Entrepreneurship plays a crucial part in the economic development of the global marketplace. It is a term used in the corporate world to describe the concept of starting and running a business to profit by taking various risks. Simply put, entrepreneurship is the ambition to start a new business.
More precisely, entrepreneurship is a way of thinking, reasoning, and acting that is motivated by opportunities employs a holistic approach and balances leadership to create and capture value.
Entrepreneurship can be defined as utilizing other productive components by one productive component to developing economic products in their most basic form. It is a smart move of building a venture by taking risks to create change.
You fall into one of the three types of entrepreneurship based on the type and scale of change you want to create.
Types of Entrepreneurship
1. Small business entrepreneurship
This is the most common type of entrepreneurship and perhaps the oldest. In small business entrepreneurship, the main objective is to change one’s personal life. For example, creating a better source of income to alleviate yourself from poverty or creating a business with flexible work hours so you can spend more time with family.
In this case, the entrepreneur is primarily seeking stability in terms of maintained profitability. As such, there is less emphasis on technical innovation but rather on process innovation, which tends to cost less in the setup phase and onward. This is why small businesses are often quicker to reach profitability than the other types.
- Problem – Office workers in that location did not have access to breakfast.
- Solution – Set up a breakfast restaurant in that location.
- Unique selling proposition – Access to breakfast
In small business entrepreneurship, a further push on expansion is considered an unnecessary risk.
2. Startup entrepreneurship
This is perhaps the most sought-after type of entrepreneurship and is common in the tech industry. In startup entrepreneurship, the main objective is to solve a large-scale problem by providing innovative products and services for profit. For example, creating a platform that helps office workers spend less time to achieve more in a day.
In this case, the entrepreneur focuses on developing an innovative product and/or process to achieve high growth in terms of rapid profit increases. As such, there is a greater appetite for higher risk-taking, and plateauing can be perceived as a failure. This is why startups are often tech-enabled and grow faster than other types of businesses.
Assuming my mom’s restaurant was a startup:
- Problem – There’s a lack of on-demand breakfast options for office workers in Africa.
- Solution – A platform where office workers can order and pick up breakfast from satellite restaurants.
- Unique selling proposition – Order and pick up breakfast from anywhere, in minutes.
In startup entrepreneurship, expansion is necessary for capturing a bigger market, which eventually translates into rapidly growing profits. Most people who take on this kind of entrepreneurship are driven by the desire to disrupt the norm and leave a mark.
The intrinsic motivation in startup entrepreneurship doesn’t have to lean purely on profit-making. There is also creating shared value where the business is built by maximizing returns while creating positive social, economic, or environmental impact. I consider Tesla to be a good example of this case.
Focus on expansion means you will be going through the journey of starting from Day 1 over and over again as you enter new markets, introduce new products, et cetera. Therefore, you need to be someone who enjoys solving new problems and is comfortable with uncertainty.
3. Social entrepreneurship
We all know non-profit organizations; they collect donations and use them to serve a specific need. In social entrepreneurship, the main objective is to solve a large-scale problem by providing innovative products and services for minimum possible earnings to sustain the business. For example, creating a platform that helps kids in underserved communities learn faster. I believe this to be the most effective alternative to non-profit organizations.
In this case, the entrepreneur focuses on developing an innovative product and/or process to achieve high social impact in terms of the number of people positively touched. The emphasis on innovation is mainly because this type of entrepreneurship revolved around self-sustenance, so the business has to make just enough profits and keep prices affordable to reach more underserved groups.
As much as a company like Tesla is focused on sustainability, it is not a social enterprise as its products are not accessible to underserved groups – maybe they will be in the future. Examples of successful social enterprises are TOMS Shoes, Grameen Bank, and Seventh Generation.
Assuming my mom’s restaurant was a social enterprise:
- Problem – There’s a lack of healthy breakfast options for factory workers in Asia.
- Solution – A platform where factory workers can order and pick up healthy breakfasts from satellite restaurants.
- Unique selling proposition – Affordable, healthy breakfast from anywhere, in minutes.
Because many social enterprises are closely related to startups than they are too small businesses, it can be far more difficult to successfully build one since their far fewer investors in this area, and it might take more time to find a correct business model. Most social entrepreneurs decide to build successful startups first and then either convert their startups to social enterprises or use their success to create new social enterprises.
Characteristics of Entrepreneurship
While there are as many entrepreneurial characteristics as there are people in the world with opinions, a few are considered essential or fundamental in a business owner. A list of them is provided below.
1. Risk-taking ability
This is an entrepreneur’s first and most significant attribute. Any commercial effort carries a substantial risk of failure. As a result, an entrepreneur must be self-assured and capable of taking such a risk.
2. Innovation
Innovating is a rare gift in a world where almost everything has been done before. Innovation is all about coming up with a new idea that can be used to establish a business and create a large profit. Product innovation, for example, can take the form of releasing a product that no one else is selling. It can also take the form of a process, which involves doing the same thing more efficiently and cost-effectively.
The advent of touch screen phones, while the rest of the world was still using keypad phones, is a simple example of product innovation.
Process innovation is common in capital-intensive businesses that need to replace manual labor with machinery to boost productivity while cutting costs.
Another type of innovation is usage-related innovation. Cell phones, for example, may now be used to view, generate, and edit a variety of files and documents, obviating the need for computers.
Related: Why Imagination and Creativity are Vital for Female Entrepreneurs and How They Can Build It
3. Visionary
A visionary is required of every business owner. If he or she did not have a vision for the future of his company, he or she would be working aimlessly and failing to achieve any level of success.
4. Leadership
An entrepreneur is someone who has a vision. Bringing that vision to reality, on the other hand, demands a major time and financial effort. People are one of these resources, which the entrepreneur employs to perform various production, provision, and accounting tasks.
Because a single person cannot fulfill all the obligations, others must be enlisted to assist. This highlights the significance of leadership since a leader provides the required direction for employees’ efforts. If there was no proper leadership, everyone would work independently without achieving the required goals.
5. Mindedness
For a good entrepreneur, every scenario could be a business opportunity. As a result, it can be put to beneficial use for the company. Paytm, for example, recognized the significance of demonetization and saw that the need for online transactions was more than ever at the time. Hence, it took use of it and grew tremendously during this period.
6. Self-assured and well-informed
A businessperson must believe in his or her abilities and ideas. His staff, as well as the other stakeholders in his organization, pick up on his confidence.
This guarantee is based on a detailed knowledge of the industry and the environment. Various legal and political laws aid or obstruct business and trade opportunities. Understanding them can help an entrepreneur make the greatest option feasible at the correct time.
7. Flexible
An entrepreneur must be adaptive and willing to change his or her strategy depending on the situation. A businessperson must be able to embrace change in a product or service as and when it is required to be successful.
8. Understand your product
A company’s product offerings, as well as market developments, should be familiar to the owner. It’s vital to figure out whether your current product or service meets market demands or whether you need to make any changes. Entrepreneurship demands the ability to hold oneself accountable and then make necessary adjustments.
Other Characteristics of Entrepreneurship
- Don’t be afraid to take risks, and don’t waste time trying to avoid failure.
- Be tenacious in the pursuit of your goals. Create Your Fortune.
- Find a Customer Base to Serve.
- Never stop learning, and always remember to give back.
In the end, it is up to you to look inside and decide what type of entrepreneur you want to be. Furthermore, being an entrepreneur may have its perks; however, it takes a lot of hard work and dedication to become a successful entrepreneur.
