I have advised many entrepreneurs and I have noticed that there are different approaches to the types of entrepreneurs, in this article I will try to group what are the types of entrepreneurs that exist? Based a bit on my professional experience.
1. Experience-based entrepreneurs
Experienced entrepreneurs have different attitudes and are difficult to classify, some are dynamic, innovative and know how to take risks without losing. However that type of entrepreneur is rare and the blows in life (after many failures) learned to face risk and win in the process. But the reality is that most experienced entrepreneurs take too many risks, are not cautious, and do not educate themselves to improve; they lose focus quickly because they change their mind as soon as they see that it isn’t working.
There is the mistake of this entrepreneur, they think that having an idea is enough to be successful in their business. Success for an entrepreneur is knowing how to implement the idea and create a business model in which they are experts. By changing their minds they never become experts, they live as novices for the rest of their lives. In general, experienced entrepreneurs who know how to take risks, are innovative, dynamic and seek to learn from their mistakes will be the ones with the greatest chances of success. Below is the evolution of entrepreneurs by experience:
They are entrepreneurs who are starting to start a business, have no business experience and perhaps do not even consider themselves as entrepreneurs. Since they do not have any business experience, they are entrepreneurs without a defined business plan, they only have an idea or business concept. They start their venture with their own financial resources, therefore their capital is very small. They may use the 3 F’s to get money:
- Family (familia)
- Friends (amigos)
Most of the informal entrepreneurs are unemployed, housewives or employees who need to earn more money, who are looking for an additional source of income and end up with informal businesses.
Due to their lack of planning and experience, these entrepreneurs fail in their businesses or the venture has a short duration because they find a better job . In some cases, they jump from business idea to business idea without ever realizing anything. Rarely do they land a business idea and change business because the previous one didn’t work. As I mentioned at the beginning, they never become experts.
Mixed or mid-term entrepreneurs
These are the informal entrepreneurs who have gained experience or are educated to develop a more stable business idea. They can also be employees with a lot of experience in the administration or development of some type of business who decide to open their own company, in some cases they are entrepreneurs by necessity (I explain this type of entrepreneur better below).
In the vast majority of cases, this type of entrepreneur not only has the idea, but also has more or less a business plan, but it is not complete. Little by little he is developing the improvements and finishing touches to his business plan and idea to take it to the next level.
They are entrepreneurs with experience being entrepreneurs, they know how to develop business plans and carry them out. As they have experience, they have several successes, contacts and know where to find financing. They have figured out their own formula and know the strengths and weaknesses of your business ideas. They have the ability to land that idea and shape it to create successful businesses. This type of entrepreneur ends up being a successful businessman who does not abandon his roots, his company has an entrepreneurial culture, taking risks and innovating.
2. Entrepreneurs by environment
This type of entrepreneur is influenced by his business environment, the type of education he received, work experience and knowledge about a market . You decide to be an entrepreneur after having bad experiences being an employee or because you are attracted to the lifestyle that entrepreneurship offers. Let’s see some types of entrepreneurs within this classification:
They have managed to obtain savings, inheritance, or a project that has allowed them to earn money, therefore they are entrepreneurs with capital to invest, but they have no business idea. This type of entrepreneur looks for other entrepreneurs or ends up financing the business of someone he knows who approached him to offer him an idea. The vast majority end up losing money due to fraud or because they do not know how to judge the idea and trust an entrepreneur from experience who spends his life changing his business idea.
A quintessential novice who has never been in a business long enough to be an expert. Now, don’t confuse this type of entrepreneur with an angel investor (an investor) who lives by investing in winning business ideas. They know how to judge an idea, a business plan and mainly people. Remember, the main reason why a venture fails is because of the entrepreneur, because he does not know how to implement his idea or land the business plan . He does not have basic knowledge to undertake how to make a business plan, he does not know how to evaluate ideas, he does not know sales or marketing; In other words, he lacks common sense and the essential knowledge to make his business a reality.
Before, business entrepreneurs were considered formal entrepreneurs who generally do business in the traditional market for goods, services, or products. They are comfortable with the types of businesses they know and are traditional. They are cautious and prefer not to take risks , which is why they use traditional business models. Typically, this type of entrepreneur requires financing or a large amount of capital to start . They know their market and they know when they found a gold mine. They are experts in managing inventory, contact networks and suppliers; they also know about distribution channels or customer service. They always look for companies where there is little competition, have an advantage over the competition or have control over the market.
However, the concept has changed, and this definition applies better to define any entrepreneur. The reality is that a business entrepreneur is a businessman who seeks to revolutionize, reform and change the market, the work environment or the community through his company, using technology, new processes, new products, etc. That’s why they take risks, because there are also more opportunities to stand out, be a leader and take the business to the next level. Therefore, an entrepreneur is who does not take risks, an entrepreneur if he does.
This type of entrepreneur is normally born from university environments or research centers , and is influenced or receives support from so-called Technology Parks such as Silicon Valley. In general, innovation has a little (or a lot) of risk, because the business model depends a lot on an innovative product, which allows creating a new market or replacing an existing market.
This type of entrepreneur is usually technological but is not exclusive to this area. They can be entrepreneurs in areas such as medicine, medical equipment, therapies, automobiles, industry, etc. A common feature in this type of venture is the need to form joint ventures with business entrepreneurs or investors who have capital, control or dominance over the market in order to ensure its penetration and distribution.
This type of entrepreneur develops within organizations or companies, it is these that motivate this type of entrepreneurial culture within their work environment (for example, Google), motivating the development of new projects for the company, mainly to seek innovation in the products, services or improve existing processes within the organization. This type of culture within an organization requires motivation, a non-traditional work environment, and both psychological and monetary incentives.