The Difference Between an Entrepreneur and a Self-Employed

Jul 28, 2023
What is the Difference Between Entrepreneur and Self-Employed?

Many people often mistakenly assume that the terms “entrepreneur” and “self-employed” have the same meaning. However, they actually have different implications. Generally, people believe that both entrepreneurs and the self-employed are individuals who establish and manage their own businesses. Is this true? In this article, we will explore the distinctions between these two roles. Let’s delve into the full explanation below!

Definition of Entrepreneur and Self-Employed

What is the Difference Between Entrepreneur and Self-Employed?

What is the Difference Between Entrepreneur and Self-Employed?

Before we dive into the differences between entrepreneurs and the self-employed, let’s first understand the meaning of these two terms.

In general, an “entrepreneur” can be defined as a person who possesses the ability, courage, and readiness to face the consequences and accept the risks associated with the work they undertake. They carry out their work with their own efforts, facilities, labor, and capital.

Apart from the general definition, there are several other definitions of an “entrepreneur” according to various experts.

Robbins and Coulter explain that being an entrepreneur involves an individual or a group of people attempting to run a business in an organized manner. The ultimate goal of this endeavor is to create value or meet market demand.

Also read: 11 Entrepreneurial Characteristics You Need to Cultivate

On the other hand, Lupiyoadi states that an entrepreneur is someone who can realize creativity and innovation, using these skills to improve the well-being of themselves and the surrounding community.

Sjahbandi argues that an entrepreneur is an individual’s ability to manage the business they run. According to Sjahbandi, several factors influence a person’s decision-making concerning entrepreneurship, such as their background and experience.

An entrepreneur’s success is often judged by their skills, experience, and competence. In conclusion, an entrepreneur is someone who possesses the ability, courage, and readiness to run a business that has an impact on both themselves and others.

Also read: What is an Entrepreneur? The Definition, Objectives, Examples

Meanwhile, ‘self-employed’ has a different definition from ‘entrepreneur’. Self-employed refers to a type of work or an individual who performs a job independently without being regulated by a superior because they do not have one.

Some define the self-employed as people who are brave in their thinking, behavior, and actions, aiming to create various job opportunities and pursue them independently.

Now that we have defined the two terms, let’s explore the differences between an entrepreneur and a self-employed individual in more detail.

Also read: The Difference Between an Entrepreneur and Entrepreneurship

What is the Difference between an Entrepreneur and a Self-Employed?

What is the Difference Between Entrepreneur and Self-Employed?

What is the Difference Between Entrepreneur and Self-Employed?

There are several differences between entrepreneurs and the self-employed. Here is a detailed explanation:

Business Focus:

The first difference lies in their business focus. Entrepreneurs dedicate all their time and efforts to their businesses, whereas the self-employed often have part-time involvement.

For instance, consider someone who owns a restaurant business. They plan, participate in the preparation of raw materials, ensure the kitchen’s readiness, and dedicate their time to the restaurant business on a daily basis. This person can be called an entrepreneur.

On the other hand, an example of someone who is self-employed is an office employee with a side business, such as operating a tent shop selling “pecel lele” (fried catfish dish). In this case, the self-employed individual has a business but is working part-time or is not fully involved in it.

Also read: Business Risks Definition: Types and How to Overcome Them

Asset Ownership:

The next difference can be observed in the assets owned by entrepreneurs and the self-employed. Here, assets refer to capital/funds and the role of decision-making in business operations.

Entrepreneurs fully own their assets and are independently responsible for managing capital and budgets for business management and development. In contrast, self-employed individuals do not entirely depend on asset ownership.

Also read: 15 Advantages and Benefits of Being an Entrepreneur

Types of Products:

The types of products offered by entrepreneurs and the self-employed also differ. The self-employed may focus on various kinds of products based on market interest.

For example, an individual may work as a reseller of snack products and baby clothes while also being employed by an advertising company. This would be an example of being self-employed.

In contrast, entrepreneurs tend to focus more on products they create themselves. This emphasis on creativity and innovation is crucial in entrepreneurship. Therefore, entrepreneurs must be determined to create products that cater to potential customers’ needs.

Also read: What is Business Ethics and Why is It Important?

Objective:

Another significant difference between entrepreneurs and the self-employed lies in their work objectives. The self-employed generally aim to help and develop other people’s businesses.

They add value to other people’s business products by leveraging their skills. Additionally, the self-employed often create job opportunities for the surrounding community, thereby contributing to the reduction of unemployment rates.

Conversely, entrepreneurs aim to create products in the form of goods and services with an established business model. As their businesses grow, entrepreneurs will need employees and create job opportunities.

Entrepreneurs also tend to spread their entrepreneurial skills and spirit to their employees, empowering them to potentially set up their own businesses one day.

Also read: 14 Business Goals and Objectives Entrepreneurs Should Know

Characteristics:

Lastly, a striking difference between entrepreneurs and the self-employed lies in their characteristics.

Visible characteristics of the self-employed include:

  • Flexibility: They can adapt to the needs of others, from rules to working hours.
  • Courage: They dare to act and remain confident, even when they haven’t mastered a skill, viewing it as a challenge to overcome.
  • Passion: They diligently pursue learning opportunities.

Also read: 10 Successful Young Indonesian Entrepreneurs Starting a Business from Scratch

Among entrepreneurs, the characteristics that stand out are:

  • Creativity and innovation: These two traits are essential for creating products that provide solutions to society.
  • Resilience: They do not give up in the face of failures, obstacles, risks, and challenges, finding alternative paths to success.
  • Ability to seize opportunities: Entrepreneurs can predict, take advantage of, or even create opportunities when new trends emerge in society.

Also read: 13 Bad Characteristics Entrepreneurs Should Avoid

So, those are some of the key differences between entrepreneurs and the self-employed. It is important not to confuse the two, as they represent distinct roles in the world of business.