The distinction between entrepreneurship and self-employment

  

Date Posted: 11/3/2017 6:16:00 AM

Posted By: Alambi  Membership Level: Gold  Total Points: 2017

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The distinction between entrepreneurship and self-employment
Definitions
Entrepreneurship – this is the activity of setting up a business or businesses taking on financial risk, in hope of profit
Self-employment – this is where one works for himself, maybe as being a contractor, a freelancer or you owning your business.

The real difference between an entrepreneur and a self-employed individual isn’t found within the workload or the working environment; it lies in the mindset, how they think and their view on business world.

1. Being self-employed, you have people who are working FOR YOU but being an entrepreneur, you have people who are working WITH YOU and not just under you. As a self-employed person, you hire people to work for you while the entire mission, vision and progress of the business lies on your shoulder but for an entrepreneur, you have people working with you - you're the boss (director, C.E.O, etc.) but you and your employees form a team and work as a team bringing in ideas and innovations.


2. Self-employed people have to go to work all the time regardless of the number of employees they have. If they don't, the business will simply come to an end. It may not end on that day, but if their absenteeism is constant, as the days go, the business may stop. This is not so for an entrepreneur; the business will keep on going even if the boss is absent because he/she has those who know and understand his/her vision and can run things well in his/her absence.
For the self-employed, if the business owner decides to retire, then that is the end of the establishment. If the business owner passes away, the business will die as well. For entrepreneurship, the business will outrun the existence of the owner because his/her employees are working with him/her. Therefore,

they understand the mission, vision and value of the business. But for self-employment, the employees are working for the owner, therefore, all they do is just sell products and services - they do not understand the owner's mind. For instance, Apple Inc., even after the demise of Steve Jobs, the business still continues.

3. Entrepreneurs are Global thinkers. They see their business in larger scale than the self-employed. An entrepreneur's mind thinks of how to build a business that can sustain itself and be valuable enough to sell to others whereas the mind of a self-employed person thinks of how to create work so as to pay bills.
An entrepreneur understands that there is money to be generated and more advantages to be had when you serve others on the larger scale. He/she thinks globally and identifies the needs and frustrations to serve people and continually furthers his/her market reach so that his/she is always seen in the international market more than a self-employed person.


For example, look at Jumia (an e-commerce organization in Nigeria) and a person who started a shop to sell goods. The person's shop is in a particular place for the easy reach of those around and not for those who are far away from the shop's location, but Jumia can bring the same kind of goods that are being sold to wherever you are - they are meeting the needs of those who are far away. From this, Jumia is an entrepreneurial organization as they are meeting the needs of many people and now the company is known internationally. It has extended its services to other countries like Kenya. Jumia and the shop-owner, who provide similar goods, have the same mission, but different visions.


4. A self-employed person does not want to go beyond his/her vicinity or do a new thing because she/he fears taking risks. Entrepreneurs are risk-takers, they know how to manage and control risks: they understand that if they’re going to achieve greatness, they need to take risks. They never regret the unsuccessful risks they take, but the risks they failed to take.

5. Entrepreneurship is believed to be a key determinant of the economic success of a nation. Self-employment may be seen as selfish at times when most of what a person thinks about is just their own personal wealth. An entrepreneur also thinks about his/her wealth, but he/she creates something that will benefit others and thereby bring in wealth for him/her - it is mutual and not selfish.
A nation that invests into entrepreneurship strengthens its economy. There is added exportation and less importation and the nation is known in the global market. In the same way, entrepreneurs in a country enhance the country's economy.

When one hears of Apple Inc., he/she immediately thinks of North America. When one hears of Techno, he/she thinks of China. Samsung makes one think of Korea. These are just a few examples.

6. A self-employed person tries to do everything themselves as they believe no one will do a better job than them, they also want to save costs and maximize profits, to them it seems everything is within their reach and manageable. An entrepreneur on the other hand knows that they can’t do everything, so they delegate responsibilities to people they trust, who are smarter and more experienced than them in those areas but still keep people accountable for their actions.

7. Compensation-self-employed individuals receive payments directly from their clients, generally via cash, cheques or electronic payment, self-employed contractors send invoice to clients for work performed and clients treat the payment as operating expenses outside of salaries/wages. Entrepreneurs on the other hand are compensated by taking a share of the profits from their business. Business profit derives from revenue obtained from numerous customers or clients.

8. Requirements – Self-employment carries far fewer requirements and restrictions than entrepreneurship. Contractors often deal with government agencies only when it is time to file their personal income taxes. Entrepreneurs must deal with a wide range of legal requirements including business registration and licenses, obtaining permits, meeting legal insurance requirements and filing business taxes.

From this, there is a clear distinction between entrepreneurship and self-employment. They are not synonymous.

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