Difference between Entrepreneur and Manager

One of the challenging things for many entrepreneurs is to effectively transition from being an innovative, risk-taking entrepreneur to a skillful and empathetic manager. This is what sets both of them apart. Entrepreneurs are known for their thought-provoking ideas that disrupt a market, while managers are experts in completing a task on tight deadlines through their subordinates.

The words ‘entrepreneur’ and ‘manager’ are sometimes used interchangeably, yet they have quite distinct interpretations. These terms should not be used interchangeably. In this blog, the difference between these two terms is explained. Let’s first find out who they are.

Who is an entrepreneur?

An entrepreneur is an individual of very high aptitude who pioneers change, possessing attributes found in only a small fraction of the population. He is one who wants to work for himself and starts his own business. He plays a role of an innovator who markets his innovation. He develops new goods or processes that the market demands and are preferably those that are not currently being offered.

Some traits of an entrepreneur are:

  • He is a person who creates and owns his own business.
  • He is a risk-taker and works under uncertainty for achieving his goals.
  • He is innovative and continuously tries to do something better.
  • He holds a strong urge to be independent.
  • He remains dissatisfied with routine activities.
  • He is determined but patient and is prepared to face the challenges of life.
  • He exhibits a sense of leadership and also a sense of competitiveness.
  • He strives to convert a situation into an opportunity.
  • He is oriented towards the future.

Who is a manager?

A manager, on the other hand, is not the owner of a company. Instead, he is in charge of the management and administration of a specific group of individuals or of a department within the company. His day-to-day responsibilities include managing his personnel and ensuring that the department functions smoothly.

Effective managers should, ideally, offer value to every activity they engage in, such as every conversation they have, every decision they make, and every action they perform on a daily basis. Ineffective managers increase cost rather than value. Companies seeking out potential managers look for people with technical capabilities, human skills, conceptual skills, and the drive to manage. Persons who possess the relevant technical expertise are given entire projects to handle.

Key distinctions between Entrepreneur and Manager

Some of the distinctions between a manager and an entrepreneur are as follows:

Creation of company

1. The paramount distinction between the two terms is that an entrepreneur establishes a business enterprise out of the ideas and concepts he believes in and invests his personal funds in it, whereas a manager delivers his services in a business already built by an entrepreneur.

Risk bearing

2. An entrepreneur and a manager vary in their capacity; an entrepreneur is the owner of the company and bears all of the risks and uncertainties that come up with operating a business, whereas a manager is an employee who bears no risk on his shoulders.

Objective

3. The objectives of an entrepreneur and a manager are not the same. The objective of an entrepreneur is to innovate and create new products, services, or processes for his organization, and he functions as a change agent, whereas the goal of a manager is to monitor and develop routines. He puts the entrepreneur’s goals and ideas into action.

Income

4. An entrepreneur is faced with more uncertainties in income as his income is contingent upon the performance of the business. Better performance leads to greater profits. On the other hand, the compensation of a manager is less dependent on the performance of the firm, rather he gets a fixed monthly pay.

Fraudulent behavior

5. An entrepreneur is not induced to engage in deceptive behaviour whereas a manager does. A manager may defraud the company by not working hard because his salary is not tied up to the performance of the business.

Qualities

6. Their scope of requirements differs in the sense that an entrepreneur must possess specific credentials and attributes such as a strong desire to succeed, innovative thinking, foresight, risk-taking capacity, and so on.

A manager, on the other hand, must be trained/certified in the disciplines of management theories and practices. In addition to having some of the qualities of an entrepreneur like leadership, accountability, decisiveness, etc., he must also show warmth and empathy towards his subordinates.

Replacement of roles

7. An entrepreneur may be a manager, but a manager cannot be an entrepreneur. An entrepreneur is deeply committed to growing his or her business via ongoing innovation. He may hire a manager to help him with parts of his responsibilities, such as defining targets, making policies, regulations, etc. But despite executing the assigned responsibilities, a manager cannot replace an entrepreneur since a manager has to perform his work by following the guidelines laid down by an entrepreneur. On the personal front though, he may sometimes leave his job to walk on the paths of entrepreneurship.

Distinguishing factorsEntrepreneurManager
FocusContinuous efforts for organizational success; looks for opportunities to dominate the market; creative thinkingSalary, promotion, and traditional corporate rewards
Decision-makingIndependent; follows a dreamDependent on the entrepreneur and top management
SkillsCreativity, innovation, risk-taking, passion, vision, dedication, determination, etc.Qualities like leadership, planning, organizing, good communication skills, etc.
TimelinessAchieving long-term growth and survival of the businessMeets short-term deadlines fixed by the top management
DelegationDelegated to oneselfDelegated by the top management
Risk bearingExtremeConservative
Mistakes and failuresDeals with mistakes and failuresMinimizes mistakes
ResourcesNeeds to arrangeReadily available to him
ServesOneself and customersTop management and customers
CompetitionWith other entrepreneurs outside the companyNone

Wrapping up – Entrepreneur vs. Manager

Difference between entrepreneur and manager

Both of them are equally important for the success of an organization. While one (the manager) is an expert in handling specific projects assigned to him by applying his skills, the other (the entrepreneur) is responsible for making business decisions needed to excel his company in the market using a forward-looking and innovative approach.

Hope the differences given above are helpful:)


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Ruchi Gandhi

The author enjoys to write informational content in the domain of company law and allied laws. She takes interest in doing thorough and analytical research on legal topics. She is a CA along with MBA (Fin) and M. Com.

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