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Reprinted from BusinessTrade.org. Original article here.
by Louis Nel
Entrepreneurs start their businesses seeking to generate a stable income from their ventures. High-impact entrepreneurs, alternatively, seek to grow a stable business that can make an impact. Here’s three ways to find out which one are you.
According to Paul Jones, representative of the Council of Innovation in the US and experienced angel and venture capitalist investor, there are four main differences between entrepreneurs and high impact entrepreneurs:
Most small business entrepreneurs start their business with the idea to attain a measure of stability in their financial life. That is why some researchers also refer to them as lifestyle entrepreneurs. Building a profitable business that can pay them a regular income is their main goal. They may want to build a legacy, passing their business down to next generation or they may want to sell the business when they retire in order to supplement their retirement investments, but the focus stays on regular income generation over the long-term.
High impact entrepreneurs, in contrast, are less worried about maintaining a regular income and are more focused on short-term operations and long term personal wealth. This can take place over 3- 5 years. It may involve building the organisation up to an exit transaction, where the business is sold off to a purchaser for a substantial amount. Funds can then be used to finance new high-impact entrepreneur endeavours.
2. Growth potential
For the lifestyle entrepreneurs, establishing a business that can be sold for a large value in the long-term (5-10 years) is not that important, as maintaining a business model which operates a level that generates their desired income and corresponding lifestyle. Consequently, the business is often run at the minimum of risk to maximum growth ratio.
Compared to lifestyle entrepreneurs, high-impact entrepreneurs have a larger appetite for risk. Their aim to generate long-term personal wealth depends on the short to medium value of their business. They may be more inclined to accept much greater uncertainty to achieve a much higher returns. Capitalizing on new trends, implementing innovative technology, pioneering new consumer markets are all characteristics of high impact entrepreneurs approach; this is a way to capitalize on ingenuity and capture new market share while stimulating their businesses’ growth.
3. Measuring impact.
In an interview with Memeburn, a business and technology website, Anthony Farr, CEO of Allan Gray Orbis Foundation, acknowledged a link between high impact entrepreneur businesses and businesses that create jobs and economic growth. This in part describes the impact that these entrepreneurs make on the economies within they function. Small business entrepreneurs have an inherent incentive to streamline their business operations, which leads to little job creation. Alternatively, high-impact entrepreneur organisations often drive innovation and because their focus is growth, they tend to generate more jobs.
Jones states that one should not make the mistake of vilifying small business entrepreneurs or classifying high impact entrepreneurs as good or evil. Both entrepreneurs play an essential role in their respective domestic economies. Small business often makes up the core of the economies, providing stable job opportunities. High impact entrepreneurs are innovation drivers and market creators. They are both needed and should both be encouraged is to grow and develop.
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