Types of Entrepreneurs
Entrepreneurs are essential for the growth of any country. They usually set up something new on their own and create many jobs for others. They also play an important role in the economy. However, to choose the right path in entrepreneurship, we need to know about different types of entrepreneurs. Each type has its responsibilities, roles, functions, and more.
In this article, we are discussing different types of entrepreneurs and their definitions. The types usually vary depending on the country, region, and even sector. Before discussing the types of entrepreneurs, let us first briefly understand about the word ‘entrepreneur’:
Definition of an Entrepreneur
An entrepreneur refers to a person who plays an industrialist role and sets up a business for commercial use, then becomes an active partner in running that business. In particular, an entrepreneur is one who builds and operates his enterprise. He is specifically a change agent who fulfill the demand through supply by assuming or forecasting society’s requirements.
A person starting a business venture is the most common example of an entrepreneur.
Importance of an Entrepreneur
The entrepreneur’s primary role is to develop new creative ideas and bring innovations to the market by replacing the old ones. However, various other factors make an entrepreneur and entrepreneurship extremely important:
- Creation of Employment: Entrepreneurs create employment for different categories. By forming enterprises, they generally provide entry-level jobs for newcomers. This eventually helps fresher to gain experience and work for further growth in a specific sector.
- Innovation: Because of huge competition, entrepreneurs always try to introduce new products, technology, goods and more in the market to further enhance the standard of living for people.
- Making better society and community development: With the employment options, entrepreneurs bring changes in the society and generate new ways for betterment. They help promote better education, better sanitation, fewer slums, and high-level homeownership with their innovations and support. Entrepreneurs help the organization towards a more stable and higher quality of community life.
- Increases Standard of Living: Entrepreneurs help people improve their living standards by giving them employment and assuring their income. Standard of living generally refers to the consumption of various goods and services by a household for various needs.
- Supports research and development: Before the products are launched in the market, they are tested for safety and research. Therefore, an entrepreneur also provides job options in research and development. This eventually promotes research colleges and universities.
Types of Entrepreneurs
Entrepreneurs are categorized into different types based on the following classifications:
- Based on the Business Type
- Based on the Technology
- Based on Ownership
- Based on Gender
- Based on the Enterprise size
- Based on Clarence Danhof
Let us understand each type in detail:
Based on the Business Type
Depending on the type of business, entrepreneurs are classified into the following types:
Trading Entrepreneur
A trading entrepreneur refers to a person who undertakes business-related activities. These types of entrepreneurs usually buy finished products in bulk from manufacturers at some discount. They then sell these products directly or with the help of retailers or vendors with profits. A business entrepreneur usually acts as a middleman between manufacturers and customers. This may include wholesalers, retailers, dealers, etc.
Manufacturing Entrepreneur
The founder of a business to manufacture products is known as a manufacturing entrepreneur. Manufacturing entrepreneurs analyze market needs or customer needs and manufacture products to meet such needs using various resources or technologies. In simple words, manufacturing entrepreneurs transform raw materials into finished products according to the customer’s needs.
Agricultural Entrepreneur
Agricultural entrepreneurs refer to the types of entrepreneurs who primarily do agricultural work. They participate in a wide range of agricultural activities such as farming, irrigation, agricultural produce, mechanization, technology, etc.
Based on the Technology
Based on technology, entrepreneurs are classified into the following types:
Technical Entrepreneur
Such entrepreneurs are called technology entrepreneurs who use to start and continue industries primarily based on science and technology. These entrepreneurs develop new ideas and turn those ideas into technology-based innovations and inventions. They always work to create new methods of production in the fields of technology and science. Besides, they also manufacture products that can help ordinary citizens and other non-technical entrepreneurs in their enterprises.
Non-Technical Entrepreneur
As the name suggests, entrepreneurs who do not set up and run enterprises based on science and technology are known as non-technical entrepreneurs. In short, non-tech entrepreneurs are those who work for innovations using traditional methods. They typically use alternative and exemplary marketing methods and follow non-technical delivery strategies to engage directly with customers. This ultimately helps them to survive and grow their business in a competitive market. Moreover, they create better relationships and meet customer needs.
Based on Ownership
Based on ownership, entrepreneurs are classified into the following types:
Private Entrepreneur
When an entrepreneur starts something personal of his or her own, such as setting up an enterprise, he/she is called a private entrepreneur. A private entrepreneur is the only person who plays the sole proprietor role for a business venture and bears the risk associated with it.
State Entrepreneur
When a state or government does a business or industrial undertaking, it is referred to as a ‘state entrepreneur’. In this case, the government is the sole owner of the enterprise and will bear all the profits and losses involved with it.
Joint Entrepreneurs
When a business or industrial undertaking is established and operated jointly by the private entrepreneur and the government, it is called joint entrepreneurship. The parties involved are called joint entrepreneurs. In this case, risk and profits are shared by both parties. However, the sharing percentages generally depend on the type of business and the agreement between the two parties.
Based on Gender
Based on gender, entrepreneurs are classified into the following types:
Men Entrepreneurs
When any business venture is formed, managed and operated by men, these men are referred to as men entrepreneurs.
Women Entrepreneurs
When any business venture is formed, managed and operated by women, these women are referred to as women entrepreneurs. Besides, if women have a minimum 51 percent share of the capital, they can also be known as women entrepreneurs.
Based on the Enterprise size
Based on the size of the enterprise, entrepreneurs are classified into the following types:
Small-Scale Entrepreneur
If an entrepreneur has invested up to a maximum of 1 crore in starting an enterprise, including plant and machinery, such entrepreneur is called Small Scale Entrepreneur.
Medium-Scale Entrepreneur
If an entrepreneur has invested a minimum of 1 crore to a maximum of 5 crores in starting an enterprise, including plant and machinery, then such entrepreneur is called Medium Scale Entrepreneur.
Large-Scale Entrepreneur
If an entrepreneur has invested more than 5 crores in starting an enterprise, including plant and machinery, such an entrepreneur is called a large-scale entrepreneur. This includes any investment above 5 crores.
Based on Clarence Danhof Study
Clarence Danhoff conducted a study on American agriculture and classified entrepreneurs accordingly. According to him, entrepreneurs generally have less initiative and drive when they start any business venture. However, they learn things with their continued economic work and become more innovative and enthusiastic. Based on his study, he classified entrepreneurs as follows:
Innovating Entrepreneurs
Innovative entrepreneurs, also known as innovators, are the type of entrepreneurs who usually come to the market with new ideas or innovations. In particular, they create new products, find new production methods, create new markets and restructure the business. Such entrepreneurs always try to innovate and invest their time and money in research and development.
Imitative Entrepreneurs
Imitative entrepreneurs or imitating entrepreneurs are often called ‘copy cats’. This is because these entrepreneurs mainly follow and adopt the innovative entrepreneurs’ existing successful enterprise system. They do nothing new of their own. Imitative entrepreneurs apply strategy from other enterprises in a manner where all core fundamentals of the original business model are replicated, and all efficiencies are retained. These entrepreneurs help improve any product, production process or suggest the use of improved technology addressed by other enterprises.
Fabian Entrepreneurs
Fabian entrepreneurs are defined as those types of entrepreneurs who generally do not seek to implement changes in their enterprise techniques. They are very careful in applying any approach and cautious in exercising any change. These entrepreneurs are known for not making sudden decisions. They imitate the change in their strategy only when it is completely clear that failing to do so will not harm.
Drone Entrepreneurs
Drone entrepreneurs are defined as entrepreneurs who do not like to adopt any changes in their enterprise techniques. They strictly follow their traditional strategies or methods for development, production or marketing. These entrepreneurs feel or experience pride and tradition in the old ways of doing business. This is why drone entrepreneurs sometimes suffer losses, yet they do not adopt changes in their current methods.
Other Types of Entrepreneurs
Apart from the above types, there are several other types of entrepreneurs as given below:
Solo Operators
Solo operators include those types of entrepreneurs who start their work primarily alone. However, these entrepreneurs employ few employees if they require. It is the most common type of entrepreneur, and most people start their ventures like solo operators.
Active Partners
Active partners include entrepreneurs who jointly start their ventures. This may include two or more people. However, each person should have equal participation in the operation of the business. Besides, when the entrepreneurs support only with the money but do not actively participate in the business’s operation, they are just called ‘partners’.
Inventors
Inventors include entrepreneurs who work effectively and invent new products, using their ability and inventiveness. These entrepreneurs are generally primarily interested in innovative strategies.
Challengers
Challengers include entrepreneurs who seek new challenges in enterprise ventures, including manufacturing, distribution, and marketing. Once they achieve their set challenge, they begin to set and acquire new challenges.
Buyers
Buyers include entrepreneurs who do not like to take too much risk in completely new business establishments. These entrepreneurs mainly purchase on-going enterprises by paying a decent amount and start their operations. This ultimately reduces the risk of establishing a new enterprise as the existing enterprise typically has better business value and customer reach.
Researchers
Researchers include entrepreneurs who believe in facts and figures based on business studies. These entrepreneurs analyze all aspects of an enterprise and take enough time to gather enough information to make a clear assumption. Then they put their detailed work and understanding to launch the products. Researchers are usually least likely to fail because they leave no room for mistakes. They gather information and analyze all ideas from all angles based on all aspects.
Life-Timers
Life-timers includes entrepreneurs who consider enterprises as an integral part of their lives. In particular, these entrepreneurs mainly learn skills from their elders and continue to operate family ventures further. These entrepreneurs usually consider their enterprises a family tradition.
Becoming an Entrepreneur
While there is no proper rule of becoming an entrepreneur, the common methods involve the followings:
- Develop a unique idea for a business
- Get an understanding of the various enterprise sectors, such as management, finance, accounting, marketing, etc.
- Create a proper business plan and arrange for funding
- Hire specific employees with corresponding business requirements
- Implement competitive strategies and launch products or service
- Find and connect related market and customers to distribute the products or services
- Expand the business combing new ideas and products