Entrepreneurs and businessmen are most of the time interchangeably used. I too have been guilty of using one or the other 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 risk and accepting whatever rewards or failures that occurs subsequently. A businessman on the contrary follows a well known path and takes less risk than an entrepreneur.Let us look at some of the points where entrepreneurship is different from running the business.
- Entrepreneur are in the business of creating something new
- Entrepreneur's "Business" is unique
- Entrepreneur puts his own money first
- Entrepreneurs working with new innovative products have more breakout opportunities
- Entrepreneurs experience more uncertainty than regular businesses
- Entrepreneurs share business ideas with team
- Entrepreneurs share the success with the team
The purpose of business is to recycle the products. Here 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 principal remains the same. Entrepreneurs create something new. They identify a problem and work to create innovative solutions that help reduce or eliminate problems. Even if they do trading, they will apply innovative methods to it. Let me give you an example. If an owner of retail chain is adding internet sales as one of his channel, he is just being a businessman trying to find new ways of getting more business. However if he goes an creates an innovative product that never existed before, he is being an entrepreneur. Here, he has taken the risk upon himself.
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, m-commerce etc), innovative products (a new software), innovative marketing techniques (viral marketing) etc. He side steps the market that is too competitive and works in a niche area.
Since people are not convinced of his ideas, 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
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 receive lower returns on the capital it offsets. The surety of making money in regular business is more than that of entrepreneurship though.
Entrepreneurship is definitely more riskier and uncertain than conducting an ordinary business. An entrepreneur faces the question almost daily about success of his product, cost of developing the product, customer's adoption, team motivation and everything else. There is uncertainty and un-evenness of sales. A regular business however has more or less regular sales and is less uncertain than an entrepreneurial venture
Entrepreneurs build on vision and they can not 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 the same through the life time of the business
Entrepreneurs do not have much cash to offer. Here they offer equity to their employees. When the venture is successful everyone who has a shares becomes rich. One of the prime example 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 now say that businesses can not be entrepreneurial or vice versa but that there is a significant difference between the way a entrepreneurial venture and a business works. A business however can become entrepreneur by doing something innovative while entrepreneur can reduce the uncertainty by being more like a business.