Entrepreneurs and businessmen are most of the time interchangeably used. I too have been guilty of using one or the another at times. However, I feel that there is a significant difference between the way entrepreneurs run their venture and businesses run their operation. Entrepreneurship is all about assuming the risk and accepting whatever rewards or failures that occur subsequently. A businessman, on the contrary, follows a well-known path and takes a lesser risk than an entrepreneur.Let us look at some of the points where entrepreneurship is different from running the business.
1. Entrepreneur are in the business of creating something new
The purpose of business is to recycle the products. Hence business is more like trading. By trading, I mean purchasing goods from one place and selling at the other. It may also involve manufacturing at some step but the fundamental principle remains the same.
Entrepreneurs create something new. They identify a problem and work to create innovative solutions that help reduce or eliminate problems.
Let me give you an example. If an owner of a retail chain is adding internet sales as one of his channels, he is just being a businessman trying to find new ways of getting more business. However, if he goes and creates an innovative product that never existed before, he is being an entrepreneur. Here, he has taken the risk upon himself.
2. Entrepreneur’s “Business” is unique
An entrepreneur will not work in areas where there is already a crowd. He will use his scarce money to explore new. He will, for example, go for new channels of sales( internet, e-commerce etc), innovative products ( a new software), innovative marketing techniques( viral marketing) etc. He sidesteps the market that is too competitive and works in a niche area.
3. Entrepreneur puts his own money first
Since people are not convinced of his ideas, the entrepreneur has to put his money on the line first. He has to show that a market exists for the products he is creating. Then only he can get external finance. This is in contrast to a regular business, where it is known that market exists and hence investors are more willing to invest in such businesses
4. Entrepreneurs working with new innovative products have more breakout chances
If the risks are high, so are the rewards. A successful entrepreneur reaps more monetary benefits than his business counterpart. A regular business with lower risk will get lower returns on the capital it invests. The surety of making money in regular business is more than that of entrepreneurship, though.
5. Entrepreneurs experience more uncertainty than regular businesses
Entrepreneurship is definitely riskier and uncertain than conducting an ordinary business. An entrepreneur faces the question almost daily about the success of his product, the cost of developing the product, customer’s adoption, team motivation and everything else. There are uncertainty and unevenness of sales.
A regular business, however, has more or less regular sales and is less uncertain than an entrepreneurial venture
6. Entrepreneurs share business ideas with team
Entrepreneurs build on vision and they cannot do it alone. So an entrepreneur constantly needs to remind his team and himself about what they are creating and why it will work. An Entrepreneur has to always look for new ways to motivate the employees. The roles of employees change frequently based on the perceived business conditions
In a business, however, the roles of employees are same throughout the lifetime of the business
7. Entrepreneurs share the success with the team
Entrepreneurs do not have much cash to offer. Hence they offer equity to their employees. When the venture is successful everyone who has shares becomes rich. One of the prime examples is Infosys technologies in Bangalore. It has created so many millionaires just by distributing equities to the founders and employees of the company.
A business, on the other hand, is less open to sharing equity with employees and would pay higher salaries to compensate for it.
I nowhere say that businesses cannot be entrepreneurial or vice versa but that there is a significant difference between the way an entrepreneurial venture and a business works. A business, however, can become an entrepreneur by doing something innovative while entrepreneur can reduce the uncertainty by being more like a business.
Source by Ashvini Saxena