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Traditional Entrepreneur and Social Entrepreneur

How do they differ and what are their key traits?

For most people, the term “entrepreneur” has become synonymous with innovation, growth, and financial success. Yet over the last decades, the business landscape has dramatically changed and diversified. This paved the way for new, powerful figures who have emerged alongside those of traditional entrepreneurs: the social entrepreneurs. In this article, we will understand the main differences between a traditional entrepreneur and social entrepreneur, digging into the traits, motivations, and goals of each. Understanding these characteristics is crucial for anyone interested in entrepreneurship.

Defining traditional entrepreneur and social entrepreneur

Let’s start with the notion of “traditional” entrepreneurs. According to Investopedia, a traditional entrepreneur is an individual who undertakes the risk of starting a new business venture. Usually entrepreneurs create new businesses in order to satisfy needs and desires they believes are unmet, and do that by bringing improved solutions or radically innovative ideas to the market. Most commonly, the primary motivations behind entrepreneurial initiatives revolve around achieving financial gains and personal success. Because of that, entrepreneurs are strongly focused on fostering business growth, profit making and increasing their equity share value.

On the other hand, a social entrepreneur is someone who leverages principles and frameworks of entrepreneurship to generate social impact. The focus of a social entrepreneur isn’t indeed profit making. Instead, the aim is to tackle complex, social problems through innovative solutions and making a positive impact on the world. Sure, socially-oriented businesses may still seek to generate revenue, but mostly to reinvest profits back into their impact missions.

Comparison of Key Traits: Differences and Similarities

As said, traditional entrepreneurs and social entrepreneurs share some common traits, but also major differences. Let’s break them down.

Drivers and Motivations

When it comes to their drivers and motivations, traditional entrepreneurs are often motivated by pursuing financial gain. Consequently, they typically measure their success through indicators such as revenues, revenue growth, market share, or equity value. From time to time, they may still have a strong sense of social responsibility, ending up engaging in philanthropic or corporate social responsibility activities. However, these initiatives are usually secondary to the primary goal of generating profit.

Conversely, social entrepreneurs are driven by the desire of creating lasting social change. Here, financial aspects of their ventures are not ignored, but they are mostly means to foster social value. Since social entrepreneurs prioritize social impact over financial gain, they tend to measure their success focusing on depth and breadth of the impact their organizations contributed achieving.

Approaches towards Innovation

Traditional as well as social entrepreneurs are usually innovators, although the nature and purpose of their innovations can radically differ.

A traditional entrepreneur innovates to seize an untapped market opportunity. Being market-driven, such entrepreneurs develop solutions to satisfy in new or improved ways consumer demand. Since they are propelled by market share and profit making, their innovative spark typically revolves around enhancing value propositions, improving business models, or renewing revenue engines.

On the other hand, social entrepreneurs innovate out of necessity. As a matter of fact, the societal issues they aim to tackle are often systemic, intertwined with multiple, diverse causes. Thus, innovation in social entrepreneurship is socially-driven, and lies in improving through entrepreneurial means the lives of those affected by the social problem addressed.

Self-Interest and Vision

Creative thinking and risk-taking are a must for both traditional and social entrepreneurs to ensure success. However, the same concept of “success” varies between the two.

On one side you have traditional entrepreneurs, whose major interest is to seek financial and shareholder gains, as well as personal accomplishment and recognition. As a consequence, they are often focused on short to medium-term economic results, mainly in terms of revenue, profit, and business growth.

On the other side, social entrepreneurs. Here, risk-taking is still needed, but prioritizes long-term social impact over short-term financial returns. Since the focus is on community and societal wellbeing, leading to lower levels of self-interest compared to traditional ones. Unfortunately, often times this ends up generating negative repercussions on their mental and physical health.

Hybrid models of entrepreneurship

While the distinction between social entrepreneurs and traditional ones may be clear at this point, drawing lines among the many types of organizations can get blurry and difficult.

As a matter of fact, in recent years there have been more and more hybrid models spreading worldwide, combining profit motives (typical of traditional entrepreneurship) with social impact goals (core of social entrepreneurship) in different ways. We recommend reading this article by our fellow colleagues of B The Change to get a better grasp of the “social enterprise spectrum“.

Fortunately, it’s getting easier and easier to find inspiring examples of successful entrepreneurs and understand how they position themselves at different levels of this spectrum. From StartSomeGood’s co-founder Tim Dawkins, to Specialisterne’s Thorkil Sonne, you will find plenty of different, inspirational stories in our case studies section. Feel free to check them out!

And now.. what about your entrepreneurial journey?

If you made it up to this point, you are probably considering embarking yourself in a new, entrepreneurial journey. And if there is one key takeaway you should make yours from understanding the differences between traditional and social entrepreneurs, we believe it is to become fully aware of the different drivers, motivations, and underlying interests influencing your entrepreneurial will.

If financial gain is your focus, you are probably driven by the wealth creation and profit making. So, you might lean more toward traditional forms of entrepreneurship, with the expected goal of expanding your business and increasing your market share. Conversely, if your personal mission to solve societal problems, profit making and financial returns are likely to be second-priority goals to you. By being more aligned with social entrepreneurship, you are likely to aim generating positive, lasting social impact and making a tangible difference in people’s lives. This means you are willing to take higher risks and accept long-term results over short or medium-term ones in order to create significant social change.

Remember: when it comes to entrepreneurship, there’s no one-size-fits-all path. So entrepreneurs can find innovative ways and leverage hybrid models to move across the social enterprise spectrum, blending financial success with social impact.

Conclusion

In this article, we discussed the main differences and similarities between traditional and social entrepreneurs.

As seen, both traditional and social entrepreneurs play vital roles in society. If the former ones lean towards economic growth and meeting consumer demand in innovative manners, the latter ones use their entrepreneurial skills and creativity to address some of the most pressing societal challenges. Here, risk-taking is needed by both types of entrepreneurs, but motivations, personal drivers, and underlying visions and desires strongly vary. Understanding such differences, will help you comprehend which entrepreneurial path may suit you best.

To conclude, at Impact Jungle we help both aspiring and established entrepreneurs fostering positive, social impact. So, if interested in finding out about ways we can help doing that, don’t forget to explore our services and feel free to get in touch with us!

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