5 Most common types of entrepreneurship
So you are getting itchy feet at work and yearning to go out into the “wilderness” and carve your own path? Good for you!
With a very wide range of options opening before you it can be overwhelming to pick the right type of business structure and to know how to best position yourself and what you are trying to build.
We are bombarded everywhere by these images of successful entrepreneurs, and most of them fit a narrow mold: male, white, young, American, often university dropouts.
You know... different iterations of this guy. Fleece vest not optional if you're located in Silicon Valley. Obvs.
And as for the company type: invariably a startup, everything is a “startup” (what is a startup, anyway?)
This video explains the difference very well:
Becoming an entrepreneur requires dedication, perseverance and passion. Understanding these different types can help you better position yourself and what you are trying to achieve. It can also help you pick the type of corporate structure you might need (if you even need one at all), target the right audience, and more.
10 most common types of entrepreneurship
01. SME (small and medium sized enterprises)
A small or medium size company is what we often think of when we think of a “company”. This type of enterprise refers to any kind of business that was usually started by a single person, or a small group of people, and that is built with no exit in sight. The idea is to keep going, possibly to grow and expand, but at its core the purpose of this company is to provide a livelihood for the founders and any other workers who join them in their journey. They will usually provide goods and/or services, and some good examples are: a store, a restaurant or coffee shop, or an agency. You might use savings or a loan to get off the ground, and pull together equipment or inventory, and will invest your resources back into the business.
In this type of business, you only make a profit if your company does, so passion, discipline and drivenness is a must in order to achieve success. In 2020, there were 33.7 million small businesses in the United States, accounting for 99.9% of companies - so small and medium entrepreneurship is always a good bet.
SMEs and Startups are terms which are often used interchangeably, even though at their core mean very different things. Unlike a SME, a Startup is usually initiated with an end goal in sight. Startups are born in extremely competitive environments where usually a “winner takes all”, so market share is king. The goal is to grow at a breakneck pace to claim that market share, usually thanks to outside investment, all the way to a “liquidity event” for the company. This liquidity event is where all investors/shareholders get the chance to cash out and move on to other opportunities, and usually takes the form of an IPO (where the company becomes listed in the stock exchange allowing for individuals to buy shares, leading to an influx of cash - by which point many shareholders sell their shares and move on), or a sale (good examples are the sale of Instagram to Facebook, etc.).
A good rule of thumb therefore is: if the offering is very scalable, the market is huge, and the profit margins generous, we have a startup. If not, we have a SME. Think: book store vs. Amazon, a restaurant vs. Uber Eats.
This is a niche term that is not as widely talked about as more than entrepreneurship it is a subtype.
Unlike an entrepreneur who is also the founder and creator of a business, an intrapreneur is an employee of a larger company, and is given the space and opportunity to “create a company within a company”.
A good example of this is Google’s “Area 120” initiative. Google encourages curiosity and creativity in its employees as one of its core values, and as such encourages employees to set aside 20% of their time to pursuits that might only tangentially connect to the scope of their jobs (then as an inside-turned-outside joke, employees started referring to this as 120% of time spent as they already give 100% to their jobs).
Google took the joke to heart and started an incubator for intrapreneurship and called it “Area 120” where employees can explore and grow companies under the tutelage and support of Google.
A franchise is yet another different type of business. Whereas refining your offerings, knowing your audience and validating your product-market-fit is key for most companies, be they SMEs, micro enterprises or startups, taking on a franchise can do away with a lot of the headaches and anxieties that revolve around getting this first part right.
Opening a franchise has the obvious advantage of an already tried and tested business plan, market, and offering, so a reasonable amount of success is a guarantee. Franchisees also get training and support from the franchiser, as well as access to equipment, connections, and more - in exchange for an upfront investment to “buy” into that franchise.
For those who want to go into entrepreneurship because of an innovative personality there is an obvious downside to this, because even though a lot of the risk is mitigated, so is room for manoeuvre and creativity, as you remain constrained within the operational requirements of the main company.
05. Social Entrepreneurship
Social entrepreneurship is such a wide field that it warrants its own article. When thinking of social entrepreneurship the first thought that comes to mind is usually NGOs or non-profit organizations, such as charities and more - but there is much more to social entrepreneurship than this.
Social entrepreneurs are innovators whose main goal is to create products and services that both benefit the world, but also make money. Social entrepreneurship relates to nonprofit, for-profit, or hybrid companies that are committed to social or environmental change. Good examples of this are Warby Parker with their “buy a pair / give a pair” program, Fredericks Foundation invests in small businesses led by unconventional founders who might find access to finance otherwise difficult, or TOMS who donate a third of their profits to impact causes.
there is more than one way to do this.
Bonus Round: Hustler entrepreneurship / Solopreneurship
It could also be that your idea is either not fully formed and you need more time to test it, you enjoy your current job and don’t want to leave just yet, or for any other reason that makes a full plunge into entrepreneurship a less attractive idea. In this case you can still dip your toe in the entrepreneurial pool by starting what is commonly referred to as a side hustle.
With the second season of "Keeping it nimbld" nearly upon us, we will be welcoming a great range of guests who will share their wisdom in all things entrepreneurial.
Other terms used are microbusiness, solopreneurship, mompreneurship, or any other that best fits what you do. This type of entrepreneurship grows directly from the founder who must be confident, fearless, and have a rigorous work ethic. In this case you often don’t even need to have an incorporated company but can simply develop your idea or market your offerings as a “side hustle” which you do as a freelancer (note that in some cases it might be more advantageous to have an incorporated business and it might be worth discussing this further with an accountant or tax advisor).
Bringing it all together
No matter the type of business that you do, or how you do it, where you do it is of utmost importance. Not everyone has the luxury of a fully kitted out home office to develop their business idea, or sometimes you might just find that a change in scenery boosts your productivity and creativity.
nimbld is free to join, and enables you to find flexible workspaces wherever you are.
I personally really enjoy spicing up where I work by switching locations every now and then - I find that this really helps me access more creative thinking by breaking up my routines.
Carla in her natural habitat: getting #nimbld in Dubai!
Remote, hybrid and flexible working is not a fad or a trend, it’s here to stay.
Why not set up your team members with a nimbld account, where they can access a variety of flexible, affordable spaces, wherever they are? This way you can easily track expenses and budgets for your remote or hybrid team, saving on your office costs.