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
