Who is an entrepreneur? There are four dissimilar types of entrepreneurial organizations; small businesses, scalable startups, large companies, and social entrepreneurs. They all involve in entrepreneurship. Yet entrepreneurs in one group think that the others aren’t the “real” entrepreneurs. In this post, we will look at the differences and similarities and reveals why there’s such confusion.
Small Business Entrepreneurship
Small businesses are hairdressers, grocery stores, internet commerce storefronts, consultants, travel agents, carpenters, plumbers, electricians, etc. They are anyone who runs his/her own business. They hire local employees or family. Most are hardly profitable. Their definition of success is to feed the family and make a profit, not to take over an industry or build a multi-million business. As they can’t provide the scale to attract venture capital, they fund their businesses via friends/family or small business loans.
Scalable Startup Entrepreneurship
Unlike small businesses, These entrepreneurs start a company knowing from day one that their vision could change the world. They attract investment from equally crazy financial investors – venture capitalists. They hire the best and the most promising. Their job is to search for a repeatable and scalable business model. When they find it, their focus on scale requires even more venture capital to fuel rapid expansion.
Scalable startups in innovation clusters make up a small percentage of entrepreneurs and startups, but because of the outsize returns, attract almost all the risk capital (and press.)
Large Company Entrepreneurship
Large Company – EFELarge companies have finite life cycles. Most grow through sustaining innovation, offering new products that are variants around their core products. Changes in customer tastes, new technologies, legislation, new competitors, etc. can create pressure for more disruptive innovation – requiring large companies to create entirely new products sold into new customers in new markets. Existing companies do this by either innovative acquiring companies or attempting to build a disruptive product inside. Ironically, large company size and culture make disruptive innovation extremely difficult to execute.
Social entrepreneurs are innovators who focus on creating products and services that solve social needs and problems. But unlike scalable startups, their goal is to make the world a better place, not to take market share or to create wealth for the founders. They may be nonprofit, for-profit, or hybrid.