According to the latest statistics by SME Corporation Malaysia, 98.5% of all businesses in Malaysia comprises of small and medium enterprises. Needless to say, new entrepreneurs and small businesses make up the economic backbone of our country. Freelancers, celebrities, multi-level marketers, sales agents have also started calling themselves entrepreneurs, further blurring the lines of what is and what isn’t “entrepreneurship”.
More and more people have been using the terms “businessmen” and “entrepreneurs” interchangeably. Do they really mean the same thing? Are they really any different? Today, we will explore the differences between these two terms and try to gain a deeper understanding of what it means to be an entrepreneur.
Before diving into the topic, it is important to note that words do not define a person. Two people can be both called an entrepreneur, yet have wildly different viewpoints on how to conduct their respective businesses. Words are just labels that we attach ourselves to, an identity that we show to others.
However, knowing the differences between an entrepreneur and a businessman is a great opportunity to self-reflect on your own goals and evaluate your current position in the market. It serves as a reminder of what you are trying to achieve out of your business and where you plan to head towards.
Culturally, here in Malaysia, any businessman or business owner can be called an entrepreneur, and that is perfectly fine in its own right.
However, according to Investopedia, an entrepreneur is an individual who founds and runs a small business, assuming all the risks and rewards of the venture. An entrepreneur is commonly seen as an innovator, a source of new ideas, goods, services and business/or procedures.
Another great maxim about entrepreneurship is – all entrepreneurs are businessmen, but not all businessmen are entrepreneurs. An important point to note is that an entrepreneur brings new ideas to the table that can solve existing problems, both old and new, adding real value to the marketplace.
There is more to being an entrepreneur than a simple dictionary definition, however. The school of thought, business goals, management style, risk tolerance – all these qualities contribute to the identity of an entrepreneur. So today, we will explore the key differences between a businessman and an entrepreneur, and what these two subtly different mindsets can learn from each others’ philosophy.
|Goals||Set up businesses according to existing ideas, products and services.||Set up businesses based on new concepts, products, services or business models.|
|School of thought||Calculative||Intuitive|
|Market||Works with existing markets||Create new markets|
|Position||Market Player||Market Leader|
|Risk Tolerance||Varies||Relatively High|
|Values||Monetary Gain||People / Relationships|
Most entrepreneurs are never content with the status quo. Their visions extend to more than just profits and losses or numbers on a financial statement. They aspire to make a difference in people’s lives and leave their mark on society. Building communities and relationships, creating innovative solutions, and empowering others are few of the many driving factors that push entrepreneurs beyond their comfort zone, aspiring to achieve greater success.
While entrepreneurs see the limitless possibilities and opportunities the marketplace has to offer, businessmen would rather focus their efforts on capitalizing on existing markets. They adopt businesses that are tried and proven to be profitable and sustainable in the long term. Stability, consistent growth and reliability are their core driving factors when starting and running a company. There is no room for emotions when it comes to making major corporate decisions, and they will let the numbers and financial statements do the talking.
One signature trait of being an entrepreneur is their willingness to take on calculated risks. They are much more open to accepting larger and riskier investment opportunities, unconventional solutions to existing problems and experimentation with their products and services.
A traditional business owner, however, will generally take a much more conservative approach when tackling risks, adopting an “if it works, don’t fix it” approach. They are much more focused on keeping the business in the green or getting it there through conventional means rather than exposing themselves to unnecessary risks that may jeopardize their current standing.
“…Slow and steady wins the race, till truth and talent claim their place.” – B.J Novak, Writer
Why compete with existing industries, when you can create a whole new industry free of competition with high existing demand? From a whole new invention to improving existing products, entrepreneurs will think of new innovative ways to solve existing problems. They aim to integrate their products and services into the marketplace while co-existing with their close competitors instead of resisting and competing against them.
A traditional businessman, however, will generally adopt an existing idea or business model. Not because they are less creative, but because they are much more careful with their ideas, requiring heavy testing and prototyping before releasing their products into the marketplace. Some may prefer not to innovate at all, and that isn’t the handicap that it sounds like, depending on how you handle your business. The way they stand out amongst the competition is by meeting high standards in terms of pricing, execution & quality, and overall customer experiences and services.
Entrepreneurs take up the active leadership role in their company, taking hold of the business by the reins. Being the leader, they are active in the daily operations of their business, being hands-on in their approach and execution.
Entrepreneurs will lead the charge, inspiring employees to follow in their footsteps, manning the front while employees will provide support from the back. Entrepreneurs also tend to focus heavily on the social aspects of running a business, forging meaningful relationships between clients and amongst employees, building sustainable communities, and inspiring others to do the same.
Traditional businessmen will tend to don a “boss/manager” demeanour around their subordinates, being very corporate and formal in their approach in dealing with business-related matters. They rely heavily on the work force’s continued (and improving) performance, employ other managers, and have Standard Operating Procedures (SOP) to ensure that the company will run like a well-oiled machine. Their goal is to let their business run without much input from the top level management, to construct a self-sustainable ecosystem that generates a form of “passive income”.
In the end, the comparison between entrepreneurs and businessmen are nothing more than a point of reference. There are very few people who fully fit the descriptions above, and most people are more likely placed in a spectrum in between these two extremities. What is important is that you, as a business owner, are able to self-reflect and determine which work style is best for your own business.
Labels should not affect the way you run your business or how you make decisions. As long as you are taking the steps necessary to grow your business while achieving your personal goals, is not that what truly matters in the end?