Everyone wants to be their own boss these days, yet self-employment and entrepreneurship are often taken when people think about starting their own business. Although both require working independently, they are not the same thing.
What exactly sets them apart?
This article will discuss the primary differences, benefits, and other aspects of self-employment vs. entrepreneurship.
Entrepreneurship
A person who establishes, grows, and expands a business with the intention of building something bigger is known as an entrepreneur. Risk-taker entrepreneurs prioritize development, innovation, and growth. They develop a system that functions both with and without them, as opposed to only creating a career for oneself.
For example, Jeff Bezos founded Amazon as an online bookshop with the goal of making it an important force in the worldwide e-commerce industry. He established a corporation that today functions on a huge scale without requiring his hands-on involvement in every facet of the enterprise.
Self-Employment
A self-employed person runs and owns their own business. This implies that their income will also cease if they quit their job. Directly offering a service or product without necessarily attempting to grow it into a larger business is the main goal of self-employment.
For instance, a self-employed person is a freelance graphic designer who works on client projects. They don’t earn money if they don’t take on work. Although they are constrained by their own time and ability, they have control over their task and timetables.
Difference Between Entrepreneur and Self-Employment
When we talk about self-employed vs. entrepreneurs, they both run their careers, but their approaches, goals, and mindsets are completely different.
There are differences between entrepreneurship and self-employment in a number of ways. Here is a thorough explanation:
Asset Ownership
Capital, cash, and the decision-making function in corporate operations are assets. Entrepreneurs are in charge of capital management and budgeting for business development and administration. They also own all of their assets. Self-employed individuals, on the other hand, are not totally dependent on asset ownership.
Scalability
While entrepreneurship comprises different activities, self-employment mostly focuses on selling a product or providing a service.
Entrepreneurs are typically driven to build something bigger and have a clear vision for their business. Their goals are to impact their fields, encourage innovation, and add value.
Self-employed people can expand their businesses, but they are only able to devote a certain amount of time and energy to them. There is no leverage through productization, systems, automation, or teams because you are working directly for clients. Additionally, this business model has few funding possibilities because it is hard to draw in outside investors without a growth model.
Objectives
The objectives of each represent yet another important distinction of self-employed vs. entrepreneurs.
Self-employed people typically want to support and grow other people’s enterprises. They use their abilities to enhance others’ business products. Furthermore, self-employed workers frequently generate employment possibilities for the surrounding community, which lowers unemployment rates.
On the contrary, entrepreneurs aim to create products and services using a proven business strategy. As their companies expand, entrepreneurs require workers and generate employment opportunities.
Additionally, entrepreneurs frequently train their employees, which eventually helps them start their own businesses.
Business Focus
While self-employed individuals frequently work part-time, entrepreneurs dedicate all of their time and efforts to their businesses.
Think of someone who runs a restaurant. Every day, they dedicate their time to planning the restaurant, helping prepare the raw ingredients, and making sure the kitchen is ready. We can call that person an entrepreneur.
However, an office worker who also runs a side business, such as a tent store selling “pecel lele” (fried catfish dish), is an example of a self-employed person. In this instance, the self-employed person owns a business but only works on it occasionally or not at all.
Problem-Solving
Innovation and creative thinking are essential for a successful business. Thinking outside the box is necessary to identify problems for which there are no answers and to develop new goods or services. Entrepreneurs need to be creative to build company models that threaten the established quo.
Self-employment, on the other hand, typically depends more on pre-existing abilities and services. Independence is prioritized before creativity.
As a result, those who are creative, imaginative, and capable of solving problems have a clear road to becoming entrepreneurs. In contrast, those who have the necessary skills and value independence and transparency can opt to work for themselves.
Product Types
People sell different kinds of products in both self-employment and entrepreneurship. Depending on market demand, entrepreneurs may concentrate on different product types.
For instance, a person may be hired by an advertising firm and simultaneously serve as a reseller of baby garments and snack items. This is an example of self-employment.
On the contrary, entrepreneurs typically focus more on their own products. This focus on invention and creativity is essential to entrepreneurship. Thus, entrepreneurs must be committed to developing products that meet the needs of prospective clients.
Risk and Reward
Another difference between self-employment and entrepreneurship is the risk and rewards. While entrepreneurs face different challenges on every step of the road and risks in their day-to-day work, self-employed people are typically risk averse.
Whereas a self-employed individual handles the majority of their obligations and outsources one or two activities, an entrepreneur assigns the majority of the work and has time to plan and prepare for the long term.
While self-employed individuals get paid directly by their clients, entrepreneurs are paid by getting a portion of the company’s profits. When an entrepreneur successfully grows his company, he will receive far higher profits than a self-employed person.
Who Has the Edge? Perks of Entrepreneurs vs. Self-Employed
With differences, entrepreneur vs. self-employed also comes with some amazing advantages. Let’s look at them.
Self-Employment
- You don’t have to start a business to work for yourself.
- Complete control over revenue, clients, and workload.
- The freedom to choose your own hours.
- Your labor immediately affects your income; if you don’t work, you won’t get paid.
- Common positions include independent contractors, consultants, and freelancers.
Entrepreneurship
- Emphasizes growth and scalability over individual effort.
- Involves taking chances, recruiting workers, and running operations.
- Calls for long-term planning, investment, and strategy.
- Offers more responsibility along with a greater earning potential.
- Typical positions include innovators, business owners, and startup founders.
Therefore, self-employment offers better flexibility and lower risk than entrepreneurship, which requires a larger initial investment but has greater earning potential.
Which choice is best for you will depend on your goals, skill level, and risk tolerance. Many people work for themselves before starting their own businesses.
Self-Employment vs. Entrepreneurship – Essential Factors to Consider
Are you thinking of quitting the 9–5 job? Self-employment and entrepreneurship both offer independence, but they come with various challenges and benefits. Before you step inside, keep the following factors in mind:
Stability
While self-employment involves directly exchanging time for money, entrepreneurship focuses on growing a company that can make money even while you’re not working.
Growth Potential
Working for yourself is fantastic if you’ve decided to be a one-person powerhouse. However, entrepreneurship is the path to success if you have aspirations of expanding, scaling operations, and assembling a team.
Risk Tolerance
Being self-employed reduces risk because you have to work for your pay. Entrepreneurship, on the other hand, requires financial investments, long-term planning, and the ability to cope with uncertainty.
Work-Life Balance
Working for yourself gives you the freedom to choose your own hours. However, especially in the beginning, entrepreneurs typically have to cope with long hours, huge risks, and constant decision-making.
Your Vision
Do you want complete freedom and command over your professional life? Or are you trying to create something that will eventually be able to function without you? Whatever path you take, there are boundless opportunities, freedom, and responsibility.
Which One Is Right for You?
Your choice between self-employment and entrepreneurship relies on your goals, risk tolerance, and long-term vision.
If you love work freedom, control, and making money from your labor, self-employment might be your best bet. But if you’re willing to take risks and build something bigger, entrepreneurship is the finest option.
Think about the following questions to help in your decision-making:
- Do you prefer stability, or are you more comfortable with uncertainty?
- You want to create a business that can run without you?
- Would you instead lead a team or work alone?
Final Takeaway!
At the end of the day, both self-employment and entrepreneurship have their perks—it all depends on what fits your goals and lifestyle.
If you can face challenges, brainstorming fresh ideas, and spotting opportunities, entrepreneurship might be your calling. But if flexibility, freedom, and work-life balance are your priorities, self-employment can be a great fit.
Working for yourself might lead to being an entrepreneur. It helps you how to work independently, communicate clearly, and take chances—all of which are essential abilities for managing a company.
Therefore, if you are already employed by yourself, don’t discount the possibility of becoming an entrepreneur in the years to come. New prospects, growth, and teamwork are constantly there!For more insights into business, entrepreneurship, and self-employment, visit Collett Thorpe today!