Meaning of Entrepreneurs and Entrepreneurship
All of us have a fair idea of what entrepreneurs and entrepreneurship are. The simplest definition can be that entrepreneurship is about starting a business and the person who does that is an entrepreneur. Add the motives for and means of starting business to the above definition and you will get more elaborate definitions.
Majority of entrepreneurs start a business for profit as their primary motive. Incorporating this factor will make the definition look like ‘Entrepreneurship is the act of creating a business or businesses while building and scaling it to generate a profit’. However, there are many other motives, either as primary or secondary, that drive an entrepreneur to venture into business. There are also different means and methods to start a business. All these elements lead to classification of entrepreneurship which we will discuss in a bit later part of this article.
So, what motivates entrepreneurs? There can be many or combinations of various reasons like; making profit; desire to change the world; having flexibility in work hours; don’t want a boss; want to serve society; wish to put ideas into practice: want to be a disruptor etc. among many others. Bill Gates to Steve Jobs to Elon Musk to Jeff Bezos were all, for example, motivated by the desire to transform the way we used to think and do certain things.
Before proceeding further, let us hear a few quotes on entrepreneurship by some of the entrepreneurs themselves to get more perspectives of entrepreneurship.
While Niccolo Machiavelli says “Entrepreneurs are simply those who understand that there is little difference between obstacle and opportunity and are able to turn both to their advantage.” Naveen Jain puts it this way; “A person who sees a problem is a human being; a person who finds a solution is visionary; and the person who goes out and does something about it is an entrepreneur.”
Phil Libin has a different view; “There’s lots of bad reasons to start a company. But there’s only one good, legitimate reason, and I think you know what it is: it’s to change the world.”
Majority of entrepreneurs start a business for profit as their primary motive. However, there are many other motives, either as primary or secondary, that drive an entrepreneur to venture into business.
Major benefits of entrepreneurship to the society as a whole
There is no argument on the fact that entrepreneurship brings in many benefits to the stakeholders and various sections of the society. We will touch upon some of the prominent ones here.
This is arguably the most important benefit of entrepreneurship to the society. All types of entrepreneurship help create jobs. The category, quantum and potentials of job creation depend on the type of business. For example, the kind and quantum of jobs created by a manufacturing business is different from retail or information technology though there can be job types common across all industries.
Job creation is very valuable from the perspective of society and economy because that provides livelihood to many people in the society which in turn drives demand for products and services in the market which in turn fuels and accelerates economic development of the country. Needless to say that entrepreneurship helps create indirect employment and small entrepreneurship too.
Most of the modern innovations in all the fields of life have come into existence thanks to entrepreneurship. Large portion of the research and development activities, whether on products or services has always been part of or results of entrepreneurship. Whatever have become indispensable parts of our contemporary world whether it be television or internet or smartphones or transportation vehicles or home delivery services or taxi aggregators or e-commerce or nanotechnology online payment have all come from the ideas of entrepreneurs. Startups mostly belong to this type of entrepreneurship.
This cannot be strictly seen separately from innovation. Some ideas disrupt the way we were doing certain activities or functions. They have helped solve problems which had been remaining without any solutions. For example, online shopping or online payment systems have changed the way we used to shop and pay till recently. It is easy to realise its importance when seen in the context of covid19 pandemic. Entrepreneurship sometimes changes the way we think and do things in life.
Give back to society
Successful businesses contribute to society by way of taxes to the government. In India, there are statutes like CSR (Corporate Social Responsibility) mandatorily applicable to companies above certain thresholds to spend a percentage of their profit on specified social development and upliftment activities. In addition or more than that, many successful entrepreneurs contribute from their wealth for noble causes or to build non-profit organisations for such causes. Bill Gates, Warren Buffet and back home in India, Asim Premji are some examples of such entrepreneurs.
Entrepreneurship contributes a lot toward building the nation, particularly its economy. It adds to the GDP of the country and as well some of them earn foriegn exchange. Taxes they pay, jobs they create, infrastructure they build, forex they earn, new products and services they create and all contribute towards nation building by way of economic growth and per capita income increase.
These are only some top most benefits. There are many other direct and indirect benefits that entrepreneurship brings to the nation and society.
Types of Entrepreneurship
There are many different ways we can look at and classify entrepreneurship based on various criteria. Let us glance through some of them before we discuss the popular and common types of entrepreneurship in more detail.
Business: Based on type of business, entrepreneurship can be classified into Trading, Manufacturing, Agriculture, Service,Technology, Healthcare, Logistics, Retail, Hospitality, Oil and Energy, Utilities etc.
Ownership: Private, Government, Co-operative, Joint-Venture, Private-Public are some of the major types based on the ownership of the business. Here too, more classifications are possible within each of the above, say closely held, public, partnership, proprietorship etc.
Technology: Business can be technology oriented or technology business itself or non-technology based. There are companies in conventional industries where there is still not much of technology adoption or automation.
Size: Micro, Small, Medium, Large, Enterprise are some of the common and universal classification of businesses by their size.
Assorted: There are many ways we can categorise entrepreneurship. Some other entrepreneurship classifications are social, cultural, internal, opportunistic, cyber, environmental, lifestyle and so on.
However, the main scope of this article is to discuss some popular classification of entrepreneurship or entrepreneurs commonly known and used across the globe. These classifications may combine or cut across various types mentioned above.
In the modern business world, as discussed elsewhere in this article, the majority of successful entrepreneurs come under this category. Most startup entrepreneurs are innovators. They are the type who come up with completely new ideas to solve problems and turn them into viable business.They intend to solve problems that have been existing for long or disrupt the way we were doing certain things or create something we never thought of even in our wildest dreams.
Bill Gates, Steve Jobs, Jeff Bezos, Elon Musk, Mark Zuckerberg, Larry Page to name a few, are those types of entrepreneurs. They created computers and applications that revolutionised the life of the common man as well digital ecosystem and provided steam to more innovations in technology. Emails, cloud computing, messaging platforms, electric vehicles, digital cameras, Artificial Intelligence, IoT, Augmented Reality etc. are all such innovative ideas. However, on a different note the wheel invented millenia back, is still considered as the mother of all inventions.
The major advantages of this type of entrepreneurship to entrepreneurs themselves are that they get all the glory for the success of their invention, they can set the rule and tone for that line of business, there is no or minimal competition in the market. The disadvantages can be the need of capital depending on the type of product or service, the gestation period to bring out the product and success and criticism it brings up if it fails.
Hustlers are the ones who don’t have any new ideas but work hard on the business they start to make it successful. Hustlers are motivated by their dreams and will work extremely hard to achieve them. They tend to be very focused and will get rid of all forms of distractions, favoring risks over short-term comfort. These types of entrepreneurs focus on starting small with the goal of becoming bigger in the future. They may not be interested in looking for capital investment or funding.
A perfect example of a hustler is Mark Cuban. He started in business very young selling trash bags, newspapers and even postage stamps and this hustle later created a goldmine which was acquired by internet giant Yahoo! Back home, the perfect example may be Dhirubhai Ambani who worked in a petrol station in Yemen before venturing into building up a company that would eventually become one of the largest business empires in the world.
Advantages of being a hustler can be that they will outwork, they don’t give up, take disappointments and rejection in stride and move forward while there is a great chance of hustlers burn out.
Even though many hustlers never give up, a lot of them are willing to try anything to succeed which unfortunately means that they have a lot of hits and misses. Achieving their dreams takes a lot longer than most other types of entrepreneurs.
They are almost the opposite of innovators. They are the type of entrepreneurs who copy existing and successful business ideas. The most successful of this type of entrepreneurs improve upon such ideas and also customise them to their target customers and market.
They are part innovators and part hustlers. Pure copycats might most probably fail unless there is a big gap in the demand-supply in the market.
Imitators stand the advantages that they can refine the idea by solving the already known bugs and pain points in the existing product, they can benchmark the performance with the existing product, they can avoid mistakes that were made by their predecessors. However, they cannot claim the glory for the idea.
Taking an existing idea and refining and improving it can be a great way to develop a business. It certainly does not have as much risk as the innovator but it might just not be as appealing and cool.
They may be innovators or imitators. They do a lot of research on the business idea whether it is their own or a copy of an existing idea. Almost all successful entrepreneurs validate the idea before they venture into putting it into practice. However, this type of entrepreneur engages in a lot of study and research taking a lot of time before they set up the business. These entrepreneurs rely much more on data and facts than instincts and intuition.
For a researcher entrepreneur, there should be no room for making mistakes. It gives them enough data and information to plan for contingencies, to minimise risk and chances of failure. However, the entire process of starting the business might be very slow.
Even though these types of entrepreneurs spend a lot of time researching and digging into the data to ensure the success of their business, they can fall into the habit of obsessing over the numbers and focusing less on the running of the business.
Jeff Bezos has spoken against this in a recent letter to shareholders where he asserted that “Most decisions should probably be made with somewhere around 70% of the information you wish you had”.
They are not entrepreneurs with any new ideas. They may already be in business and / or have funds, and want to start business or grow the existing business inorganically by buying or acquiring existing companies that are already successful or have potential to grow or will be strategically beneficial to the current business of the buyer. Buyer entrepreneurs will identify a business and assess its viability, proceed to acquire it and find the most suitable person to run and grow it.
The advantages of such entrepreneurship are that it is a less risky option, does not have worry much about innovation and building up the organisation from scratch, skills sets are already available and there is market for their product, However, you may end up paying more price based on valuation, and unless proper due diligence is done it can lead to problems.
That said, it is not always easy or correct to classify any entrepreneurs strictly into any particular type or group as most of them are combinations of various types of entrepreneurship. Reality is not always that the type of entrepreneurship is selected by entrepreneurs beforehand, mostly they get into such brackets after they have started the business. What is important for entrepreneurs is to select certain elements of entrepreneurship like being innovator or imitator or researcher or buyer depending on their attributes, capacity to persevere, their background and other internal and external environmental factors.