When asked on a regular basis ‘what do you do’, I almost always reply that I am an Entrepreneur. More frequently than not this inevitably leads to the question: ‘yes, but what is that you do?’ – as though being an entrepreneur is not specific enough as a clearly definable day-to-day activity or a valid enough qualification!
Many entrepreneurs forget that they are NOT defined by their business or businesses. Yes, an entrepreneur owns and operates a business and assumes significant accountability for the inherent risks and the outcome of that enterprise but should that venture start making losses or fail altogether – the business is ultimately a failure – not the entrepreneur. But what is the real definition of an entrepreneur and why does it matter what type of an entrepreneur you are?
Tracing back its roots to 1950 our understanding of entrepreneurship owes a lot to the work of Joseph Schumpeter (economist) who defined an entrepreneur as a person willing and able to convert a new idea or invention into a successful innovation. Further in 1959, Cole further defined four distinctive types of entrepreneur:
1) The innovator
2) The calculating inventor,
3) The over-optimistic promoter,
4) And finally, the organization builder.
These entrepreneur types are not related to the personality of the entrepreneur but more to the type of opportunity the entrepreneur will inevitably be attracted to and the problems that they will face (or so Cole thought).
Nowadays, Cole’s categories, though very applicable are broken down in varying ways, but the main entrepreneurial categories that are agreed upon are:
1) The Lifestyle Entrepreneur:
This is someone who has decided to build a business to make a living and to satisfy his or her own personal motivations. This entrepreneur would like to create a successful company – but building a company to be listed on the Nasdaq would definitely NOT be a driving force. Instead this entrepreneur would be more likely to be ’income statement affluent’ over any of the other types of Entrepreneurs listed – and the choice of businesses he or she would choose to be involved with would generally be non-scalable, but usually cash generative businesses.
2) The Empire builder:
This particular entrepreneur would be classed as ‘balance sheet affluent’. This entrepreneur buys – but does not easily sell, usually stubbornly choosing to go ‘long’ on all of his investments and business decisions. This Entrepreneur would not really consider selling or exiting from his company, unless it was absolutely essential or involved members of the board physically dragging him/her out of their presidential chair.
3) The Serial Entrepreneur:
It is fair to state that this entrepreneur’s main motivation will be the cash payout on the exit or sale of their venture so that they are able to move on and build their next company. The serial entrepreneur has mixed reviews amongst Angel Investors as they usually have less skin in the game than say an empire builder, however, Angel investors that invest in a serial entrepreneur can leverage their broad experience base and their focus on the businesses trade sale which is in alignment to most angel investor’s investment criteria.
A study published in late 2004 by the Canadian Federation of Independent Business pointed out that entrepreneurs are commonly believed to have special traits that make them successful. For instance, entrepreneurs are commonly seen as being especially skilled at spotting new business opportunities, or they are regarded as brash or aggressive and ready to take greater risks than their peers. However, the study adds, despite a lot of academic study “no one has been able to identify a truly unique set of entrepreneurial personalities.”
A similar view is proposed by the Center for Bioscience, part of the Higher Education Academy at Leeds University in the UK. “Increasingly, it is recognized that at least some (and probably the majority) of the skills associated with entrepreneurship, and how to apply them successfully, can be learned,” it says.
Dr Pauric McGowan, Director of the Northern Ireland Center for Entrepreneurship, believes that entrepreneurs are both born and made with some people born with entrepreneurial traits and behaviors. Success depends on developing these traits but also learning skills, such as management skills. He also believes that everyone has the potential to become an entrepreneur and that entrepreneurial traits and skills are useful in well-established businesses, where they can be used to improve, for example, the running of the business.
My personal belief is that entrepreneurialism is not reserved to certain types of individuals only. Instead I truly believe that anyone is capable of being an entrepreneur as long as they are placed into the circumstances that would nurture the need for them to create an environment for themselves in which they can prosper (or not) but at their own terms. A common theme amongst successful entrepreneurs seems to be that they ‘had no choice in the matter’ and that it was through necessity that they had to think and work outside of the box to succeed.
Whatever your personal belief is in this matter, and whether you believe entrepreneurs’ are born through nurture or nature, the fact remains that living outside of one’s comfort zone, and having the stomach to do this on a regular basis is key to an entrepreneur’s success especially in the start-up stages of his/her company. What I also find personally curious is that Coles 1950s distinctive entrepreneur profile types can still be applied to each of the three widely accepted entrepreneurial types above. It’s surprising because even now, almost 60 years on, whilst many elements of our market place and economy have changed, the basic entrepreneurial philosophy has not, and probably never will, for as long as we operate within a ‘free capitalist’ society.
Article written by and contributed by:
Rishi Anand: Founder and Managing Director of VentureGiant.com. No matter the type of Entrepreneur you find yourself, you can find Angel Investors at Venture Giant. If you are a Tech Start-up or Small business looking to take your businesses to the next level, Venture Giant connects entrepreneurs & SMEs to Angel investors that are seeking to invest and provide angel investment to start-ups and established businesses.