What is Entrepreneurship and Small Business?

“Entrepreneurship” and “small business” are two terms that have been floating around in the world of business these days. People have been talking about them as if they are the next big-shot kids in town. But why shouldn’t they? Many working professionals across the globe, slogging from nine in the morning to eternity in tall, lavish glass buildings, are taking both entrepreneurship and small business very seriously. The urge to break free from their tedious, slow-growth jobs has pushed many of them to embrace entrepreneurship and start a small business.

 

Let’s talk about Australia now. Overall, the country has seen 355,722 new companies emerging, marking a net growth rate of 2.7 per cent between financial years 2018-19. What’s even more interesting is that 974 companies are founded in the country every day, and 40 new companies are founded every hour! These are quite impressive numbers for a country like Australia, where small and medium enterprises offer half of the country’s jobs. There are 4.8 million out of the total 10.5 million people employed working for the country’s small businesses. Small businesses employ about 45.7 per cent of the country’s workforce, while medium enterprises employ 24.3 per cent. (Source).

 

How are entrepreneurs and small business owners different?

There is, however, an important point to note: both the terms “entrepreneurship” and “small business owners” are often used interchangeably, but there lies a significant difference between the two. Both an entrepreneur and a small business owner can have a small organisation, but they follow different paradigms and leadership styles. One is not better than the other, but they are simply different. Let’s take you through some of these differences here:

 

1. Meaning

Entrepreneurship essentially means the process of identifying a business opportunity by an individual with an idea. It is a trait that shows the readiness and ability of a person to create and care for a business, take risks, and maintain the profitability of the venture. A risk-taker who wishes to formulate a business idea and turn it into reality is an entrepreneur.

On the other hand, a small business owner is one who starts a venture single-handedly or with a small group of people and has contributed capital towards its establishment. These business owners manage a limited number of employees. Compared to entrepreneurs, these business owners don’t always look for new business opportunities, meaning their profit-making ability is limited. Sole proprietors and partnerships are two common business models followed by small business owners.

 

2. Scope of ideas

Entrepreneurs think big. They have grand dreams and ideas that haven’t been tried and tested before. Innovation, profit and tremendous growth are major objectives that an entrepreneur wishes to achieve through a business venture. Money is certainly a goal, but not the only goal of an entrepreneurship firm. Their innovative ideas can shake up the market with something extraordinarily new-fangled.

 

On the flip side, small business owners have a great idea—something that’s smaller in scope compared to that of an entrepreneur. Their aim is to address a concern that’s pressing the community by starting a business firm. They have clarity of their venture and who they wish to reach and are extremely customer focused. These business owners often deal with a familiar product or service and are not die-hard innovative thinkers.

 

3. Vision

Entrepreneurs are known to have long-term visions for their business venture. They plan for a period much ahead from now. They are visionaries who go beyond their daily schedules and look at the bigger picture. The future of their business is more important to them than the mundane administrative jobs. They make sure that all daily tasks in the organisation are aligned with the long-term plan that they have.

However, small business owners tend to be more task-oriented than entrepreneurs. They are mostly concerned about how much they are required to complete in a particular week. They create daily and weekly list of things to do and stick mostly to this routine. They work with their customers, manage their employees, reach out to potential customers and keep the organisation going.

 

4. Approach

Entrepreneurs plan their approach in way that helps them scale. They have a growth-mindset that does not hold them back from taking risks. They know that there are opportunities beyond any challenge or risk that comes their way. They want to grow as the company grows and surround themselves with people who can help them achieve their growth objective. All their decisions and actions are in line with their desire to take their company to new heights of success.

 

Small business owners, however, come across as very sentimental about their venture. They are focused on earning money by making a difference to the community, but are never planning ahead. Their approach is never to sell or hand over their business to someone else. They like to make decisions and run the day-to-day affairs of the company. Their overall approach to running a business is quite flexible and they are usually comfortable with their routine processes.

 

Closing lines

It’s true that both entrepreneurship and small business ownership require similar personality traits on the part of the leader, but both are quite different in their essence. Their strategies, goals and culture are quite different, but they both have the power to bring about change in a meaningful way.

 

But one key difference between an entrepreneur and a small business is the level of risk they are willing to take. Entrepreneurs are more venturesome and love to hop onto risky ventures, while small business owners are more risk averse. They like to take the safer route and maintain the revenue-generating potential of their business.

 

Both entrepreneurship firms and small businesses in Australia are required to take on some degree of risk and should prepare for unforeseen challenges. Both should consider getting business insurance. Visit this website for details.

 

*As with any insurance, cover will be subject to the terms, conditions and exclusions contained in the policy wording. The information contained on this web page is general only and should not be relied upon as advice.

 

References

1. Novel Coworking, Published on 10^th October, 2019, DIFFERENCES BETWEEN ENTREPRENEURSHIP AND SMALL BUSINESS, Avl at: https://novelcoworking.com/blog/differences-between-entrepreneurship-and-small-business/#:~:text=A%20small%20business%20is%20an,an%20industry%20or%20maximizing%20profit.

 

2. Entrepreneur, Published on May 15, 2014, Author: Melanie Spring, Are You a Small-Business Owner or an Entrepreneur? The Difference Is Important., Avl at: https://www.entrepreneur.com/article/233919

 

 

3. com, Published on Feb 6, 2020, Entrepreneurship vs small business, Avl at: https://www.termscompared.com/entrepreneurship-vs-small-business/

 

4. Investopedia, Updated Jul 6, 2019, Author: Shobhit Seth, Entrepreneurs and Entrepreneurship Defined, Avl at: https://www.investopedia.com/articles/investing/092514/entrepreneur-vs-small-business-owner-defined.asp