Who is an Entrepreneur?
An entrepreneur is a person who undertakes all the risks and accepts all the responsibilities. He/She is the one who arranges all the resources, i.e. land, labour, material, machinery, capital etc., so as to start a new business, often a unique one and earn profit out of it.
Table of Contents
- Types of Entrepreneur
- Wrap Up
Types of Entrepreneur
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 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, processes or methods, identify prospective markets and restructure the enterprise are termed innovating entrepreneurs.
Here is one thing that you should keep in mind, innovating entrepreneurs can carry out the functions only when the company attains development up to a certain extent. Also, people expect change and improvement. He/she is the one who gathers and processes information and initiates a unique combination of these factors. These are generally industrial leaders.
Must Read: Levels of Management
As the name clarifies, imitative entrepreneurs are the ones who are always ready 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 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 a loss to the company’s relative position and profit or when the success rate is considerably high.
Must Read: Group Cohesiveness
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. Entrepreneurial activity is often confined to a few innovations only.
So, the above classification relies on two important aspects:
- It indicates that an economy which is developing in terms of technical progress possesses 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
Based on the type of Business
- Trading Entrepreneur: A trading entrepreneur is one who is involved in the activity of buying goods from manufacturers and selling the same to customers. The sales is possible either directly or through a retailer. So, such entrepreneurs act as intermediaries, i.e. wholesalers, dealers, traders, etc., amidst the manufacturer and the customer.
- Manufacturing Entrepreneur: Those entrepreneurs who are involved in the activity of manufacturing products are manufacturing entrepreneurs. To put it simply, manufacturing entrepreneurs transform raw materials into finished products. These entrepreneurs carry out the following activities:
- Perform market research
- Identify the customer’s needs
- Arrange the resources and technology required for manufacturing those products that can satisfy the customers’ needs.
- 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.
Must Read: Group Discussion
Based on the use of technology
- Technical Entrepreneur: Those entrepreneurs who set up and operate industries which are based on science and technology are termed technology entrepreneurs. In better words, they 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.
Based on Ownership
- Private Entrepreneur: As the name itself suggests, a private entrepreneur establishes 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 belong to him/her only. For them, profit acts as a motivation. Hence, they do not enter into those businesses where the profit prospects are not high.
- State Entrepreneur: When the State or Government owns, manages, and controls the enterprise, be it a trading concern or an industrial unit, it is State Entrepreneur.
- Joint Entrepreneur: The enterprise that a private individual and the state jointly owns and operate. It is a joint entrepreneur.
Based on Gender
- Men Entrepreneurs: Business enterprises or industrial units set up and run by a male are men entrepreneurs.
- Women Entrepreneurs: When a female owns and manages a business enterprise, 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 women entrepreneurs. Further, the process is called Women Entrepreneurship.
Based on the Size of the Enterprise
- Small Scale Entrepreneur: He or she is one who makes an investment of ₹ 1 crore or less in the purchase and installation of plant and machinery.
- Medium Scale Entrepreneur: When the amount of investment made on the purchase and installation of the plant and machinery in the enterprise lies between ₹ 1 crore and 5 crores. Then such an entrepreneur is Medium Scale Entrepreneur
- Large Scale Entrepreneur: He/She is the one who makes investments in the procurement and installation of plant and machinery above ₹ 5 crores
Apart from the above-discussed types of entrepreneurs, there are some other types of entrepreneurs. It includes – Solo Operators, Active Partners, Inventors, Challengers, Buyers and Life-Timers.