Some time ago, I read a white paper from Value Builder, a company that sells sales and marketing software. The paper really got me thinking about the diverse landscape of entrepreneurship. Clearly, each small business founder has unique aspirations and motivations for starting a business. As a small business mentor and consultant, I have mentored thousands of clients, and one of the first things I do when I meet a new client is to try and understand their motives for starting a business. Based on my own experiences, it is clear that there are three distinct categories of entrepreneurs, each defined by their own set of principles and objectives:
Enterprise Builders are rare and represent only about one in fifty entrepreneurs. They are driven by relentless growth and competition, with titles like CEO and Founder reflecting their unwavering commitment to building a larger enterprise.
Lifestyle/Micro Business Owners represent about one in four entrepreneurs. I define a lifestyle/micro business as a Mom-and-Pop business with under one million in annual revenue and no more than ten employees. These owners prioritize independence, often hiring family and valuing single-business ownership over the years.
Specialist/Freelancer Business Owners account for the largest share of entrepreneurs, just under three out of four entrepreneurs. This cohort strives for mastery in their chosen fields and seamlessly moves between jobs and freelance work over their working life.
Understanding each of these categories is crucial for anyone in the world of entrepreneurship, including business mentors like me, for several compelling reasons:
Tailored Guidance: Recognizing the motivations and characteristics of each category enables mentors like me to provide more tailored and effective guidance to my clients. By understanding their specific aspirations and challenges, I can offer them advice better aligned with their unique entrepreneurial journey.
Targeted Support: As a business mentor, tailoring my support to the needs of individuals within each category allows me to provide more targeted assistance. I can help Enterprise Builders develop strategies for rapid growth, Lifestyle/Micro Business Owners achieve work-life balance, and Specialist/Freelancer Business Owners hone their business acumen.
Networking Opportunities: Knowing each category’s prevalent traits and preferences helps me connect entrepreneurs with others who share similar goals and challenges. This facilitates networking and collaboration among like-minded individuals, enhancing my clients’ growth.
Efficient Resource Allocation: Understanding where the majority of entrepreneurs lie can guide the allocation of resources and support systems I develop. Since most of my audience falls into the Specialist/Freelancer Business Owners category, I can direct a larger share of my efforts and resources toward addressing their most pressing needs.
Mentorship Effectiveness: I can tailor my mentorship style and content to be more impactful by acknowledging the differences in motivations and weaknesses among these categories. My recommendations and guidance can be better attuned to their specific growth objectives and challenges, ultimately leading to more successful outcomes for my clients.
Caring about each of these categories is essential because it enables me to be a more effective and empathetic business mentor, fostering the success and growth of the diverse entrepreneurial community I serve. Let’s explore the motives of each type of entrepreneur in more detail.
Enterprise Builders
Enterprise builders represent only about 2% of business owners. However, they are what organizations such as the Small Business Administration (SBA) and Economic Development Centers (EDCs) want to incentivize and foster, as they become primary employers in an ecosystem. For enterprise builders, growth and challenge are the driving forces. They are never content with their current status and always strive to excel. The relentless urge to compete and emerge victorious fuels their entrepreneurial journey.
Business card title: “CEO/Founder.” Their business card title reflects their role as the driving force behind their ventures.
LinkedIn clues: If you look at their LinkedIn profile, you can see they are serial entrepreneurs, often juggling multiple projects simultaneously—a true portfolio entrepreneur.
Employees: Enterprise builders have very high standards for employees, resulting in many employee challenges and frequent turnover.
Pride: Enterprise builders take immense pride in their personal achievements and the milestones they’ve conquered.
Money: For enterprise builders, money is the tangible measure of success. The more they amass, the more successful they see themselves.
Capital structure: Enterprise builders are willing to relinquish ownership/control to attract top talent or secure investments.
Trust: Other entrepreneurs and advisory boards are the enterprise builders’ go-to for trusted advice and insights.
Engagement: Award programs are where they actively participate and seek recognition. Recognition is very important for enterprise builders.
Weakness: Access to capital can be challenging, and enterprise builders may struggle with outdated data from past successes.
Exit strategy: Enterprise builders consider selling their business a natural final step.
Lifestyle/Micro Business Owners
Lifestyle/micro businesses represent about a quarter of the business owners. They own a business that, for the most part, runs itself, even when they are not actively involved. They manage the business while their employees do most of the day-to-day work. Independence is the driving force for the lifestyle/micro business owner. Their unwavering need for control and life balance is what led them to business ownership as a means of achieving it.
Business card title: “Owner/President.” Their business card title reflects their central role in the company.
Employees: Lifestyle/micro businesses often employ family members and treat their employees like extended families. As a result, they often hold onto weak employees for too long.
LinkedIn clues: Lifestyle/micro business owners have dedicated years or even decades to a single business venture.
Pride: The lifestyle/micro business owners’ greatest source of pride is the company they have painstakingly built.
Money: For owners of a lifestyle/micro business, accumulating wealth represents their ultimate freedom.
Capital structure: The lifestyle/micro business opts for slow and steady growth. As a result, they are reluctant to relinquish control, except to family or trusts for tax-related reasons, and rarely have any investors other than friends and family.
Trust: They rely on professionals such as accountants, lawyers, and industry experts for guidance and support.
Engagement: The lifestyle/micro business owners attend industry-specific conferences where they actively participate and gather knowledge.
Weakness: Operations and broader business acumen can pose challenges for the lifestyle/micro business owners.
Exit strategy: Lifestyle/micro business owners see selling their business as something to do only when they are ready to retire.
Specialist/Freelancer Business Owners
Specialist/freelancer business owners represent the majority of business owners, accounting for just under three-quarters of all business owners. They are one-person shops and often trade time for money as a consultant. They are what Robert Kiyosaki defines as self-employed. They own a job, and if they do not work, they don’t make any money. That said, they are propelled by their aspiration to be recognized as the best in their respective field. Their life’s mission is to master their chosen craft and dedicate their entire career to one industry.
Business card title: Their profession. Whether they are a Massage Therapist or a Copywriter, their business card title describes what they do and is a testament to their focus on expertise and mastery of their craft.
Employees: Specialist/freelancer business owners avoid full-time hires. They prefer a risk-averse approach and occasionally use subcontractors since payroll is a significant financial obligation.
LinkedIn clues: Their job history mirrors the ebb and flow of the job market. Their LinkedIn profile is a tapestry of various roles as employees of larger firms and freelance assignments.
Pride: The specialist/freelancer business owners’ latest project is a constant source of pride and accomplishment.
Money: Specialist/freelancer business owners are frugal and very price-sensitive, often merging personal and business finances.
Capital structure: Specialist/freelancer business owners run a 100% owner-operated business, maintaining full control.
Trust: Specialist/freelancer business owners trust anyone who collaborates with them.
Engagement: Specialist/freelancer business owners attend local industry workshops and events to stay connected with their trade.
Weakness: Operations and business acumen can be areas of challenge for them.
Exit strategy: Specialist/freelancer business owners trade time for money and rarely have anything to sell. When they stop working, the business stops too.
These three categories embody the essence of entrepreneurship, each with its own unique perspective on what it means to be a business owner. While Enterprise Builders, Lifestyle/Micro Business Owners, and Specialist/Freelancer Business Owners have distinct motivations, they collectively contribute to the dynamic tapestry of entrepreneurship worldwide.
How will you plan to use this information to improve how you interact with each type of business owner?
