they use their innovative skills to create a new business which is different from the family business.
3. Inherited Entrepreneurs
These are individuals who run businesses that they inherited from their families.
Most of them were initially involved in running family businesses and they either inherit them or they expand and open branches in other regions.
Some inherited entrepreneurs also tend to add new products or services in order diversify and be a little different from their family businesses.
4. Modern Entrepreneurs
Modern entrepreneurs are always innovative and they tend to move with the current business trends and technology.
A modern entrepreneur is someone who is dynamic and he is ready to change in order to adapt to the current market demands.
Modern entrepreneurs are also referred to as innovative entrepreneurs.
Classification of Entrepreneurs Based On Motivational Aspect
1. Pure Entrepreneurs
Pure entrepreneurs are persons who venture into business after being trigged by eminent economic and psychological factors. Their desire to undertake entrepreneurial activities is driven by the passion of making a difference in the society, changing their economic status or standing out among others.
They are motivated to start impact-oriented enterprises and they have the required skills to manage the business and handle associated risks.
2. Spontaneous Entrepreneurs
As a spontaneous entrepreneur, the desire to venture into business activated by the natural talent that one has.
They have self-confidence, resourceful, and they are motivated to start their own venture or work as a group in order to tap their own talents.
Since they have a natural talent, they can easily succeed in their venture if they learn how to manage associated risks.
3. Induced Entrepreneurs
For the induced entrepreneurs, they have the potential of becoming entrepreneurs but they wait until there is ease of doing business.
Induced entrepreneurs only undertake their entrepreneurial activities when there are incentives and subsidies given by the government.
Government intervention policies such as financial support and technical assistance are the main driving factors that motivate these types of entrepreneurs to start new businesses.
4. Motivated Entrepreneurs
Motivated entrepreneurs are those individuals who venture into business as a result of self-drive in order to achieve a personal goal/desire. They are motivated by the fact that they want to see a positive change in their personal life or society.
Classification of Entrepreneurs based on Technological Aspects
1. Technical Entrepreneurs
A technical entrepreneur is a business person who has got adequate technical knowledge on a certain field and focuses mainly on production activities.
A technical entrepreneur can also be referred to as a technocrat due to their sophisticated technical and innovative skills.
They use technical knowledge and creative ideas to come up with new innovative designs and products that satisfy a need in society.
2. Non-technical Entrepreneurs
A non-technical entrepreneur focuses more on the marketing aspects of finished products rather than actual manufacturing.
They are highly skilled in product promotions and they change their marketing strategies accordingly to meet their target clients seamlessly even in the most dynamic markets.
3. Professional Entrepreneurs
A professional entrepreneur is an individual who skilled and applies innovative techniques to establish a business venture which has potential for growth.
They are mainly focused on coming up with the business ideas and turning them into reality with the aim of selling them to interested investors.
Professional entrepreneurs capitalize on their innovative skills and they make profits by selling their businesses to other business owners.
Classification of Entrepreneurs Based On Ownership
1. Private Entrepreneurs
A private entrepreneur is also referred to as a sole proprietor. In a sole- proprietorship, all the business decisions and management are done by the owner.
Private entrepreneurs are self-employed and they can make any business decision without consulting.
2. Public Entrepreneurs
Public entrepreneurs are also known as state entrepreneurs and they work on behalf of the state. All the businesses under state entrepreneurship are owned by the state.
They also have different centres of command and well-outlined procedures.
3. Joint Entrepreneurs
It exists in the form of joint entrepreneurship and it involves both the private entrepreneurs and state. Such arrangements are made in an effort to combine capital, technology, and human resource while undertaking big projects.
Joint entrepreneurship is common in government projects and intervention initiatives in areas of transport, manufacturing, healthcare and mining.
Classification of Entrepreneurs Based On Clarence Danhof Study
Clarence Danhof conducted a study on American agriculture and key stakeholders in this sector. Based on his study, he was able to classify entrepreneurs into 4 categories. The following are the four different types of entrepreneurs.
1. Innovative Entrepreneurs
Innovative entrepreneurs have creative minds and they are passionate about creating a new product or service.
They are dynamic and they look out for unique and creative strategies that can help them come up with a completely new product or service in the market.
They invest most of their investment in research and development so as to come up with new refined designs and ideas.
2. Fabian Entrepreneurs
Fabian entrepreneurs are those who only adapt to new changes in the market when they realize that they have no other option and failure to do so will result in business losses.
A Fabian entrepreneur has no personal desire to bring change unless he is forced by the situation.
They are also very slow to adopt new strategies in their daily business operations because they prefer to stick to their old traditions.
3. Drone Entrepreneurs
A drone entrepreneur is an old school type of an entrepreneur who sticks to his traditional style of doing things even when there is imminent market disruption.
These types of entrepreneurs are at a high risk of suffering huge losses due to their conventional ways of doing business.
Since change is inevitable and drone entrepreneurs resist change, they are pushed out of the market in most cases due to stiff competition and perennial losses.
4. Adaptive Entrepreneurs
Adaptive entrepreneurs are dynamic and they adopt new disruptions in the market created by innovative entrepreneurs.
Most of the adaptive entrepreneurs tend to imitate the technologies and techniques used by the market leaders.
They are mostly found in growing economies and they imitate and customize different product designs and technologies to fit in their target markets.
Types of Entrepreneurship
Entrepreneurship exists in different forms and the following are the different types of entrepreneurship.
1. Imitative Entrepreneurship
Most of the imitative entrepreneurship businesses exist in developing countries under a franchise agreement.
A company is given the authority to imitate certain products and services and customize them to suit the need of their target market.
It does not involve a mere copy-pasting but rather its learning and implementing similar concepts and designs with slight modifications.
2. Administrative Entrepreneurship
As the name suggests, administrative entrepreneurship revolves around administrative techniques and related functions.
It enables decision-makers to easily plan for short-term and long-term goals in order to remain sustainable and competitive.
Examples of administrative entrepreneurship include; total quality management, pension fund management, job redesign, and management by consensus.
3. Acquisitive Entrepreneurship
Acquisitive entrepreneurship involves learning key business concepts and strategies from the already established enterprises.
They keep learning from their competitors and other market leaders as a way of staying relevant and sustainable.
4. Opportunistic Entrepreneurship
Opportunistic entrepreneurship is for those shrewd entrepreneurs who are able to change with market situations.
Any change in the business environment creates a new business opportunity but not every entrepreneur is quick to realize and take advantage.
Those sharp entrepreneurs who have the capacity to identify a business opportunity and they execute it first are said to be operating in opportunistic entrepreneurship.
5. Incubative Entrepreneurship
Incubative entrepreneurship is popular in large organizations and it involves nurturing new ideas and products.
Those with unique ideas and talents are incubated and their ideas funded fully with the aim of making them big ventures in the near future.
Incubative entrepreneurship can also involve a number of companies coming together and nurture an idea that has the potential of becoming the game-changer in the industry.