Differences Between Entrepreneurship and Management

Entrepreneurship originates from having an idea and activities to make those ideas a reality bearing the risk of business and ownership. In contrast, management is an ongoing process of getting things done given the circumstances and challenges while making dynamic changes in the organization while not bearing the risk of ownership in a more decentralized environment instead of entrepreneurship.

An entrepreneur starts a new business with innovative concepts, whereas management runs that business with various administrative functions. In this article, we look at the differences between entrepreneurship and management.

Entrepreneurship is starting a new business that the entrepreneurs have innovated, designed, and planned. An entrepreneur who is an originator of a new business comes up with an innovative idea of making a particular product or rendering unique services to society to serve them better or create ease in their lifestyle.

• Nowadays, these new businesses are also known as start-ups, like the information technology sector. Many entrepreneurs built start-up companies to serve better technology to the users.
• Entrepreneurs are very passionate about their ideas, and they work hard to make their company successful and earn profits from it. They try to mitigate the risk and develop the business model, which is ultimately the society's desire.
• For example, Flipkart was a small start-up company with its unique e-commerce services in India. Their entrepreneurs struggled a lot initially, but afterward, their company became the biggest online shopping platform in India. Walmart acquired it for $16 Billion, the biggest deal in the e-commerce market, and their e-entrepreneurs have made huge profits from it.

Management is a continuous and never-ending process of planning, managing, organizing, controlling, and coordinating the efforts of the people to achieve the defined goal of an organization with the help of available resources.

• Some economists also define management as the art of getting things done through people. It is more an administrative job as a group of people in the management do not work themselves; instead, they create a team of people who work for them.
• There are many hierarchies in management like a board of directors, head of departments, supervisors, team leaders, etc. In a big organization, all of which keep directing and managing the work of their subordinates. Management is dynamic and result-oriented, and their policies are flexible enough to adjust their resources according to the best opportunities available in the market.
• Management is responsible for running the business of an organization smoothly and effectively. They have to play various functions like operations, sales, human resources, support functions, financial functions, and many others. They should ensure that all candidates are placed at suitable places according to their professional qualifications, experiences, skills, and abilities to bring the utmost efficiency in their assigned tasks.

The key differences are as follows –

• An entrepreneur is an owner of the business as he is the originator of the business idea and a key person behind the formation of an enterprise. At the same time, management is employees of an organization as they have to perform their duties in the interest of an organization and owners thereof.
• Being the owner of the business, an entrepreneur bears all the risks of success and failure of the business. He is also responsible for not working his new business idea up to the satisfaction of the consumers. Management is not concerned about the risk of business failure as they are just employees of an organization and mostly don't hold any beneficiary interest in that organization except a few key managerial personnel who might have shares in the company.
• An entrepreneur gets remuneration in the form of profits out of business only after netting all the direct and indirect expenses. They certainly have to keep money aside for future expansion and future business opportunities and for downturns in business cycles, which may result in not gaining any money in the starting years. However, they may earn abnormal profits when their company grows in the market. If any business acquisition is made, he will get huge returns on the entire investment made in that innovative business idea since the beginning of the project. At the same time, management gets remuneration in the form of salary or any incentive or commission based on their performances.
• Entrepreneurs are motivated to start a new venture with their unique business ideas. In contrast, management is encouraged to manage an existing business of the entrepreneurs in a more effective and timely manner.
• Being the originator of the business, entrepreneurs have all the decision making authorities in respect of that business, whereas management doesn't have such decision-making authorities; instead, they have to follow the decisions made by the owners except few key managerial personnel who are involved in the decision-making body of the organization.
• Sustainable business growth is the primary motive of entrepreneurs, whereas management is motivated towards accomplishing defined organizational goals with the optimum utilization of available resources.
• The overall process of entrepreneurship is centralized, whereas the management process is decentralized due to the many hierarchies available in an organization.

It is good to have new businesses with innovative business ideas in a country that will create more employment and improve its living standards. It will also help to grow the country's financial and economic conditions, and hence the government promotes and supports the start-ups in all its possible ways.

However, entrepreneurship is the risk-taker's cup of tea as many start-up companies close every day due to poor planning, inadequate funds, high competition, lower demands, non-performing business ideas, and many more rational grounds. Moreover, people leave their existing jobs to start a new business, and if that business doesn't survive, they will come into a financial crunch. Hence it is suggested to ensure the risk involved in forming new businesses and make provisions to mitigate those risks. Finally, entrepreneurs are born, and they build the management.

This has been a guide to entrepreneurship vs management. Here we discuss the top difference between the two and infographics and a comparison table. You may also have a look at the following articles –

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