Types of Entrepreneurship You Need to Know About

Running a business is not just about effort. You could give your all to a business, pour your heart out, and watch it fail nonetheless. Why? Because succeeding as an entrepreneur isn't about the hard work alone; it's about making the right choice that best fits your strengths and goals when facing different types of entrepreneurship.

However, the taxonomy of entrepreneurship can be approached in multiple ways. Some categorize it based on the stage of economic development, while others categorize it according to its functions or characteristics. So, different frameworks offer different lenses through which we understand entrepreneurial behavior.

11 Types of Entrepreneurship

Researchers who have studied entrepreneurial behavior suggest that entrepreneurship is certainly not a one-size-fits-all concept. Instead, there are different types of entrepreneurs.

If we draw from various classification methods, we can distinguish 11 different types of entrepreneurship. Although some types may overlap in practice, each represents a distinct approach to building, managing, and scaling businesses.

Imitative entrepreneurship

Imitative entrepreneurship takes what works and makes it even better. So, instead of reinventing the wheel, imitative entrepreneurs focus on building on successful strategies that others have already proven. They are pragmatic but don't simply copy a business model, product, or marketing strategy. Instead, imitative entrepreneurs seek ways to emulate these ideas while improving upon them, taking them into new markets, and/or enhancing their functionality.

Think of Sam Walton, the founder of Walmart: no innovator there, as he was not the first to create a discount store. He didn't need to be. Walton saw what worked in retail and followed that pattern but tweaked it a bit to make it his own by focusing on rural areas and reorganizing logistics and supply chains. His imitative approach did not simply follow the leader but elevated it.

For many, this approach feels safer. When developing new products might be risky or costly, imitative entrepreneurship can lead to success without the high-stakes gamble. In the end, it is not about being the first one; it's about doing it better, doing it more efficiently, and bringing it to the world in a new way.

Lifestyle entrepreneurship

Lifestyle entrepreneurs create businesses that are basically an extension of themselves or something they love. They aren't driven by a zeal to dominate markets or pull in huge revenues but by molding a business to fit with their personal values and passions.

Think of a surfer opening up a surf school on a sun-kissed beach. They aren't looking to be some sort of global surfing brand or franchise; they love the ocean, and teaching other people how to ride waves is how they stay connected to that every day.

There is something much more genuine and warm in what they do, which reverberates far deeper with customers and thus builds customer loyalty—not to the product or service per se but to the person who offers those things.

Businesses of lifestyle entrepreneurs are built to fit around the entrepreneurs' lives, not the other way around. It's all about finding that sweet spot where work and personal life mesh together in a nice, even flow: not just making a living but living.

Small business entrepreneurship

Small business entrepreneurship is arguably the most well-known form of entrepreneurship, with over 400 million small businesses operating today. These encompass local businesses started by entrepreneurs to serve their community and make a modest profit. It's the corner bakery where the owner knows your name or the family diner that's been part of your life for generations. They may not be global empires, but they are just as important in that personal touch and connection with the community.

Actually, these small and medium enterprises (SMEs) provide more than 50% of global employment and create 7 out of 10 new jobs. While small businesses may never make the front-page news, like technology giants do, they provide jobs that are invaluable in terms of community building and maintaining local economies.

Hustler entrepreneurship

Hustler entrepreneurship is the definition of grit. Such entrepreneurs don't wait for the perfect opportunity; they make it out of whatever scraps are available. They don't dream of overnight success. Instead, they grind their way to it, one small win at a time.

From the street vendor saving to open a restaurant to the freelancer juggling ten clients, hustlers build from the ground up. They are fully aware that success is not handed on a silver platter but rather worked for through persistence, long hours, and a never-say-quit attitude. In the quick-fix world, they show that real growth comes from grinding, day in and day out.

Scalable startup entrepreneurship

Scalable startup entrepreneurship is about building a business that has exponential growth potential. In other words, scalable entrepreneurs focus on creating a business model that will scale up very fast. That is usually more prone to work in technology or innovative sectors.

Just think of companies like Uber, Airbnb, or Facebook. Scalable startups initiate their operations on the basis of some sort of idea related to disruptive innovation, aiming at rapid growth through capturing venture capital investments and scaling up their operations.

These entrepreneurs are visionaries who look beyond the immediate product or service to how that idea can be expanded on a massive scale. They often take big risks in pursuit of just as big rewards, investing heavily in talent, infrastructure, or technology.

Innovative entrepreneurship

Innovative entrepreneurship is basically the opposite of imitative entrepreneurship. This one is all about creating a product, service, or way of doing business that is entirely new.

Innovative entrepreneurs are constantly looking for ways to break conventions and move out of their comfort zones. For instance, mobile phones before the iPhone were functional but unimaginative. Jobs changed the way in which we communicate and relate to technology by combining aesthetics, functionality, and innovation.

These entrepreneurs thrive on creativity and are always on the lookout for solutions to problems or ways to satisfy consumer needs. When successful, they tend to bring about lasting changes.

Evidence-based entrepreneurship

Evidence-based entrepreneurship is a type of entrepreneurship where the main approach is to make decisions driven by data, research, and proven methods rather than intuition alone. Similar to a scientist running experiments, an evidence-based entrepreneur systematically gathers information, tests ideas, and refines strategies based on measurable results. The aim is to minimize risk and make entrepreneurship more calculated.

Evidence-based entrepreneurship is typically incorporated into other types of entrepreneurship. For example, in small businesses, it helps owners test new offerings before fully committing, while large companies use it to constantly innovate and improve products with data-driven insights. By including evidence in their decision-making, entrepreneurs in any field can turn uncertainty into strategy, making their ventures more resilient and efficient.

Social entrepreneurship

Through social entrepreneurship, business blends with purpose. With this type of entrepreneurship, the main goal is to create a meaningful and lasting impact on society as these entrepreneurs strive to solve real-world issues, including environmental challenges, poverty, and education gaps. Their ventures serve as tools for change.

Social enterprises are definitely not isolated cases of goodwill. An estimated 10 million social enterprises worldwide create around 200 million jobs. They are all united in one guiding principle: putting purpose before profit. Such enterprises manage to generate $2 trillion in revenue each year.

What's more, half of all social enterprises are run by women, compared to only one in five conventional businesses. This shows that social entrepreneurship is actually quite inclusive and diverse—the mission for the upliftment of marginal groups is embedded at the heart of business.

Large company entrepreneurship

Large company entrepreneurship refers to innovation and new business development within established corporations. It involves developing new products, services, or lines of business that would facilitate the corporation's growth through market expansion, new product offerings, or adapting to changes in consumer demand.

Entrepreneurs in large companies often work in dedicated teams to drive strategic innovation within the organization. They leverage the corporation's assets while using the larger infrastructure already in place.

Unlike startups, where agility and speed are the norms, entrepreneurs within large organizations face the unique challenge of balancing innovation with the constraints of a structured corporate environment. They must navigate bureaucracy, legacy systems, and established business models while finding ways to push boundaries and introduce new ideas.

But while startups often face uncertain survival rates, large companies come with the advantage of resilience. Well-established corporations enjoy a considerably higher rate of survival compared to small businesses. They possess the resources, customer base, and market influence that enable them to ride out economic storms and adjust to changed circumstances.

Intrapreneurship

Intrapreneurship and large company entrepreneurship share the same goal of driving innovation within established organizations but take very different approaches. While both involve creating new ideas, products, or services, intrapreneurship is all about independence within the system.

As the name suggests, intrapreneurs are entrepreneurs working inside the company. They are often given the freedom to experiment with bold, unconventional ideas outside of the corporation's usual processes. They operate in a startup-like environment, testing concepts and taking risks without the immediate pressure to align with the company's broader strategy.

One of the most famous examples of intrapreneurship in action is Google's 20% time policy, whereby employees were allowed to devote up to 20% of their workweek to passion projects outside their regular circle of responsibilities. This bold initiative empowers employees to think like entrepreneurs within the company, giving them the freedom to explore ideas that don't necessarily align with Google's core objectives.

Buyer entrepreneurship

Buyer entrepreneurs don't build from scratch; they acquire existing businesses and grow them. These entrepreneurs are not creators per se but investors who realize that there is potential in an already set-up business. What they do is look for undervalued companies with potential and use their skills and resources to take them to the next level.

Private equity firms often engage in this type of entrepreneurship, buying companies and improving operations in order to increase profitability before selling them. It's a calculated form of entrepreneurship that requires keen financial insight and operational expertise.

How to Choose the Right Type of Entrepreneurship for You

When deciding on a type of entrepreneurship, here are the key factors to consider:

Leadership qualities

Different entrepreneurship types prioritize different leadership qualities. Do you see yourself as a bold, visionary leader ready to disrupt markets, or do you prefer a hands-on, community-focused approach? Scalable startup founders often need to inspire rapid innovation, while small business owners may thrive by fostering personal connections with customers.

Risk tolerance

How much risk are you willing to take? If you embrace uncertainty, scalable startups or innovative entrepreneurship may be for you. On the other hand, if you prefer more calculated and stable growth, small business or imitative entrepreneurship could be a better fit.

Financial capacity

Your available resources matter. Some ventures, like large companies or scalable startups, require significant capital investment, while others, such as small businesses, can be launched with limited funds and grow incrementally.

Personal passion and long-term goals

Aligning your entrepreneurial path with your passion is crucial. Whether you're interested in making a social impact, becoming a leader in a specific market, or creating a lifestyle business, your choice should reflect what motivates you most.

The Bottom Line

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Frequently Asked Questions (FAQs):

What are the three main types of entrepreneurship?

Generally, the three main types are small business, scalable startup, and social entrepreneurship.

How does intrapreneurship differ from entrepreneurship?

Intrapreneurship involves innovation within an established company, while entrepreneurship typically focuses on building something new from scratch.

What are the specific problems faced by entrepreneurs?

Entrepreneurs often struggle with securing funding, managing market competition, and balancing risk and growth while staying innovative.