Though entrepreneurship is the overall process of developing, launching, and running a business, there are several general types of entrepreneurship.
Small Business Entrepreneurship
Small business entrepreneurship is the act of starting a business without turning it into a large conglomerate or opening many chains (franchising). A single-location restaurant, a retail shop, a doctor’s office, or a small consulting firm would all be examples of small business entrepreneurship. This type of business is very dependent on the founder’s efforts alone, therefore the maximum financial profit is limited by their available hours and personal energy.
This type of entrepreneurship usually involves personal investment and success is tied to profits that the individual uses as their main source of income. They are often called lifestyle businesses, because they support the founder’s personal lifestyle, and are based almost entirely on the founder’s personal efforts. Therefore, they are not easily scaled up into a larger business. These individuals are not seeking investors and will only take a loan if it helps to continue their business operation, growth and scaling up are not important goals.
For highly experienced academic researchers, consulting is a common and attractive route into small business entrepreneurship. Using their highly specialized subject matter expertise, researchers, faculty, post-doctoral fellows, or even graduate students, can easily transform their specialized educational background into a fee-for-service business by providing consulting services to businesses and organizations outside the academic ecosystem. Academics often have the latest understanding of leading-edge research in their area of expertise. This deep knowledge base can be used to provide guidance and opinions to industry partners or even government organizations that are unable to understand, interpret, or vision a path forward for complex new research results.
This type of business model is often set up as a sole proprietorship or as a simple corporation with only one employee (the academic researcher) or no employees with the academic as the main shareholder. The small business corporation model is often chosen to control shareholder liability and to enable more retained earnings to remain within the corporation at a lower tax rate. A corporate model can also enable reinvestment in business building activities, enhance the business image, and instill greater trust from potential clients. Some academics can even specialize in providing scientific opinions to lawyers and the courts during litigation of matters involving complex science or patent disputes based on scientific inventions.
Before venturing into consulting, it is imperative for academics or industry experts to ensure they have the freedom to do so based on their existing employment agreement and that the consulting topic is not a conflict of interest or conflict of commitment between their consulting client and their academic research projects. Almost all public academic institutions allow researchers (faculty/staff/students) to perform private consulting outside of work hours, provided it is not in conflict with institutional policies. If unsure, check your institutional policies or connect with your human resources advisor.
Scalable Start-up Entrepreneurship
Scalable start-ups usually begin with a founder who has a unique idea and the vision to create and scale-up (grow) the company until it is highly profitable (or for social ventures, fully sustainable) and often continue to grow the company to be the leader in the market.
These businesses begin on a very small scale, often as just the seeds of an idea. The idea is then nurtured and scaled, typically through the involvement of outside investors, until it becomes something much larger. These companies must grow to survive because often they are not profitable until they are very big and benefiting from huge economies of scale. Many Silicon Valley digital technology companies fall under this model; they begin in the founder’s garage, academic research lab, or home office before eventually scaling up into large multinational corporate businesses. Amazon, the world’s largest corporation by market capitalization, did not report a profit for the first 10 years.
Listen to Steve Blank discussing start-up companies.
Social entrepreneurship seeks innovative solutions to community-based problems. Social entrepreneurs are willing to take on the risk and effort to create positive changes in society through their initiatives. In other words, a social entrepreneur launches an organization that’s fundamentally about working towards enacting positive social, cultural, or environmental change, in addition to generating profits. Often the initiatives function as a non-profit organization, non-governmental organization or B-corporation. The social change in question may support environmental conservation, racial justice, international development, enhanced health care, or education in underserved communities, populations or regions of the world. They can vary in size from a few employees/stakeholders to thousands or even millions of employees/stakeholders.
Sometimes, entrepreneurs work within the context of a larger, established company. Imagine someone that works at a large automotive manufacturing company. Through careful market research, they have realized there is a high demand for motorcycles, and that the company has many of the technologies and processes in place to branch into motorcycle production. If the idea is approved the company moves to fund and launch a brand-new motorcycle division, or spin out company.
Within large organizations (for profit, not-for-profit, academia, and even government), an “intrapreneur” is a person who acts like an entrepreneur but within the constraints of a larger company and for the benefit of the company that employs them. These people are agile, resilient, tenacious, passionate, visionary, and they don’t fear failure. These people survive because the corporate culture of the company has purposely allowed and supported an ecosystem to encourage such behaviour (within limits) because it might just develop the next big innovative product, process, or business model for the company. In short, they have the freedom to act like an entrepreneur and take risks within the security of a larger company. For example, Google is known to be intrapreneurship friendly, allowing their employees to spend up to 20% of their time to pursue projects of their choice.
The academic entrepreneur is an entrepreneur primarily focused on using their research results, and the knowledge generated while working in an academic setting, to support innovation and the creation of new products and services. The goal of the academic entrepreneur is to transfer their new knowledge and discoveries into the real world where it will have the greatest impact. The technology transfer process (described previously) is directly linked to academic entrepreneurs.
These entrepreneurs want to expand their role beyond academic research and knowledge creation and assume a role in a start-up or new venture. As either a scientist, researcher, product developer or advisor they aim to ensure their research results (often patent pending) have the best chance of being converted into a viable, marketable, and sustainable product adopted by industry and customers. Unused knowledge has little impact, but new products and services (commercial or social) that solve real problems in society, can have huge positive impact.
Academic entrepreneurship is a form of knowledge mobilization that is facilitated through the academic researcher’s participation in a start-up. For many academic entrepreneurs, the goal is not to quit academia and become a business leader or CEO. Instead, they assume the role of Chief Scientific Officer, VP Research, or similar scientific advisory role that enables them to steward the complex knowledge generated from years of research, so that it can be properly used by a start-up venture led by experienced business leaders.