What is Entrepreneurship?
Entrepreneurship refers to the ability to develop and organise a business enterprise. It involves running a business for earning profit. An entrepreneur is a decision-maker person who establishes and administers a startup along with the risks and uncertainties entitled to it. Business management refers to the process of managing the administration of a business organisation. A manager is responsible for overseeing the business operations and reviewing the contracts. He helps the employees in working towards the fulfilment of the organisation’s goals and objectives. More often, the term entrepreneurship and small business management are misunderstood as one. However, there is a difference between these two.
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Entrepreneurship can be defined as the desire and ability to establish and administer a startup venture. It involves the will to succeed in the venture and make profits. Generally, an entrepreneur earns profits by combining land, labour, natural resources and capital.
Who is an Entrepreneur?
An entrepreneur is a person who is willing to take risks to earn profits. He must be a person with great imaginative power, orderliness and professionalism. He must be dedicated and opinionated.
What is Management?
The management of a business is its foundation which organises and structures its entire ecosystem. Management refers to the overall functioning of the business. It involves planning and creating, managing and governing. It is an executive function which helps in the utilisation of all the resources of a company.
The number of managers in a company depends upon the size of its management. Generally, the manager of a business is responsible for getting all the jobs done. He directly helps the company in achieving its goals and objectives.
Difference Between Business Management and Entrepreneurship
Business management and entrepreneurship play a very important role in its success. However, these two are different from each other. The following are the main points of difference between management and entrepreneurship in business:
Meaning
Entrepreneurship is the process of building and creating an enterprise. It involves taking a financial risk to earn profits. An entrepreneur is the owner of the organisation and is directly affected by its working.
Management is a business activity. It involves getting jobs done by other workers in the organisation. A manager is responsible for managing all the business activities.
Function
Business management entrepreneurship involves deciding the production policy of the business organisation. An entrepreneur takes all the decisions such as what is to be produced and in what quantity, the place of production etc.
The management in a company is responsible for the following activities- planning, organising, controlling and leading. A manager looks after an ongoing venture in the company. He allocates the employee resources and delegates responsibilities between them.
Status
The status of an entrepreneur is of the owner of the business organisation. He is responsible for its working and success.
The manager is an employee of the organisation. He is hired by the entrepreneur and is given a monthly salary.
Rewards
An entrepreneur is the owner of the organisation earns from its profits and has to bear the losses. He does not earn a specified fixed amount every month.
A manager is a paid employee of an organisation. He gets a fixed salary to carry out his job. His reward is not affected by the profits or losses of the company.
Goals and Objectives
Its owner or entrepreneur sets the goals and objectives of an organisation. The concerned body is responsible for deciding the policies of the company. The job of a manager is to imply the goals and objectives set by the entrepreneur. He cannot decide the objectives or alter any policies on his own.
Decision Making
The decisions made by an entrepreneur are based on his gut feelings and personal perception. He is free to make any decision on his own without considering the advice of others.
A manager has to make decisions after collecting all the information in detail. He has to analyse every factor before concluding. He has to consider the company’s objectives and policies before making any decision.
Innovation
An entrepreneur is an innovator. He is responsible for bringing creative and innovative ideas into the business. A manager is an executor. His only responsibility is to execute the ideas and decisions made by entrepreneurial management.
Fraud
An entrepreneur is the owner of the business. He can never get involved in any fraud in the organisation.
A manager is a paid employee of the organisation. He can be involved in fraudulent behaviour or cheating by not giving his best or working inefficiently.
This article highlights the major difference between entrepreneurship and management. Both entrepreneurship & small business management play an important role in the success of a business organisation.
FAQs on Management and Entrepreneurship: A Guide
1. What is the fundamental difference between an entrepreneur and a manager?
The fundamental difference lies in their core role and relationship to the business. An entrepreneur is the owner of an enterprise who conceives the business idea, bears the financial risks, and is driven by profit. In contrast, a manager is an employee hired to oversee operations, execute plans, and manage resources to achieve the goals set by the entrepreneur.
2. How do the primary functions of management differ from the core activities of entrepreneurship?
The primary functions of management involve a structured process: planning, organising, leading, and controlling an ongoing business to ensure efficiency. Entrepreneurial activities, however, are focused on innovation, opportunity identification, and venture creation. Essentially, an entrepreneur builds the enterprise, while a manager maintains and optimises it for sustainable growth.
3. What are the essential characteristics of a successful entrepreneur as per the Business Studies syllabus?
A successful entrepreneur typically displays several key characteristics, including:
- Innovation: The ability to introduce new ideas, products, or services that create value.
- Risk-Taking: A willingness to take calculated financial and personal risks to achieve their vision.
- Self-Motivation: A strong inner drive to succeed and persevere through challenges without external oversight.
- Flexibility: The capacity to adapt strategies and products in response to changing market conditions.
- Passion: A deep and unwavering commitment to their business venture and its goals.
4. Why is risk-taking a critical element of entrepreneurship but not for professional management?
Risk-taking is critical for entrepreneurship because the entrepreneur is the primary investor who commits their own capital and reputation to an unproven venture. The success or failure of the business directly impacts their personal wealth. A manager, as a salaried employee, is tasked with minimising risk through careful planning and control. Their role is to protect the company's assets, not to put them at stake, and they are not personally liable for business losses.
5. How do entrepreneurship and management complement each other in a growing business?
Entrepreneurship and management are two essential forces for a business's life cycle. The entrepreneur provides the initial vision, innovation, and drive to establish the business. As the business grows in complexity, management provides the structure, processes, and stability required for scaling. Management ensures that the entrepreneur's vision is executed efficiently and sustainably through effective planning, organisation, and control.
6. Is starting any small business the same as entrepreneurship? Explain the key distinction.
No, they are not necessarily the same. The key distinction lies in innovation and the intent to scale. True entrepreneurship typically involves creating a new business model, product, or service with a plan for significant growth. For example, developing a unique tech platform. Starting a small business, like opening a local cafe, often involves replicating an existing, proven business model and may focus on stable, local operations rather than large-scale innovation.
7. What is the primary motivation for an entrepreneur compared to a manager?
The primary motivation for an entrepreneur is the potential for profit and the personal achievement of building a successful venture from their own vision. Their reward is variable and directly tied to the business's performance. In contrast, a manager's primary motivation is a stable income through a fixed salary, along with career advancement and the authority that comes with their position. Their reward is predictable and not directly dependent on company profits.
8. Can a manager also be an entrepreneur within the same company?
Yes, this concept is known as 'intrapreneurship'. An intrapreneur is an employee who acts like an entrepreneur within a large organisation. They take the initiative to champion new products, services, or processes, using the company's resources to drive innovation. While they do not bear the personal financial risk of a traditional entrepreneur, they exhibit the same creative spirit and drive to create new value for the business.
