Identifying Entrepreneurship With Small Business. All You Need To Know

The terms ‘entrepreneurship’ and ‘small business’ are used interchangeably; there is almost no difference between them. But, certain factors set them apart. Entrepreneurship is the process of designing, launching, and maintaining a new business organisation that is initially started as a small business. The people who start this business are known as entrepreneurs. A small business is privately owned and controlled with a small workforce with a low sales target. Thus entrepreneurs are identified with small businesses.

Who Is an Entrepreneur?

An entrepreneur is a person who starts and runs a business organisation with limited resources and is responsible for all the risks and rewards. The venture is usually a new product or a service. These entrepreneurs target a high return on the investment, with a high level of uncertainty. The entrepreneur takes into consideration the high risk of financial security and his career, invests a lot of time in an uncertain start. He also arranges for the required amount of capital, raw materials, and production locations. The entrepreneur controls the department of marketing, sales, and distribution. There might be a possibility that the entrepreneur cannot carry out all the tasks by himself, so some might be outsourced.

What is a small business?

A business that is small in terms of its workforce, organisational structure and sales volume is considered to be a small business. It is usually managed and owned by a single person or a group of individuals. They are involved in the decision making process of the business and invest capital. As there are a small number of employees in a business venture it is easy to manage. The main motive of the small business owners is to earn profits. They do not look for growth opportunities and are not keen in expanding. The most popular small businesses are partnership and sole proprietorship.

Similarities Between Entrepreneurship and Small Business:

1. Similar organisational setup

Both small businesses and entrepreneurial ventures have a few team members. A single person may be assigned to various roles. The small business owner must be an accountant, manager, and supply chain person. As in the case of an entrepreneur, he/she may be the CFO, CEO, or CTO. Also, as a single individual runs the whole company, the decisions are quickly made, and actions taken are fast-paced.

2. Competing against big industry leaders

As big industry leaders cover most sectors, they have a strong hold on the people. So the small business owners and entrepreneurs are always trying to look for niches that these industry leaders do not cover.

3. Do not have sufficient in-house resources

Both entrepreneurs and small business owners do not have sufficient in-house resources. They both have to outsource their work.

4. Affected by the same factors

A small business and entrepreneurial venture is affected by the same factors such as culture, location, environment, firm characteristics, and individual characteristics. While determining the success of both the ventures, these factors cannot be neglected as they both equally and significantly determine the outcome of both concepts.

5. Play a significant part in socio-economic development

A small business and entrepreneurial venture helps in economic growth, economic development, economic transformation, and employment creation. They aim towards the same objective, i.e. the socio-economic transformation of the national economy.

6. Possess the same characteristics

There is a list of various traits which is possessed by entrepreneurship and small business such as commitment to a contract, perseverance, self-initiated individuals, emphasis on diligence, systematic planning, self-confidence, integrity and reliability, systematic planning, ability to influence people (influencing strategy), creative problem-solving skills. These characteristics help in the effective and successful running of their endeavours.

Entrepreneurship Vs. Small Businesses:

1. Meaning

A small business is controlled and owned by a single individual or a group of individuals with a limited scope and market share. The scope of entrepreneurship is very vast. It identifies new business opportunities in the market and develops the old ones. It begins as a small business but gradually grows into a large organisation.

2. The owners' attitude

Even though both the entrepreneurs and small business owners are self-employed, they possess different attitudes. Small business owners are satisfied with what little they have and do not expand very far, whereas an entrepreneur is always looking for opportunities to change and expand. They have an energetic attitude.

The entrepreneurs are looking for opportunities to affect the entire world and thus impact many people making their market share high. Small business owners do not provide service to many people, making their market share relatively lower.

Not every person who starts their business venture is successful. That must not stop them from taking the leaps and risks. An entrepreneurial spirit is required by the general public so that new innovative businesses can emerge. Entrepreneurs tend to overlook the actual cost of starting and doing the business. They do not have a clue as to what cost they are incurring to keep the business running. If a person starts a home-based venture, they usually lack knowledge about the money they are investing while listing the products, researching, and the amount incurred while processing the orders.

An individual may do the work themselves or hire someone else to do it. In that case, it takes a lot of time and cost in processing an order, reviewing the payment details, print labels, packaging and making the shipment. It does not end there; proper notification must be sent to the customers regarding the shipment and tracking number.

There are many times when the customers might want a detailed description of the product or complaint regarding the product, which might take a lot of time to answer. In the year 2020, many business organisations were forced to work remotely from their homes to prevent the spread of coronavirus. Many companies struggled a lot through this period to ensure their performance remained at an all-time high. Thus flexibility becomes a major issue, which the entrepreneurs tend to overlook. If they have not made enough provisions for their employees to work from home, their performance will deteriorate. Some companies have to let their employees work according to their flexibility to increase the performance standard.

Thus, in conclusion, even though a small business is identified with entrepreneurship, there is a major difference between them as to creativity, innovation, and risk taken. Although every entrepreneurial venture starts as a small business and, due to the entrepreneur's enthusiasm and spirit, achieves higher success within a short period. Looking from the economic perspective, both help develop the economy by using the local resources and creating technological development. Thus both are necessary for a required proportion for the economy to be successful.

Also Read:

1) Which Companies Specifically Target Small Businesses for Business Growth?
2) What do Small Business Owners Need Help With?
3) Why Do Most Small Businesses Stay Small?
4) How to Get the Attention of Small Business Owners?
5) OkCredit: All you need to know about OkCredit & how it works.

FAQs

Q. Where should the business be incorporated?

Ans. Depending upon the demand for that product or service that is being sold and the availability of raw materials, a business should be established to keep in mind these points and where cheap labour is available.

Q. How to come up with the name of the venture that is being established?

Ans. The business name should reflect the nature of the business that is going to be established. It should be creative and catchy in the eyes of the customers. A google search can be done to eliminate the names already taken by other entrepreneurs.

Q. What are the biggest challenges an individual would face while establishing the business?

Ans. An entrepreneur can expect to face some of these challenges: Shortage of capital and cash flow, cheap labour, availability of raw materials, good business plan, managing time, and overworking.

Q. What is the maximum number of employees a small business can employ?

Ans. The maximum number of employees that can be employed by a small business owner is 500.

Q. What makes a small business better than a big one?

Ans. Both have their own advantages but a small business enjoys closer contact with their customers and requires small capital investment at the beginning. Thus it is easier for the businessman to adapt to the changes according to the consumer demands.