Not all entrepreneurs are the same. And the failure to understand that can cause major headaches for anyone who wants to start and scale any sized business. Below are the four types of entrepreneurship models that any enterprising business leader needs to understand.
Small Business Entrepreneurship
The most common type of entrepreneurship is the small business entrepreneurship. With this model, someone goes from being a start-up to creating a business. The primary purpose of this type of entrepreneurship is to put food on the table. A great example of this type of entrepreneurship model is the immigrant family that comes to Ellis Island and then opens a pizzeria. The net profits of the pizzeria go mainly to support the family of the owner.
Scalable Startup Entrepreneurship
The next type of entrepreneurship model is the scalable startup entrepreneurship. With this model, the person who starts-up the company has a larger goal in mind. Instead of merely trying to put “food on the table,” this entrepreneur has the vision to scale the business to a much larger size. Typically, the scalable startup entrepreneur will have an exit strategy to sell the company to a larger company.
Large Company Entrepreneurship
With the large company entrepreneurship, a multi-billion dollar company will seek to enter a new space in the market. The company will set aside resources to create a start-up within the company. A commonly used example of large company entrepreneurship is IBM’s entry into the personal computer market. IBM established a separate office in Boca Raton, Florida that operated independently from the rest of the company. Several years later, IBM’s Boca Raton division was able to create the company’s first PC which would substantially contribute to the business’s bottom line.
This entrepreneurial strategy involves the founder of a movement gaining influence over a large group of people. This influence leads to leverage that can allow the founder to reap a benefit. One example of social entrepreneurship is the case of Irfan Alam. Mr. Alam was able to help thousands of rickshaw pullers, in India, gain funding for new rickshaws via ad revenue, profit-sharing model. These rickshaw pullers were eventually able to own their rickshaws outright after paying back their loans.
These four types of entrepreneurship models can benefit any vision and any business. The right entrepreneurial model can help feed a family or create an empire. Understanding the difference between these four entrepreneurship models can help anyone reach their business goals.