Entrepreneurs vs Business men

An Entrepreneur is an individual who starts and runs a business with limited resources and planning, taking account of all the risks and rewards of his or her business venture. The business idea is usually a new innovation, product or service, rather than an existing business model.

Such entrepreneurial ventures target high-returns, with high level of uncertainty. The entrepreneur is willing to put his or her financial security and career at stake to take risks on an idea, spending time as well as capital on an uncertain venture. (Who were the 10 Greatest Entrepreneurs?)

Entrepreneurial ventures require the enterprising individual to arrange for capital, raw materials, manufacturing locations and skilled employees necessary to produce a good or offer a service. Marketing, sales and distribution are other important aspects which are controlled by the entrepreneur.

Today’s technological advancements (like online ventures) have allowed the entrepreneurs to skip a few mandatory needs (like procuring manufacturing facilities, door-to-door marketing) or outsourcing selected functions (like marketing, sales & distribution), but the risk is still borne by the entrepreneur.

Entrepreneurship is different from:

Inheriting and/or running an existing businesses (family owned, co-owned)
Working for other businesses or entrepreneurs for a salary
Being a commission agent
Selling already available goods or services as a franchisee or dealership
There is a very fine line between running a small business (SB) and an entrepreneurial venture (EV) as they have a lot in common. Initial stages of both SB and EV need significant hard work and dedication, but over a period of time very few SBs become EV. The following guidelines help to differentiate between the two.

What are the primary difference between Small Businesses and Entrepreneurial Ventures?

1. Small Business usually deal with known and established products & services, Entrepreneurial Ventures are for new innovative offerings.
2. SBs aim for limited growth and continued profitability while EVs target rapid growth and high productivity returns.
3. Small Businesses deal with known risks; Entrepreneurial Ventures take deep dive with lots of unknown risks.
4. EVs generally impact economies & communities in a significant manner, which also results in a cascading effect on other sectors like job creation. Small businesses are more limited in this perspective and remain confined to their own domain and group.

A few myths which exist about entrepreneurs:

Entrepreneurs take uncalculated and unknown risks without any plans – Partially True; entrepreneurs do take uncalculated and unknown risks but they do keep limited resources, plans as well as bandwidth for dealing with the unknowns to a limited extent.

Entrepreneurs start business with a revolutionary invention – Partially True; not all entrepreneurial ventures are true breakthroughs. Most are identifying and capitalizing on a mix-n-match approach. Google (GOOG) did not invent the internet, McDonald's (MCD) did not invent the cheeseburger, Starbucks (SBUX) did not invent coffee. It’s the identification and capitalization of the idea and rapid growth rate with cascading impact that makes the venture entrepreneurial.

Entrepreneurs venture out only after significant experience in the industry – Most entrepreneurs are young, inexperienced individuals, who follow their passion.

Entrepreneurs complete extensive research before taking the first step – Unless an existing business is setting up a new business line on a new concept, entrepreneurs start with very limited or no research. However, they do have good awareness about the potential of their offering, which gives them the confidence to go ahead with the venture and risks.

Entrepreneurs start with sufficient capital and sound business plans – Capital is the foremost requirement of any entrepreneurial venture. Most entrepreneurs fail to secure capital from outside sources, unless they already proven themselves with a running prototype. Hence, most entrepreneurs start out with insufficient capital.