Much of the business world is kinda getting carried away with the word “entrepreneur”…
And many are calling themselves an entrepreneur when they’re really not…
AND, not everyone is an entrepreneur, nor should we expect everyone to be.
Free Market Capitalism needs different roles…
AND THAT’S OK!
But –
I wanna share some insights on the differences (because an “investor”, “fast food franchise owner”, or “copy cat” isn’t an entrepreneur).
Here follows my small, non-definitive list of different types of business people:
en·tre·pre·neur noun /ˌäntrəprəˈnər,ˌäntrəprəˈno͝o(ə)r/a person who organizes and operates a business or businesses, taking on greater than normal financial risks in order to do so. NOTE: the following definitions are purposefully stereotyping
Entrepreneur, VC-Backed:
Own: Partial
Control: Partial
Risk Tolerance: Highest
PERSONAL Cashflow Level: Moderate until an IPO, if it happens
Time to Personal Cashflow: Once funded, immediate
They’re a creator, imaginary, disruptor, truly new Eg: Entrepreneurs that take cash on Shark Tank. I’m very against this. It’s freaky. I want the market to give me my paycheck when I’m selling something of worth, and not before that.
Entrepreneur, Non-VC Backed:
Own: Full
Control: Full
Risk Tolerance: High (less likely to lose their shirt if it fails, they own it all)
PERSONAL Cashflow Level: Low for a while, then grows big
Time to Personal Cashflow: Soon after traffic is consistent
They’re a creator, imaginary, disruptor, truly new, and a bit more scrappy than the VC-backed chaps. Requires moderate skills in marketing and sales.
Eg: Steve Jobs(He tried to get financing but was turned down. So he sold his car for $750 and Steve Wozniak sold his calculator for $500. Get after it)
Eg: Russell Brunson(He used funnels to sell funnels (imagine that, a product of his product) so his own money wasn’t at risk. Get after it)
Business Owner, Copy-cat:[not an entrepreneur]
Own: Full, dependingControl: Full
Risk Tolerance: Moderate (but they’re just copying someone else)
PERSONAL Cashflow Level: Moderate, they didn’t create anything
Time to Personal Cashflow:
They’re usually not very creative. They can make good money “hacking” all the time but I’ve found those that stay there usually remain worried about money. It’s not that they don’t make money, they just constantly need to see what others are doing so they know how to act next, which takes focus off their own creativity, so they stay in a “hacking” loop.
Eg: Any product that was ‘second’ to a market or off-brand
Business Owner, Franchisee:[not an entrepreneur (includes all working under commission)]
Own: Yes
Control: “Yes” (but it’s an illusion, so no)
Risk Tolerance: Low
PERSONAL Cashflow Level: Low
Time to Personal Cashflow: Slow, with little ‘perks’
Franchise Owners, in my opinion, are most desperate to be included as an entrepreneur. They are stuck in a business model that focuses their role solely on the product and operations, not actual marketing as it’s out of their hands. They bought a job and ‘entrepreneur’d’ nothing. The original builder was the only entrepreneur here.
Eg: Practically any fast food chain
Investor:[not an entrepreneur]
Own: Depends if it’s an equity, asset, or cashflow deal
Control: Depends how the business was valued and what type of contribution the investor is making (cash, talent, assets, relationships, etc)
Risk Tolerance: Low
PERSONAL Cashflow Level: Willing for low, but secure, with big exit plan
Time to Personal Cashflow: Usually needs cashflow back regardless of business health
It’s the other side of the “Entrepreneur, VC-Backed” coin. I have no problem when someone chooses to take on an investor to move faster, but only AFTER the market has said yes to them by paying the business lots of cash. An investor doesn’t have the option of simply giving cash. I’ve heard investors say that the only time when their investments in existing companies has worked well is when they’re personally involved (not a fund-and-dash), or there’s a brand new talent brought in for the company.
Eg: Warren Buffet (who kinda ‘entrepreneur’d’ his style of investing)