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Common Forms of Entrepreneurship

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  • 0:03 Entrepreneurs
  • 0:55 Basics of Entrepreneurship
  • 1:58 Forms of Entrepreneurship
  • 4:44 Lesson Summary
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Lesson Transcript
Instructor: Brianna Whiting
Creating a new product and being brave enough to try and sell it can lead to exciting things for an entrepreneur. In this lesson, we'll learn the four common forms of entrepreneurship and their characteristics.

Entrepreneurs

Meet Skip! Skip has recently invented a new product for schools that he thinks will be a huge hit. While he has not mentioned his product to anyone else, Skip feels it might be time to start his own business selling his product. Now, anyone can start a business selling products that are already on the market that are loved and needed by consumers everywhere. But, starting a business selling a product that is new and never been sold before, is a whole other story.

You see, if Skip decides to start and run a new business selling a new innovation and takes on all of the risks and rewards, he would be considered an entrepreneur. Before Skip decides to take a leap and start his business, he first wants to do some research on the different forms of entrepreneurship. Come along as Skip learns which form is best for him and his new school product.

Basics of Entrepreneurship

Let's learn the basics of entrepreneurship first. Keep in mind that entrepreneurial ventures are generally started by an individual who usually has very limited resources to operate the business. Many times they revolve around new, innovative products but not always. The owner takes on all of the planning and the risks of the business at the beginning. And, should the business succeed, they reap all of the rewards. Sometimes investors are brought on board to share risks and rewards. Skip knows he is ready for the rewards, but is a bit concerned about all of the risks he would be taking on himself

In order to continue with his new business he knows he has to be willing to stake everything on his product - including both his finances and his time. He will need to find the materials needed to make the product, the money to finance his business, and the possible employees. Entrepreneurial ventures also need to do their own marketing and have to generate their own sales and distribution. But, if the product takes off and is a huge success, Skip could see sky-high returns.

Forms of Entrepreneurship

Now, Skip has decided to compare the following four forms of entrepreneurship to better understand where his new product and business best fits.

Small Business Entrepreneurship

There are many small businesses today. If Skip were to become a small business entrepreneur, he would typically hire local employees and family members to run his own business, and would likely only produce very small profits. Small business entrepreneurs often just operate to make ends meet and not to make huge profits and become a multi-million dollar business. It's common for small business entrepreneurs to fund their company with the help of family and friends. This is because getting an investor or financial backer is hard to do when the company is small and may seem unattractive to the large investor. Some examples of small business entrepreneurship include small local grocery stores or hair salons.

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