Where Do You Fit in

Where do you fit in?

To the best of my knowledge there has not been a complete list of this nature that covers all of the types produced. Invariably authors focus on their own area of interest, I added no 1 and 2, but the others all existed based upon other people’s research. I found these completing the PhD in SME development and compiled a single list.

The list is important because each of these types has factors that make them different. How? Let us list them first and then dissect them to understand the differences. Bear in mind that one is not better than another. They are simply different and consequently they have different strengths and weaknesses. Those closest to 10 are the most entrepreneurial and the most likely to build a large profitable business. This tendency scale was produced by Burch in his Entrepreneurship Continuum (1986).

The Burch Continuum helps you to understand how people differ. They will differ on each item to a difference extent. These factors make us who we are. Some of these factors are part of your personality and extremely hard to change. Others are part of how we were brought up, taught and things we have been exposed to at home, in school, university, and with our friends. These too can be changed to varying degrees if we put our mind to it.

These factors are seldom understood in context, but once they are we begin to understand our behaviours. There is no correct or wrong. There is simply who we are. It is imperative to understand these and how they affect our behaviour, because this determines what we will and will not do.

Kirzner’s Theory of Entrepreneurship defined an entrepreneur as an individual that identifies disequilibrium in the economy and then equilibrates the factors of production. In the context of this continuum, this would not be equally applicable to all categories of entrepreneurs on the entrepreneurial continuum. Governments will therefore have to take note that interventions would impact differently on the different levels of entrepreneurs. As much as you should want to understand what and who you are if you intend to be in business.

The types of business owner are: - Survivalist - Salary replacement - Small business manager - Franchisee - Copycat business - Lifestyle business - Inventrepreneur - Franchisor - Serial entrepreneur - Portfolio - Angel funder - Venture capitalist Please note that these definitions are never a tight fit. There are 8 factors defined by Burch and each is independent of the others. Understand that as humans we are never that precisely defined. The following descriptions are broad generalisations, and you may not fit exactly into one category but may blend across more than one. You need to look at it from a big picture perspective.

- Survivalist The survivalist is most often someone who has low to no education, has performed predominantly manual labour and quite likely has minimum to nil resources.

These people are often only suitable for manual labour employment through to a tradesman. They can contribute at this level in economic development programmes.

- Salary replacement - small business manager Although this group are near the bottom of the scale, they are in a much better situation. They most often have had jobs working in small through to large businesses. They are generally workers and seldom rise above the bottom rungs of management at best. They have little to no entrepreneurial drive and it would be highly unlikely they would look to entrepreneurial activities as a solution. They like and need the regularity of a monthly or weekly salary cheque. They have either been fired or retrenched, as they would be highly unlikely to resign. They have quite likely held down the same job for a very long time, without or with limited promotions. They are possibly older people and unlikely to find a new job. Despite trying to find a new job, they will eventually become desperate, as the retrenchment package and/or their pension starts to run out. They then decide they have to get into business.

As they are highly risk averse, they will start by looking for a small business to buy, which will be making enough profit to allow them to earn a similar salary to the salary they earned previously. It will be a simple business most likely with a small shop or office with an established clientele of repeat customers. This is the preferred choice as they are not at all comfortable or capable of selling.

- Franchisee Franchisees can be divided into two groups. One group is not truly entrepreneurial. They are similar to the salary replacement/small business manager in that they want to create wealth, but they too are risk averse. They have limited capital and often go into debt to buy a franchise. They often end up buying franchises which seldom create great wealth due to limited capital. The second group have greater assets and/or capital and buy the bigger better and more expensive franchises. As their success builds, they often purchase further outlets of the same franchise and can have a large portfolio of franchises. Franchisors prefer selling new or re-possessed franchises to existing successful franchisees. This results in a win-win relationship. I know a number of these franchisees who have created great wealth. In some respects, it is difficult to assess whether they are entrepreneurial or not. I believe they are, but they just do not fit the traditional entrepreneurial mould. They are very astute, and I believe that their business model is to find low risk, high return opportunities. A good franchise is just that and a top franchise brand can be extremely lucrative. This is very dependent on the franchise brand and the country. They are quite likely better entrepreneurs than the traditional entrepreneur, in that they are not too interested in the independence normally wanted by entrepreneurs. They are 100% focused on low risk and high returns and generally do very well as a consequence. - Copycat business The copycat business owner is seldom very successful. They often see friends, family, neighbours or a casual acquaintance start a business and do relatively well. They then open an identical business. They however have no insight into the business, are not entrepreneurial, and mostly lacking in business skills. The few I have encountered seldom survived a year.

- Lifestyle business These are a step up on the salary replacement/small business manager in certain respects. The are a lot more entrepreneurial and are able to sell, so they are able to grow their businesses. But they have a passion for living their lives, hence the name, lifestyle entrepreneur. They build a good business quite quickly and are soon making good profits. They start to buy the toys in life – motorcars, motorbikes, holiday homes, and expensive hobbies. Then they start to work shorter weeks to enjoy these toys. They earn well and live well. The business is generally sound and they spend enough time there to maintain it. But they do not grow it, and consequently by the time they want to retire and sell the business, the value has been eroded due to no growth and inflation, and the business is often not saleable. They have often not accumulated real wealth but rather depreciating assets, and a property or two. - Inventrepreneur The inventor who believes their invention will make them very wealthy. Seldom met successful inventrepreneurs in wealth terms for one simple reason, they never finish their invention. They are perfectionists who never finish. The last one I met 2 years ago had spent 13 years and was still trying to perfect it. No focus on business, just unrealistic perfection. They talk the talk but cannot walk the walk. They are often very plausible because they believe so deeply. They consequently survive on grant funding, but seldom get wealthy from their invention.

- Franchisor A franchisor is a person or group of persons who develop a business model and create a business that is extremely profitable with high growth rates. They may or may not have started with the intent of creating a franchise, but once they launch, it grows quite quickly.

To launch a franchise you need to have at least 1 store but more is an excellent marketing tool.

A good franchise can be exceptionally profitable for the franchisor, but it requires that the franchisor finds an excellent business model in a new area. Copycat franchises seldom work out as well as the original. Creating, selling and managing franchisees is a very difficult and requires good business skills, but key is the business model.

Franchisors with a good business model most often do create substantial growth.

- Entrepreneur An entrepreneur is a person who pays attention to the world around them, identifies new opportunities and then starts a business to take advantage of the opportunity.

The secret is to fill gaps in the market. It may not be leading edge technology and could just be a gap that exists in the geographic area you are focused on. Remember that a geographic gap may not be sustainable for various reasons. Someone else could do the same thing the week before or after, and your competitive advantage is lost. The best competitive advantage is when you get into a new technology or business model first. First to market is always a great opportunity but it can also be tough to make it. Remember that the market may not be ready for it so early, so it can take time to build. Your first clients could be early adopters and they are limited in numbers. But if you do and hang in there you have a big base of clients before your competition starts and you are already perceived as the market leader.

If you pull it off, you can sell your business for a premium as all the latecomers fight for market dominance. - Serial entrepreneur Serial entrepreneurs are entrepreneurs who start, sell and start again. They never own more than one at a time. They focus everything on that one business that is active at the time.

They enjoy the start-up process and get bored with success, so they sell and start something new. In the days before capital gains tax, it was a good way to make tax free cash and build your capital. So, if you are entrepreneurial, check out your own country’s capital gains tax laws. If necessary, go to the local tax office and ask for information or Google it. There may still be opportunities in your country.

It is a great way to make capital grow quickly at zero or low tax rates. Currently the UK and Mauritius for example have capital gains tax that is taxpayer friendly, and I am sure there are more. A big failing is when people who have never started a business decide they will do this. You have to remember that starting, managing and growing a business is not simple for the first few times. Businesses require a wide range of skills and these need to be refined in the doing, and if you are changing sectors you need to make sure you know and understand the specific factors related to that sector. Do not rusk into this until you have some business experience, or it could be an expensive lesson. If you patient and work very hard on the sales, it can be a profitable and fun route to wealth creation.

Key to success is largely due to your ability to start good saleable businesses. Your potential buyers are salary replacement/small business manager business owners. - Portfolio entrepreneur The portfolio entrepreneur is the next step after the serial entrepreneur. The difference? Instead of starting, owning, selling, you now start, own and keep a number of businesses simultaneously. To achieve this is difficult. New entrants think it is simple, but this is far from the truth.

You need to understand how all the businesses function. You need to understand the industries and their technical components, the strategies, the finances, the staff, the market, the clients and a whole lot more, BUT FOR EVERY BUSINESS YOU OWN - SIMULTANEOUSLY. Quite often people take partners or buy existing businesses but keep the previous owner as a co-owner, director or manager.

New people often think this is a good idea because they can make more money. The reality is that if you do not know what you are doing and lack any real experience you can be assured of losing a lot of money.

This is a good way to create wealth, but there are no shortcuts except to poverty.

- Angel funder Few entrepreneurs get to this level.

An angel funder, also known as an angel investor or simply an angel, is an affluent individual who provides capital for a business start-up, usually in exchange for convertible debt or ownership equity. Angel funders are typically entrepreneurs themselves or retired business executives who seek to invest in early-stage companies with high growth potential. They often contribute not only financial resources but also mentorship, advice, and valuable connections to help the startup succeed. Angel funders play a crucial role in the early stages of a company's development, filling the gap between self-funding (bootstrapping) and larger venture capital investments.

When seeking an angel funder be careful. They are not all created equal. Experience shows that some think because they are funding the new business, they should run it. They try to dominate the new owner into doing it their way despite not necessarily having relevant knowledge and experience. They also try to get too much equity for their investment which leaves the owner with too little equity for later fund raising and consequently the business fails or the startup owner ends up as a minority shareholder in their own business. I have seen where the angel funder ends up owning the business and the startup owner ends up with no equity and just an employee.

So, do not rush onboarding an angel funder, as they can make or break your business. Spend some time at their existing businesses and watch what and how they do things. Talk to their staff. Be VERY careful!

- Venture capitalist A venture capitalist (VC) is an investor or investment firm that provides financial backing to early-stage, high-potential startup companies in exchange for equity ownership. Venture capitalists typically invest in businesses that have the potential for rapid growth and scalability, often in the latest technology, biotechnology, or other innovative sectors.

Unlike angel investors, venture capitalists manage funds pooled from various institutional investors, such as pension funds, endowments, and corporations, or from wealthy individuals. They usually invest larger amounts of capital and are involved in later stages of a company's growth, often after initial proof of concept has been established.

Venture capitalists not only provide funding but also offer expertise, guidance, and networks to help the startups they invest in succeed. They typically take an active role in the companies they fund, often serving on their boards of directors and providing strategic direction to help them achieve their growth objectives. In exchange for their investments and support, venture capitalists seek significant returns on their investments, usually through a successful exit, such as an initial public offering (IPO) or acquisition by a large corporate entity.

If you have no interest in growing really big, do not look for funding here.

What is important is to understand where you fit in and what you want. There is no right or wrong! It is what you want. The only problem is that once you start down a path, it is difficult to change direction later. So pay attention and make sure you are on the correct path to achieve what you want in life.