Entrepreneurship isn’t just running a business; rather, it is a name given to anything done with intentions of changing the world. An entrepreneur is a world-changer, an innovator, and an opportunist. Now you might be wondering what entrepreneurship is? Let us explain to you in a little more detail!
Entrepreneurship is launching, developing, and running a business venture along with its financial risk. Such business ventures are valuable for economic development as it allows a country to expand its businesses and resources in the global market.
However, most people perceive entrepreneurship as one dimensional, and they do not think about their various types. Today, we have decided to clear this confusion for you and explain different types of entrepreneurial businesses.
In today’s growing world, it is common to see that more small businesses are running than more prominent companies. We can even roughly guess that about 75 % of companies are small businesses. Such companies hire a large workforce, and these businesses also make enough profits to make a living and support their families.
However, these types of businesses fail to capture attention from funds raising organizations, and mostly these small businesses have to ask for capital from their friends and families.
Examples of Small Businesses:
In such Entrepreneurial Businesses, entrepreneurs set-up their own companies believing that their visions will positively change the world. Entrepreneurial Businesses usually get funding from venture capitalists, and they prefer to hire the best employees.
In short, such entrepreneurs focus on developing a reputable business model that can grow. When they succeed in this first step, then they later search for venture capitalists to help them start and grow their idea. However, these businesses usually make a small proportion due to risk capital and outsize returns.
Examples of Scalable Startup Entrepreneurship:
These entrepreneurial businesses focus on sustaining innovations, offering new products that are a variety of their core products. These entrepreneurial businesses have to do continuous research and develop new products to meet challenging customer demands and advancements in technologies. Often this is done by partnering with innovative companies or even purchasing those companies as well.
Examples of Large Company Entrepreneurship:
These entrepreneurial businesses focus on creating those products which provide services to the people and solve their social needs and problems. They want to bring the change in the world and make it a better place rather than just accumulating profits and acquiring wealth. Such entrepreneurial businesses can be non-profit, profit, and hybrid.
Their success is the widespread use of ethical practices, including impact investing, conscious consumerism, and corporate social responsibilities.
Examples of Social Entrepreneurship:
This is another kind of entrepreneurship that we can consider in our article of types of entrepreneurial business. We named it ‘Jack of all trades’ because such entrepreneurial ventures mostly sell and provide services in almost all categories. These businesses are not afraid of exploring new trends.
However, such businesses have huge risks, but they are worth the excitement and experience. You have to find the right investors and stakeholders to keep your entrepreneurial activities up and growing. As it is a broad term, it is difficult to summarize in a few examples, but you can surely look at Google, trying to explore different fields.
We all have thought about this and wondered why entrepreneurship is so in demand and appealing. So, we even thought of making you aware of its paramount importance for a country and oneself.
Entrepreneurial Businesses create jobs and reduce the unemployment rate of the country hence supporting a country's economy. Moreover, as this business venture grows, more positions develop, and poverty among the people lessens.
Entrepreneurial Businesses create change because these entrepreneurs always make a product that provides a solution to the everyday problems of the people. In short, their ambitions and ideas are the game-changer of the world.
Entrepreneurial Businesses help to provide and help societies. Most people have an assumption that Entrepreneurial Businesses are just focused on making money, but in reality, the more money they make, the more taxes they will have to pay, and there will be more funds for social services.
Some factors always seem to hinder your path of success. Some of them are mentioned below!
Now, let us discuss further on what other types or rather sub-types of Entrepreneurial Businesses can exist.
This, sole proprietorships, is one of the common types of entrepreneurial businesses that you would have come across in your daily lives. Usually, small businesses are categorized under sole proprietorships, but some large entrepreneurial firms can also be sole proprietorships.
So, what is the sole proprietorship? Generally, a person who owns a business and is personally responsible for it, in small, entrepreneurial companies, there is no legal significance between the owner and the industry.
Such entrepreneurial businesses are popular because of the ease and simplicity of their set-ups. Many small businesses are included in sole proprietorship because such entrepreneurial companies require nominal costs. Moreover, a sole proprietor just needs to secure local licenses to carry out his or her businesses
On the other hand, there are some problems with sole proprietorship types of entrepreneurial ventures because the owner of the company is liable for all the business’s debts. If that owner runs into some kind of financial trouble, then he can be a victim of lawsuits from creditors. If those lawsuits are successful, the owner will be in pain as they have to pay all the debts from their own pockets
Examples of Sole Proprietorships are:
Partnerships are another sub-type of entrepreneurial businesses, and it is a common scenario that you will see such entrepreneurial ventures on large companies. Now let us define this!
As from the word Partners, you can have a general guess that more than one person runs this entrepreneurial business. In definition, we can say that it is a legal form of operating a trade between two or more people. All the partners of that business will share management and profits, and such businesses are further categorized in general and limited partnerships.
In general partnerships, the partners are responsible for managing a company and even manage debts and other obligations. While in limited partnerships, the partners just act as investors. They do not have any control over the company, and they are not subjected to any kind of liabilities that general partners might have. A partnership business can even be run by a mix of limited and public partnerships.
If a person does not have any experience in the administrative area, then partnership entrepreneurial businesses are not a good idea because they require filings and regulatory complexities.
Examples of such businesses are:
The full form of LLCs is ‘Limited Liability Company.’ This is an entrepreneurial business model mostly used in the United States of America. In such an entrepreneurial business structure, owners are not personally held responsible for a company’s liabilities and debts. Moreover, these entrepreneurial businesses can be considered as hybrids as they are a result of a corporation with those of a partnership and corporation businesses or sole proprietorship and corporation businesses. It is an entrepreneurial business model that combines the pass-through taxation of partnership and sole proprietorship with the limited liability of a corporation.
The LLC'S benefits are that there is no limit or restriction on the number of members allowed in this entrepreneurial business. Members even have flexibility in structuring the company management. Furthermore, it does not require as much annual paperwork or formalities which corporations need, and owners are free from the responsibility of debts and liabilities.
However, these entrepreneurial businesses are expensive to form and even have a limited life. Lastly, ownership is typically harder to be transferred within a corporation.
Examples of such entrepreneurial businesses are:
This is another subtype of large entrepreneurial businesses. A corporation can be considered an organization made up of a group of people or different companies. The government has authorized them, states to act as a single entity, and is even recognized as such in law for specific purposes. This type of entrepreneurial business is guided by a group of officers known as the board of directors.
Such corporations are the most beneficial types of entrepreneurial businesses because these corporations exist as a separate entity. A corporation does not own right to vote and some other limitations, but apart from that, a corporation carries all the legal rights which an individual has.
Some benefits of corporations are that the shareholders of a corporation are only liable up to the amount of investment they have done. Due to this, the personal assets of a person are protected. Such entrepreneurial businesses can even raise money just by selling their shares or issuing bonds. Moreover, it allows the transfer of ownership as well.
On the contrary, there are some drawbacks to such entrepreneurial businesses. You might even have to pay double taxes, and there can be excessive tax filings as well. Moreover, it can be quite tricky to manage such entrepreneurial businesses independently.
Examples of such entrepreneurial businesses are:
Now, let us talk about what franchises are. It is just a type of license that a part which we can call franchise acquires so that they are allowed to have access to a business’s proprietary, knowledge, trademark, and processes so that party can sell that similar product or provide that same service under the original businesses name. They just have to pay franchisors an initial start-up fee and annual licensing fees. These Franchises lead us to our new discussion.
Why is it better to purchase franchises rather than building the business from scratch?
First of all, the risk of having a business failure is near to minimum because if you start a business by franchising, your business model will be based on a proven, tested idea. If it is too good to be true, then you can check how successful other franchises were.
Secondly, as the parent company will already establish the products and services, you would not worry about marketing, and there would be no need for market testing as well. Moreover, you would already be using a recognized brand name and a trademark. When the real business owner promotes his or her brand, your franchise will automatically be improved, and you will get more customers. Such perks are near to zero if you start to build your business from scratch.
Thirdly, the franchisor will also be ready to give you support and even training and helping setting up the business. The owner will also be readily giving you advice on the go, which undoubtedly will aid you in profiting more and more.
Fourthly, as franchises are a kind of small business, association with a recognized brand name allows the franchises to compete with big brands, and you may even get exclusive rights by the franchisor itself as well.
What’s more, banks will also be ready to lend you money to purchase a franchise with a good reputation, and hence financing will also be easy to do. Furthermore, relationships with other franchisors and suppliers will already be established, and you could just use their support to grow more.
What are the disadvantages of franchises over building a business from scratch?
First of all, you would not have your brand or identity as you will be using the brand name of your franchisor. Moreover, franchisors even have the right to implement restrictions on a franchise and how it can be run, which makes you handicapped when using your ideas and implementing them.
Costs of purchasing a franchise may be a lot higher than you would have expected. You may have to pay continuing management service fees, apart from the initial cost, and even agree on buying things and products from the franchisor.
Thirdly, you may find it challenging to sell your franchise because, without the franchiser's approval, you have no power. Moreover, if franchisors go out of business, then so do you.
Lastly, your profits might be shared between you and your franchisor, which may restrict you from making vast sums of money and benefits.
Your own eyes can witness some examples of such businesses and franchises. When you are on the road, you might have seen Macdonald and KFC fast-food restaurants. These are the franchises bought by different people and running in different places. These people used these franchises as an alternative to building their businesses from scratch.
We recommend you purchase a franchise rather than building your business from scratch. By running a franchise, you will learn the ethics and rules of a company and different business strategies, which you can later imply on your business and build it without any hindrance. Having experience is the knowledge to succeed in the field of marketing.
In a nutshell, Entrepreneurial Businesses are of several types, and it depends on oneself to choose from. If you are a risk-taker and have enough capital, then you can go for a large business venture, or if you desire to use your money carefully, then going for small businesses is what you should be doing!
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