What Are The 4 Types Of Entrepreneurship?

gopika Things to Know
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In the world of startups, it is necessary to know the basics of four types of entrepreneurship and to see if you belong to that section. Now, ask yourself if you are fascinated by various types of businesses. Do you see yourself becoming an entrepreneur by starting your own business?

In today’s times, many women entrepreneurs are doing excellent in a sector that was known to be a male-dominated space. Hence, we all know that the key to starting a business is having a plan.

In this article, we will explore the four basic types of entrepreneurship.

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image by RDNE, source: Pexels

1. What Is Entrepreneurship?

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If you are someone who wants to handle their career by themselves, i.e., by not working under an organization. Entrepreneurship might be a good idea for you, provided you know what business to come up with.

So let us first understand what entrepreneurship is, to begin with. It is the ability to run a business despite the level of risk that comes along with four types of business ventures. An entrepreneur is a person who is willing to or has set up a business, and this process is called entrepreneurship.

2. Who Is An Entrepreneur?

An entrepreneur is a person who starts or owns a business. There is no restriction on starting a business. Therefore, entrepreneurs must know how to convert business ideas into commercially viable innovations.

If you are to make profits despite the risks that accompany them, you have the potential to become an entrepreneur if you have a growth mindset.

3. The 4 Types Of Entrepreneurship In Business

Different Types of Entrepreneurship

You can check out this video!

3.1. Small Business Entrepreneurship

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As the name implies, the business is small-scale. The capital investment is lower than that of large companies. Due to the lower capital, the technology or equipment is also lower than that of large businesses. As a result, the human labor required is also meager in small businesses.

Funding for Small Business Entrepreneurship is usually resources provided by the entrepreneurs. Sometimes family members help with money and rely on bank loans, for business loans. Apart from that, small business entrepreneurs have considerable flexibility in their decision-making.

That comes along with this form of entrepreneurship. Apart from that, most of its funding is self-generated. So it impacts fewer people, i.e., local employees. Unlike large companies where thousands of people work. There is often confusion among people regarding start-ups and small business entrepreneurship.

Yet, there is a wide difference between the two. Startups are generally started as entrepreneurial ventures which become larger businesses, and are registered as Ltd(s). For small-scale businesses, they don’t need a similar LLC registration.
Instead, they are managed by a single person, sometimes under a partnership or sole proprietorship. However, forming an LLC in New York or any US state can be highly beneficial for small business entrepreneurs as it provides a layer of legal protection, separating the business’s liabilities from the personal assets of the entrepreneur. This precaution can be crucial in mitigating personal financial risk. Further, let us understand the advantages that come along with running a small business.

3.1.1 Advantages

Mostly, one person owns the idea of the business, granting them a lot of freedom and minimal involvement from other people. In the case of small business entrepreneurship, you do not have to make changes, unlike start-ups. As they must abide by the conditions set forth by their investors.

You get to create and be your boss! Yet, being an entrepreneur is risky, but it also gives you freedom and time. As you do not have to stick to the 9-to-5 time slot because you are not working for any larger company or organization. You are creating the organization, even if it is a small one.

With that, there are disadvantages to it as well.

3.1.2 Disadvantages

For example, small businesses are usually self-funded. Sometimes they are dependent on bank loans, not venture capital. So you will have to have faith in your business venture to grow gradually, as the growth will be slow.
Besides that, in small business entrepreneurship, the founder is solely responsible for all the decision-making. So, there are chances that the decision may not be the right one. Unlike big companies that have a dedicated decision-making panel, here the number of employees is smaller.
Lastly, there is a financial restriction. So one must keep the number of employees minimal. Small business entrepreneurs have to keep such points in mind before entering the business field. Because funds and resources are scarce.
Small business entrepreneurship is registered as:
  • Co-operative
  • Limited Liability Company
  • General partnership
  • Non- profit
  • Sole proprietorship
Some examples are grocery stores, retail stores, one-location restaurants, and so on.

3.2. Scalable Startup Entrepreneurship

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A scalable startup focuses on growth and profit. As they aim for the largest growth and rapid expansion. For maximum growth, they also rely on outside investors, i.e., venture capitalists for funding. As that will help expand the startup from being a small business into a leading large company. Scalable startups are dependent on ideas that will thrive in the market and are in demand.
A scalable start-up is mostly technology-focused. Hence, the entrepreneurs work to have a business plan that will create market demand. Make people interested, especially the investors, i.e., the venture capital investors.
Not only does the company need good innovative ideas. But it also needs to be capable on a large scale to yield enough profit to reinvest in the business again.

3.2.1 Some Aspects Of Scalable Start-Ups Are

A good team that is diverse in all areas so that the business can expand and be durable is important. For scalable start-ups, it is not important to spend a large amount of resources on marketing to get customers. Instead, the quality and utility of the product and innovation should be your top priorities as an entrepreneur.
And with success, you need to aim for a large team to get things done. Because consistent growth is a key trait of scalable startup entrepreneurship. Some leading examples of scalable startup entrepreneurship are Amazon, Flipkart, Facebook, and Microsoft. Most of these start-ups have secured offices in Silicon Valley now.
One thing these entrepreneurs have in common with any big established company that dominated the market share is, that they all started small. By having offices in garages, homes, and whatnot. Now, they are part of Large Company Entrepreneurship.
A scalable start-up needs to have a unique aspect to set it apart from other companies in the industry. For example, Bill Gates, who was a college dropout, created Microsoft. Which is one of the largest companies in the world.
Microsoft’s unique selling point is its investment in innovation and services. And the use of new technologies with thorough research and development. It paved the way to being among the top companies in the world.
It is also noteworthy that scalable startups can cause market disruption with their innovation and business strategies. Besides, it is risky as the opponents will be fierce enough. As every company desires to dominate the market share, success is also not guaranteed.

3.3. Large Company Entrepreneurship

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Large-company entrepreneurship includes companies that have expanded activities, size, investment, and influence. A large company has enough resources and a large market. Unlike small business entrepreneurship and medium business ventures.
A large company’s size is determined by its total revenue, assets, and market capitalization. The sector also plays a major role in determining the influence of the company. As different sectors have different thresholds to meet.
Scalable startup and large company entrepreneurship belong to the category of innovative entrepreneurship. There are many characteristics of large-company entrepreneurship; some of them, for example, are:

3.3.1 Customers And Influence

Large companies have clients from various places around the globe. Thus, they have offices and factories everywhere to run their business.
They also need to be aware of their competitors. And, if possible, make the appropriate move to acquire them. As that is how all multinational corporations function. For example, Google’s acquisition of YouTube was a great strategic move to gather more customers and grow as a company.
Large companies have a strong influence in their respective industries. The success of an MNC opens the door to being able to make policies, market trends, and industrial standards.
Some examples are Google, Apple, Amazon, Nike, Adidas, etc.

3.3.2 Flexibility

Entrepreneurs need to understand the importance of being flexible. As they should be aware of market trends to make the right decisions on time.
For this, one must take risks and learn from failures. Because that indicates what should not be implicated. The major reason why most businesses fail is because they are not strategic and flexible.
A large company’s entrepreneurship impacts the lives of many, as there are thousands of employees working for the firm. Hence, it is necessary to be flexible.

3.3.3 Disruptive innovation and Life cycles

Such companies have a life cycle for every product they release. Innovation is the backbone of a company. Without it, the existence of the company would not have taken place. Being a large company comes with many other responsibilities. As they have to be respectful of the culture. Hence, it is important to make use of new technologies and be innovative.

3.4. Social Entrepreneurship

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Per on Unsplash
Last but not least, there is social entrepreneurship. In this, the entrepreneurs focus on topics that influence change. They aim to make the world a better place by trying to solve social problems. Some areas of interest for social entrepreneurship among entrepreneurs are:
  • Racial justice
  • Environmental conservation
  • Education
  • Economic development
 There are other aspects as well, which have not been mentioned above. Social entrepreneurship does not focus on making profits. And is sometimes barely profitable. Being a social entrepreneur, your priority is to look for a solution to such social dilemmas. Hence, the focus is on social groups.
The social impact determines the success of the entrepreneur. Out of the four types of entrepreneurship, Social entrepreneurship has gained popularity quite recently.
One of the most successful examples of social entrepreneurship is Grameen Bank, founded by Mohd. Yunus. They aimed to provide loans for all, unlike most banks, which only helped rich businesses. The microloans provided helped many women. As they were able to generate income and repay the loans! Unlike the social belief at that time, which was that women could not work.

4. Conclusion

Entrepreneurship is indeed a risky job. All entrepreneurs should be willing to take calculated risks. Successful businesses are beneficial for the economy. It is important to know the foundations of business before considering it.

Last Updated on by Narayani Bhardwaj

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