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What type of an Entrepreneur are you

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When asked on a regular basis what it is that I do, I always state foremost that I am an “Entrepreneur and an Investor” which always inevitably leads to the question: ‘yes, but what is that you do?’ – as though being an entrepreneur isn’t enough, 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 the enterprise – but if that venture should start making losses or worse still, fails altogether – the business is a failure – not the entrepreneur.
 
Tracing back to 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 who is 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 organisation builder.

 
Cole made it clear that these types were not related to the personality of the entrepreneur - but more to the type of opportunity the entrepreneur will inevitably face.

Nowadays, Cole’s categories, though very applicable, are broken down in varying ways, but the main types of 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 satisfy his or hers own personal motivations. This entrepreneur would like to create a successful company – but becoming a FTSE 350 company is definitely NOT a necessity nor his/her main driving force. This type of Entrepreneur can be classed as more “Income statement affluent” then any of the other types of Entrepreneurs listed – and the choice of businesses he or she will choose to be involved with will be non-scalable, but usually cash generative businesses.
 
2) The Empire builder: This particular entrepreneur can be classed as “balance sheet affluent”. This is the entrepreneur that buys – not sells and usually goes ‘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.

3) The Serial Entrepreneur: It is fair to state that this Entrepreneurs main motivation will be the exit – and usually this entrepreneur type is usually unfavoured amongst Angel Investors due to the fact that he or she may have started a number of business ventures (and moved on!) therefore he/she may have mixed priorities. Some Angel Syndicates I have spoken to actually do prefer to invest in the serial Entrepreneur, because it usually this entrepreneurial type that is focused on the exit or sale, and the cash payout is his main motivation.

A study published in late 2004 by the Canadian Federation of Independent Business points 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 Centre for Bioscience, part of the Higher Education Academy at Leeds University. "Increasingly, it is recognised that at least some (and probably the majority) of the skills associated with entrepreneurship, and how to apply them successfully, can be learnt," it says.

Dr Pauric McGowan, Director of the Northern Ireland Centre for Entrepreneurship, believes that entrepreneurs are both born and made with some people born with entrepreneurial traits and behaviours. 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.

What I 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.
 

By Rishi Anand
Written for and behalf of Venture Giant Enterprises Ltd. All rights reserved 2008


About the Author

Venture Giant is a premier UK business Angel investment network and small to mid sized business networking portal that matches active business angel investors with entrepreneurs' seeking investment capital and business funding. 


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Article Published/Sorted/Amended on Scopulus 2009-01-30 12:25:29 in Business Articles

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