Who is an Entrepreneur?
An entrepreneur is a person who undertakes all the risks, accepts all the responsibilities, arranges all the resources, i.e. land, labour, material, machinery, capital etc. so as to start the new business often a unique one and earn profit out of it.
Types of Entrepreneurs
Classification of entrepreneurs by Clarence Danhof:
In the year 1949, Clarence Danhof based on his study on American Agriculture grouped entrepreneurs into different categories. According to him, at the commencement or budding stage of economic development, there is less initiative and drive in entrepreneurs, but when the economic development proceeds, the innovational and enthusiasm level in them rises. So, he classified entrepreneurs into four types:
Those entrepreneurs who introduce novel products, introduce new production techniques, process or methods, identify prospective market and restructure the enterprise are termed as innovating entrepreneur.
Here one thing should be kept in mind that innovating entrepreneurs can carry out the functions only when the company has attained development up to a certain extent. Also, people expect change and improvement. He/she is the one who gathers and process information and initiates a unique combination of these factors. These are generally industrial leaders.
As the name clarifies, imitative entrepreneurs are the ones who are always prepared to embrace fruitful innovations, often introduced by innovating entrepreneurs. This means that they do not take the first step towards innovating the change, rather they simply follow the techniques and technology pioneered by the other entrepreneurs.
These entrepreneurs are appropriate for those areas which are under development, so as to imitate the techniques and technology adopted in the developed areas. These are also called as adoptive entrepreneurs
These entrepreneurs are very careful by nature when it comes to implementing any change in their enterprise. Such entrepreneurs are characterized by timidness, scepticism and cautiousness.
Hence imitation is only done by them when it is quite clear that failure in doing so would cause loss to the company’s relative position and profit or when the success rate is considerably high.
Drone entrepreneurs are the ones who refuse to grab opportunities to implement any change or modification in the production method or process, even if their returns would hit severely if they don’t adopt the change.
Therefore, they incur losses, but they do not make changes in their production techniques or methods. The entrepreneurial activity is often confined to a few innovations only.
So, above-classification is based on two important aspects:
- It indicates that an economy which is developing in terms of technical progress possess a large number of innovative and imitative entrepreneurs and less number of other entrepreneurs, i.e. Fabians and Drones.
- Technological advancement may not be possible if the ultimate ownership and control of production lie in the hands of Fabians and drones.
Other Types of Entrepreneurs
On the basis of the type of Business
- Trading Entrepreneur: A trading entrepreneur is the one who is involved in the activity of buying goods from the manufacturers and sell the same to customers, either directly or through a retailer. So, such entrepreneurs act as an intermediary i.e. wholesaler, dealer, trader, etc. amidst the manufacturer and the customer.
- Manufacturing Entrepreneur: Those entrepreneurs who are involved in the activity of manufacturing products are called a manufacturing entrepreneur. These entrepreneurs perform market research and identify the customer needs and then arrange the resources and technology required for manufacturing those products that can satisfy the needs of the customers. Simply put, the manufacturing entrepreneurs transform the raw materials into finished products.
- Agricultural Entrepreneur: Entrepreneurs who carry out agricultural activities fall under this group. The activities may include cultivation, mechanization, marketing and selling of agricultural produce, animal husbandry, etc.
On the basis of the use of technology
- Technical Entrepreneur: Those entrepreneurs who set up and operate industries which are based on science and technology are termed as technology entrepreneurs. In better words, technical entrepreneurs make use of science and technology, particularly in the method of production used in the plant.
- Non-technical Entrepreneur: Entrepreneurs other than technical entrepreneurs are non-technical entrepreneurs. This means that their enterprise does not make use of science and technology. Hence, they use surrogate or similar methods for marketing and distribution so as to survive and compete in the market.
On the basis of Ownership
- Private Entrepreneur: As the name itself suggests, a private entrepreneur who establish the business enterprise, as the sole owner. Further, he/she single-handedly manages the entire concern and is responsible for all the risks and losses which the company incurs. Also, all the profits earned by the firm belongs to him/her only. These are typically motivated by profit and so they do not enter into those businesses where the profit prospects are not high.
- State Entrepreneur: When the enterprise, be it a trading concern or an industrial unit is owned, managed and controlled by the State or the Government, it is termed as State Entrepreneur.
- Joint Entrepreneur: The enterprise which is owned and operated by the private individual and the state jointly, it is called joint entrepreneurs.
On the basis of Gender
- Men Entrepreneurs: Business enterprises or industrial units which are set up and run by a male, then they are called as men entrepreneurs.
- Women Entrepreneurs: When the business enterprise is owned and managed by a female or she owns 51% of the share capital of the concern and provides a minimum of 51% employment to the females, then such entrepreneurs are called as women entrepreneurs.
On the basis of the Size of the Enterprise
- Small Scale Entrepreneur: When an individual makes the investment of Rs. 1 crore or less, in the purchase and installation of plant and machinery, then such an entrepreneur is called a Small Scale Entrepreneur.
- Medium Scale Entrepreneur: When the amount of investment made on the purchase and installation of the plant and machinery in the enterprise lies between Rs. 1 crore and 5 crores. Then such an entrepreneur is termed as Medium Scale Entrepreneur
- Large Scale Entrepreneur: When the amount of investment made by the entrepreneur on the procurement and installation of plant and machinery is above Rs. 5 crores, then such an entrepreneur is called as Large Scale Entrepreneur.
Apart from the above-discussed types of entrepreneurs, there are some other types of entrepreneurs such as – Solo Operators, Active Partners, Inventors, Challengers, Buyers and Life-Timers.