Page 23 - DMGT310_ENTREPRENEURSHIP_AND_SMALL_BUSINESS_MANAGEMENT

Entrepreneurship and Small Business Management

Notes Introduction

In the previous unit we dealt with the meaning and importance of entrepreneurship and also
discussed about the various characteristics of an entrepreneur. This unit will help you to
understand the classification of entrepreneurship and various emerging models of
entrepreneurship. The various sections and sub-sections of this unit will also summarize the
problems faced by entrepreneurs in India. Entrepreneurship is the best tool for creation of
money, specifically for people with a business mind. There are various types of entrepreneurs
and each and every one of them has their good and bad traits. In order to be successful in
business, one must know what kind of entrepreneur he is and be aware of himself. This is the
first step on the way to transform oneself into a better person. An individual can become a very
proficient entrepreneur within no time at all.

2.1 Types of Entrepreneurship

By simple definition – all active owner-managers are entrepreneurs. They can be classified into
following categories:

2.1.1 Classification on the Basis of Ownership

Entrepreneurship can be classified on the basis of ownership as follows:

Founders or “Pure Entrepreneurs”: As the term suggests, they are those individuals who are the
Founders or “Pure Entrepreneurs”: founders of the business. They are the ones who conceptualize
a business plan and then put in efforts to make the plan a success. For example, Dhirubhai
Ambani of the Reliance Group.
Second-generation operators of family-owned businesses: They are the individuals who have
inherited the business from their fathers and forefathers. Like Mukesh Ambani and Anil Ambani
sons of Dhirubhai Ambani of the Reliance Group now split into two: Reliance – Reliance Industries
Limited and Reliance – Anil Dhirubhai Ambani Group.
Franchisees: Franchisee has been derived from a French word which means free. It is a method
of doing business wherein the parent owner (the franchiser) licenses his trademarks and tried
and proven methods of doing business to a franchisee in exchange for a recurring payment.
Here, the franchisee has not conceptualized the business but has invested his money and time in
the business.

Example: NIIT has given its franchisee operations to local players after thorough scrutiny
and proper training. These franchisees follow the same curriculum, use the same set of books,
have the same pricing strategy and award the same degree. They share the profit margins and
get training, curriculum design and books from the parent company i.e., NIIT.

Owner-Managers: When a person buys a business from the founder and then invests his time
and resources in it he is called the owner-manager. Like Sabeer Bhatia is the founder entrepreneur
of Hotmail, whereas Microsoft’s Bill Gates became its owner-manager after buying it for $400
million.

2.1.2 Classification on the Basis of Personality Traits and their Style of
Running Business

The Achiever: These types of entrepreneurs have personal desires to excel. The only drive that
pushes them is the desire to achieve something in life, the desire to make a mark in society, the
desire to prove their excellence. No matter how many hurdles come in their way, they are

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