The 6 Different Types Of Startups

Different Strokes for Different Folks

The term entrepreneur is used by a wide range of individuals to describe what is often seen as a generic group of young people building startups. In this traditional view, the goal is to rapidly grow a business concept and then take it public in an IPO. This process has been highlighted in numerous books and magazine articles. 

In reality, the American dream of being in your own business takes on many forms with many different goals. Individuals start businesses at all stages of life in many different kinds of enterprises. There are at least six varieties of these businesses and understanding the differences can be important to how to approach the process. Shooting for an IPO is a dramatically different undertaking from simply opening a small franchise restaurant. Below is an overview of those types.

Creating a Job. The Family Business.

The focus on small business in the U.S. is constant because small businesses are so critical to our economy. Most businesses are small businesses and they serve to provide a job for the owner. Some of these businesses grow and some remain the same size for decades. In either case, they are very important to local economies. They buy from other small businesses and create jobs, whether one or many. These small businesses represent, in total, the backbone of much of the business in the U.S.

Creating a Job 2. Living a Lifestyle.

With the growth of the Internet and a non-traditional work mindset, many individuals today focus on finding ways to pay the bills while working at their hobby or special interest. From freelance writers and designers to programmers and fishermen, there is a growing segment of the workforce that puts following a passion above increasing the profit.

Growing Someone Else’s Baby.

There is a constant pressure on many public companies to increase sales and earnings. Using the currency of public stock, many of these companies turn to acquisitions as a part of their strategic growth plans. Responding to this demand, more and more companies are established with being acquired as the goal, not seeking an IPO. Another factor affecting this segment are the growing hassle and regulatory costs of a public company. Simply accepting stock is far preferable for many.

The Green Factor.

Whether it is the environment or literacy, many individuals today seek to have a socially significant component in their efforts. People realize they can have a decent standard of living and still pursue goals that don’t fit the traditional grow and profit models. There is a sophisticated nonprofit universe that supports these efforts. However, an increasing number of individuals also pursue profit models as their goal.

The Home Run.

The venture market continues to feed that segment of entrepreneurs that are in it for the dream of building a large company for the public markets. 

Intrapraneurship.

With varying degrees of success, large companies are investing billions in their own startups, attempting to bring innovation into a manageable environment.

Evaluating different enterprises covers everything from capital used to the exit strategy. For example, is there a plan to sell, go public, or hand off to the next generation? Understanding the type and size of business being built is essential to the process and whether it ultimately succeeds.

Author Bio:

Faye Nicole Oflada is currently blogging for Internet Angel Investors. She enjoys blogging about crowdfunding and offers advice on different ways you can invest.