The concept of entrepreneurship takes a wide range of definitions and its meaning has progressed over the century. To many, it is linked to starting one’s personal business. However, nearly all economists believe that it is more than starting a business.
The word entrepreneur comes from the French word entreprendre, meaning ‘to embark on.’ From a business perspective, it means to start a business. An entrepreneur can also refer to a person who systematizes and administers a business and usually takes the risk for the sake of profit or turnover. He can also be defined as a person with a high propensity who pioneer change or anyone who wants to work for himself.
Entrepreneurship vs. Small Business
The terms ‘entrepreneur’ and ‘small business’ are quite alike and can often be used interchangeably. With many commonalities, however, there are significant differences between the entrepreneurial venture and the small business.
An entrepreneurial venture is quite different from a small business in the following ways:
- Innovation – This is the very instrument of entrepreneurship. It provides resources with a new power to create wealth. Entrepreneurship frequently engages extensive innovation further than what a small business might exhibit.
- Risk – Risk must be usually high in an entrepreneurial venture. If not, with the enticement of sure profits, many entrepreneurs would be trailing the idea and the opportunity would no longer exist.
- Amount of wealth creation – A booming entrepreneurial venture generates substantial wealth, normally in excess of several million dollars of profit rather than simply generating an income stream that replaces fixed employment.
- Speed of wealth creation – A successful small business can make quite a lot of profit over a lifetime. But for an entrepreneur, wealth creation often is fast and speedy, for example, within 5 years. Also, the types of business they are engaged in are what basically differentiates entrepreneur activities. Innovation is the key. Every entrepreneur should rely greatly on this. Innovation can be emphasized in the following:
- new organization
- new products
- new markets
- new production methods
When such innovation produces new demand, wealth is created. From this standpoint, one can simply describe the function of the entrepreneur as one of merging a variety of factors in an inventive manner to generate value for the customer. It hopes that this value will surpass the cost of the input factors, therefore spawning greater returns on investment.
So the main difference between entrepreneurship and small business is that the entrepreneur takes a risk and hits the ground running with the intent of immediate, and hopefully massive payoffs, whereas the small business generally starts smaller, with less risk, and the income and success build over time under very controlled planning.