Types of Start-Up Firms

Types of Start-Up Firms
Salary-substitute firms are small firms that yield a level of income for
their owner or owners that is similar to what they would earn when working for
an employer. Dry cleaners, convenience stores, restaurants, accounting firms,
retail stores, and hairstyling salons are examples of salary-substitute firms.
The vast majority of small businesses fit into this category. Salary-substitute
firms offer common, easily available products or services to customers that are
not particularly innovative.
Lifestyle firms provide their owner or owners the opportunity to pursue
a particular lifestyle and earn a living while doing so. Lifestyle firms include
ski instructors, golf and tennis pros, wine bars, and tour guides. These firms
are not innovative, nor do they grow quickly. Commonly, lifestyle companies
promote a particular sport, hobby, or pastime and may employ only the
owner or just a handful of people. Tahoe Trips & Trails, owned by Hanna
Sullivan, is an example of a lifestyle firm. The company leads multiday
outdoor adventure trips for private groups and corporate clients to Lake
Tahoe, Yosemite, Death Valley, Jackson Hole, and similar locations. Sullivan
left a prestigious job with Freemont Ventures, a private investment company,
to start Tahoe Trips & Trails because it better accommodates her preferred
lifestyle.
Entrepreneurial firms bring new products and services to market. As we
noted earlier in this chapter, the essence of entrepreneurship is creating value
and then disseminating that value to customers. In this context, value refers to
worth, importance, or utility. Entrepreneurial firms bring new products and services
to market by creating and then seizing opportunities. Google, Facebook,
and Zynga are well-known, highly successful examples of entrepreneurial firms.
Having recognized an opportunity, the entrepreneurs leading companies of this
type create products and services that have worth, that are important to their
customers, and that provide a measure of usefulness to their customers that
they wouldn’t have otherwise.
Next, we describe the newly emerging characteristics of today’s entrepreneurs.
You may be surprised to learn about the types of individuals who are
choosing to become entrepreneurs! While reading these characteristics, think
about people you know who are accurately described by these characteristics.
Do you think any of these people will choose to become entrepreneurs?