Government Report Identifies 4 Entrepreneur Types

by Startacus Admin

What type of entrepreneur are you?

Talk about a loaded question. Loaded, because many of you will now be racking your brains to decide which 'type' you are, whilst others will be rolling their eyes in disapproval at the mere suggestion that 'entrepreneurialism' might be reduced into 4 distinct, mutually exclusive categorisations.

Whichever camp you fall into, you will probably concede that the question is nonetheless an intriguing one.

It seems the folk at the Department for Business Innovations and Skills agree, since they have recently released the findings of a report into this very matter called 'Understanding the Motivations for Entrepreneurship'.

Their results suggest that the vast majority of entrepreneurs can be classified into one of four groups, depending on their particular motivations for starting a business.

We are undecided regarding the validity of these results, and indeed whether there is anything to be gained from attempting to box people into such tightly defined categories.

The report states its motivation for doing this as the following;

"The recession and subsequent downturn saw an increase in numbers of very small businesses and a rise in the rate of entrepreneurial activity. Despite little change in balance of opportunity-driven and necessity-driven entrepreneurship there was a renewed focus on questions about whether necessity-driven businesses will tend to survive and succeed. It is often assumed that necessity-driven businesses will be less successful than those started to pursue an opportunity and this report establishes evidence to address this."

We have covered in detail the sudden and dramatic rise of entrepreneurialism over the past couple of years and are of the opinion that this can only be a good thing, both for the economy and the people of the UK. We do however find ourselves somewhat torn regarding the benefits of pre-empting business failures / success based on tight motivational parameters... it just feels rather anti-Startacus. We will come back to this over the course of the next few weeks, but for now, let's just take a quick look at the entrepreneurial 'types' identified in the report.

(We're sure you will all have some pretty strong opinions on the matter so please comment at the bottom, or tweet us to let us know what you think!)

The 4 Types of Entrepreneur

Older opportunists using existing skills

• Tend to be older entrepreneurs, perhaps approaching retirement or recently retired

• Their business is not driven by a financial need (therefore they have little risk) – they are driven more by remaining occupied, taking advantage of a good opportunity or earning a little extra money

• Some have been self-employed before

• Not intended to be a long-term venture

Consistently self-employed

• These entrepreneurs have been self-employed for a long time, generally moving from one business to another

• The business tends to be their main source of income

• These entrepreneurs tend to be skilled in their specific area AND in running a business in general

• Intend to maintain the business long term, and grow it in some cases (and generally have a concrete plan in place for doing so)

• Rely on getting clients / projects through the door to maintain income

Business-from-scratch: competent/experienced

• Entrepreneurs that have never been self-employed before (though they generally know friends / family who are)

• The business tends to be their main source of income

• They are using skills previously used in employment, and are working in an area that is related but different (e.g. journalist now self-employed as a media consultant)

• Often driven by wanting to be their own boss / flexible working

• Have a reasonable level of business knowledge due to general business-savviness and watching others run their own business, but want help with aspects specific to their chosen area, e.g. advice on legislation or licenses.

• Due to starting out on their own for the first time they also say access to a business mentor would be very helpful.

Business-from-scratch: no experience

• Entrepreneurs that have never been self-employed before (though they generally know friends / family that are)

• The business tends to be their main source of income

• Often driven by wanting to be their own boss / flexible working

• Have no / very little experience in their chosen area, i.e. they are not necessarily using skills from their previous employment but trying something completely new, for example setting up a B&B

• Can struggle with business planning, drive, focus and confidence – a regular mentor in the early months would really help these businesses.

Whatever you / we might think about the significance, or indeed accuracy of these assumptions, it is undeniable that the Department for Business Innovations and Skills have done their homework on the matter, with detailed and impressive research very evident in the report (which is definitely worth taking a look at!).

I'm sure that this one will be keeping us talking for quite some time.

 

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Published on: 23rd March 2015