5 Primary differences between entrepreneur and businessman

Difference between entrepreneur and businessman: This article explores the differences between entrepreneur and businessman. Although these terms tend to be used interchangeably, subtle differences qualify them. The table below shows a simple way of differentiating the two. In further sections, we explain each of these areas further to indicate how different they are.

Key areas considered in this article are:

• Meaning and definition of businessman and entrepreneur
• Areas of focus and operation
• Competition in the market
• Risks for the type of business
• Market and defined area of focus

1. Meaning and definition — Entrepreneur Vs Businessman

While exploring the difference between entrepreneur and businessman we start with the basic definition of these terms.

Entrepreneur: As discussed in the article, what is a startup — an entrepreneur is a person starting a business or a new venture. Most of these businesses by nature are born either by a new idea or innovation. Most entrepreneurship is focused on a singular purpose of providing new idea/services. It is a reference for someone starting something on their own. The origins of entrepreneur inherently refer to someone taking a risk.

Businessman: A businessman on the other hand refers to a wide variety of services existing in the market. Most businessmen focus on existing business models to provide service. Differences between these existing businesses mostly vary on a pricing model where they tend to undercut the market or other players. The businessmen originate to fix a gap in the market and most often, this is to do with price and availability. The originality of an idea is limited compared to an entrepreneur.

2. Areas of Focus

The difference between entrepreneur and businessman is more dominant in areas of focus.

Entrepreneur: An entrepreneur focuses on creating value/ providing a benefit to the user. These benefits are usually in terms of a different way of operating a business or a new product/service which fills a gap in the market. The majority of entrepreneurs try to do something new and innovative by introducing a non-existent entity into the market.

Businessman: Businessmen on the other hand are more focused on profits and price points. You can see these type of business differences in the supply chain where they replace other suppliers with a lower price point or better quality of product etc. In this instance, there is no new product or service introduced into the market. Instead, the goal is to earn profits by offering a similar service already present in the market

3. Competition

Competition is a common factor for both entrepreneurs and businessmen.

Entrepreneur: An entrepreneur normally faces less competition than a businessman. This is primarily because the business plan focuses on creating a product-market fit which is usually non-existent. In other words, since the market hasn’t been established, the competition is widespread and there is no clear indication as to what the visible competition is.

Businessman: A businessman operates in a highly competitive environment. Since they are trying to enter the market in an already existing product/market fit — the competition is stiff. The best routes available for businessmen are either increasing market capture by reducing prices or by providing a better quality of products. A good way to look at the competition and strategy for these businesses is through Ansoff Matrix to decide their next steps of increasing the market hold.

4. Risks

Risk is the most common entity in any form of business.

Entrepreneur: I’d consider entrepreneurship at higher risk compared to a business. This is primarily because they are operating in an area of untested product or market. It can either be a phenomenal success or a complete failure. Given that it can easily go either way, the impact of risk is much higher

Businessman: The risks for a businessman are known. It might not end up being a complete loss, there might still be something to salvage from an investment which is not always the case in entrepreneurship.

5. Market

Entrepreneur: For an entrepreneur, the market is unknown. It can spiral or change at any point in time and the entrepreneur can adapt to provide a completely new service offering or pivot into a different solution set. Since the entrepreneur’s journey is more about identifying what fits or not, the market is volatile and in a constant process of being discovered.

Businessman: In a businessman’s world — the market is known and easily recognisable. Market expansion has a few unknowns depending on how people react, but the niche and area of focus are already established which makes it — dare I say a bit easier.

Summary: Difference between entrepreneur and businessman

In summary, I’d like to present the table which summarises the difference between entrepreneur and businessman. It is not comprehensive but gives you a bird’s eye view of key differences and opportunities in these two areas.

Originally published at https://inspire99.com on June 25, 2021.