I have had the pleasure of interacting with many talented young entrepreneurs, startup founders and CXOs over the years. Such conversations have often accompanied a question: What is the difference between an entrepreneur and a business person?
I readily answer, saying I was a businessman at 26 and an entrepreneur at 56. This answer essentially steers the conversation to the specifics, on what I do now, that is distinctive from my early career days. Since a successful entrepreneur invariably becomes a business person in due course, the lines do get blurred at some point. But there are significant differences between the two, right from the start.
The definition
A business person is a new entrant to an existing market. He/she is banking on an old, existing concept or idea, with slight changes, if any. An entrepreneur, on the other hand, is introducing a new, innovative idea or concept, which is first of its kind, in a given place, at a given time.
The Drive
A business venture is often need driven. In competitive markets, business persons tend to be product and profit driven. Entrepreneurship revolves largely around passion, which is to say, entrepreneurs tend to focus on customers’ pain points and are purpose driven. Of course it’s fair to point out that lately, progressive CXOs are increasingly subscribing to customer-first approaches, regardless of business classifications.
The market position
A business person is a market player, who faces considerable challenges and competition due to incumbents and emerging players. This scenario demands product differentiation, effective change management, continued efforts and business acumen. An entrepreneur, on the other hand, creates the market for his new idea, thus becoming the de-facto market leader.
Risks
Although risk is part and parcel of any venture, business persons face relatively less risks. Established businesses have wide room for course corrections, based on competitors’ or existing players’ successes and failures. Entrepreneurship carries a higher level of risk, with uncertainties at every turn. Since the idea is new, it has to contend with regulatory roadblocks, social aspects and, at times, intellectual property infringement.
Rewards
Businesses define revenue targets and operate accordingly. Since they are prone to market risks, rewards go hand in hand. Entrepreneurs tend to be farsighted, set on long-term goals, rather than short-term rewards. And that could lead to a windfall. Serial entrepreneur Elon Musk nearly went bankrupt in 2008, trying to save Tesla. In 2020, he has surpassed Bill Gates as the world’s second-richest person, thanks to Tesla’s now roaring stock.
Operational boundaries
Business persons operate within structured environments, with well-defined responsibilities. Entrepreneurs, however, wear many hats, as risk analysts, managers, organizers, etc. Not only will their workforce be small sized, but also fluid, in terms of “who-does-what”. The same goes for workplaces. Entrepreneurs often prefer flexible, collaborative spaces, while businesses have designated offices with designated teams.
Operational approach
Business persons are more analytical, as opposed to entrepreneurs, who are rather intuitive. The latter rely on creativity and imagination, along with unconventional modus operandi. Business persons are known to be conventional, with the tendency to put more stocks into tried-and-tested approaches. So, they are predictable. As I mentioned earlier, progressive CXOs are developing hybrid models, with customers as the focal point. This trend is across business and industry, and will remain so for the foreseeable future.
Recently, the pinnacle of entrepreneurship has come with a dash of celebrity. Think of the likes of Elon Musk, Mark Zuckerberg, or any one of a hundred changemakers. Irrespective of where their venture will stand in the future, in terms of competition, entrepreneurs retain the credit for conceiving the original idea. Their ability to blaze a trail for a generation of young entrepreneurs will remain uncontested, and rightfully so.
