Seven top differences between entrpreneurs and businessmen

by Ashvini on October 11, 2010 · 5 comments

in Entrepreneurship

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 risk and accepting whatever rewards or failures that occur subsequently. A businessman on the contrary follows a well known path and takes 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
  2. 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 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.

  3. Entrepreneur’s “Business” is unique
  4. 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.

  5. Entrepreneur puts his own money first
  6. 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

  7. Entrepreneurs working with new innovative products have more breakout chances
  8. 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.

  9. Entrepreneurs experience more uncertainty than regular businesses
  10. 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

  11. Entrepreneurs share business ideas with team
  12. 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 life time of the business

  13. Entrepreneurs share the success with the team
  14. Entrepreneurs do not have much cash to offer. Hence 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 nowhere say that businesses cannot be entrepreneurial or vice versa but that there is a significant differences 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.

About The Author


Mark May 18, 2014 at 11:29 pm

Once again you offer some extremely savvy insights Ashvini!

And thank you for clarifying the subtle yet real differences between being an entrepreneur and or a business professional. Although the vast majority of people love the unlimited upside potential of being an entrepreneur!

Emotionally and financially, they secretly crave and cling to relative security of the (perceived) more safe businessman model!

Clearly being an entrepreneur is far more risky! So it’s probably safe to say most people should run their business like a business, but dream and aspire to be a successful entrepreneur!

Until they can financially and emotionally afford to do otherwise! Thanks for sharing!

Aswani October 17, 2010 at 10:39 pm

This is again very useful and informative post. I came to know a lot from this article. Thanks so much. Keep blogging.

Ashvini Kumar Saxena October 19, 2010 at 10:21 am

Its great to know that you are enjoying the posts much. Thanks and be in touch

Aswani October 19, 2010 at 4:53 pm

Asvini, I wish I could be an Entrepreneur but unfortunately, its not the case. I think I have got all those skills but maybe there is a lack of will from my part :(

Ashvini Kumar Saxena October 20, 2010 at 11:25 am

I would say, even thinking about is a start.:) Once you set your sight on it, you will definitely take it from there. It happens to all of us. So if you have the right skills, then maybe you should think about it. Even your blog can be a your venture.

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