While both business and entrepreneurship involve risk-taking and decision making, there are distinct differences between the two that should be noted. In this guide, you’ll learn about the key differences between business and entrepreneurship, as well as how to determine which one may be best suited for your goals.
Definition: What is a Business?
Business is defined as the organized effort of individuals to produce and sell, or exchange, goods and services. It involves the creation of products or services with an aim to earning a profit—the money that comes in as a result of successfully selling what has been developed. Businesses operate within an existing structure, often relying on family connections or yearly regulations set forth by a board.
Definition: What is Entrepreneurship?
Entrepreneurship refers to the process of designing, launching, and running a new business venture with the aim of making a profit.
According to the Oxford Dictionary, an entrepreneur is “a person who organizes and operates a business or businesses, taking on greater than normal financial risks to do so.”
Entrepreneurship entails taking on financial risks in the hope of matching products and services with a target market for maximum return on investment. Unlike businesses which have established models or predefined goals, entrepreneurs must create their own plans and define their desired outcomes.
“The entrepreneur always searches for change, responds to it, and exploits it as an opportunity.” – Peter F. Drucker, Innovation and Entrepreneurship: Practice and Principles.
Many factors come into play when creating a successful entrepreneurial model. These include finding the right balance between innovation and profitability; understanding macroeconomic trends; and dealing with legal, finance, and marketing issues.
While businesses can provide structure and certainty, entrepreneurs must possess qualities like creativity and risk-taking to make their venture a success.
Entrepreneurs must also have resourcefulness, the ability to take on new challenges quickly, the flexibility to adapt strategies if needed, and a deep understanding of customer needs. Additionally, they should be resilient in the face of unexpected roadblocks that may arise as they pursue their business dream.
Motivations: Business Versus Entrepreneurship.
Generally speaking, the motivations behind business and entrepreneurship are also distinctly different. Business owners may have a few motivations such as stability, wealth-building, and passive income. On the other hand, entrepreneurs may be driven by ambition, innovation, creativity, the urge to succeed and make a difference in the world with their idea or product. They seek disruption for something better than exists today, often without much concern for financial reward.
Final Considerations with Business and Entrepreneurship.
Before embarking on the path that best suits your interests and goals, consider these important aspects of a business or entrepreneurship. First, each will require different skills and resources, meaning you should make sure to thoroughly understand the differences between both paths.
Also, since business and entrepreneurship often involve unique risks, you’ll need to understand any potential implications so you can make an informed decision as to which path is right for you.