First and foremost, after years of writing, there is always a realization that the dilemma is certainly the razor-thin margin between fact and fiction. The tiny margin is enough to attract a broad spectrum of opinions, which is the most prominent upside of being a writer. In all fairness though, the most important part of being a writer is to be informative to your readers. In reality, I have to say; it’s extremely telling that the majority of people don’t seem able to make the distinction between entrepreneurship and small business ownership.
Sometimes, something is so obvious it needs to be stated: in as much as entrepreneurial ventures and the small businesses may have much in common, however, there are significant differences between them. Add to that the fact that nobody can necessarily argue otherwise, not even the small business owners themselves. On that basis, even if many people seem to have made it acceptable to use the terms “entrepreneur” and “small business owner” synonymously, still the issue remains; there is a glaringly big difference between the two. This is not necessarily intended to create confusion in your minds. This is simply – a cautionary tale of how rapidly the word entrepreneurship in my humble opinion, because of its elasticity, now refers to any small business for most.
We need to educate ourselves and our governments that there is a big difference between entrepreneurship and small business ownership. One Andile Khumalo, aptly stated it in the only best possible way, when he remarked, ”The later is a plumbing business that has hired 15 people in the past 10 years and will continue to hire 15 people for the next 10 years. The former is a malaria testing kit made by two coloured gentlemen in Cape Town, which currently hires 10 people and because it has signed up an international pharmaceutical is about to build a factory in Goodwood.” In a sense, our misconception about the two, is the reason due to a need to be self-employed we have small businesses sprawled across the entire African continent under the pretext that it’s entrepreneurship.
But while there are stories of successful African businesses, entrepreneurship on the continent is littered with those who are not so lucky and are having to endure eventful sojourns in the trenches. Entrepreneurship should be the poster child for capitalism, where smart private money should support productivity and provide a handsome and bountiful return to investors for their high risk appetite.
For many in Africa, mistaking entrepreneurship with having a small business has created the prevalent opinion that no one is financing businesses, and this unfortunately is the reason why entrepreneurs can’t get their ventures off the ground. Even though, tangible proof of this opinion can’t be revealed, contrary to this popular belief, the most promising businesses in Africa are getting funding from any corner of the globe.
From a personal perspective, entrepreneurship is so important from a job creation, economic growth and financial point of view. The reality is that we all might claim to know the differences; however, some of the major differences between entrepreneurial ventures and small businesses are the following:
Amount of Wealth Creation
Substantial wealth is the fruit of a successful entrepreneurial venture, most importantly; substantial would represent profits in excess of several millions. In as much, as both entrepreneurship and small business ownership create self-employment for their founders, perhaps most importantly, entrepreneurship doesn’t just replace traditional employment with another income stream. It creates a sack-full of riches that translates to a sizeable fortune for the owners far beyond their wildest dreams.
Let’s face it: it is highly unlikely that when Aliko Dangote set about starting his trading enterprise, he ever thought that he would have the Dangote Group reportedly employing 26,000 people in Nigeria alone. However, during the old days small family businesses used to be the norm, nonetheless, nowadays entrepreneurial ventures are creating millionaires and the lucky ones become billionaires in a short space of time. It’s no longer news that Aliko Dangote is Africa’s richest man, and is also among the World top 100 richest. He is a certainty to continue, unwillingly, to trouble statisticians with validating his net worth. He recently announced plans to construct cement plants in Iraq and Burma, on top of the fact that his cement company is already constructing similar plants in Ethiopia, Zambia, South Africa, Senegal, Cameroon, the Republic of Congo and several other African countries.
Furthermore, Dangote wants to build a $7 billion refinery facility in Nigeria, which would annually process 400,000 barrels of petroleum, according to media reports. Aliko Dangote surely is not a small business owner, he is an entrepreneur.
Speed of Wealth Creation
It’s never debatable that generating several million dollars of profits is a possibility over the lifetime of a successful small business. However, entrepreneurial ventures create wealth at a quick-fire rate and this is where we can distinguish the two -small businesses generate million dollars at a slow rate, whilst, entrepreneurial ventures generate million dollars at a breath-taking rapid rate. For instance, when Dr. Strive Masiyiwa decided that the telecommunications industry was the sector from which he would make his fortune as an entrepreneur, he set-up Econet Wireless. Even though, he engaged in a well-documented prolonged legal battle with the Government of Zimbabwe for an operating license, it didn’t stop Econet Wireless Zimbabwe from listing on the local bourse, less than a year after being finally granted a license and commencing operations. Within a few years, Econet Wireless Global had spread its wings into a few African markets and even set-up a Head Office in Johannesburg, South Africa. From being the last mobile-operator to get an operating license, to being the leading mobile-operator in Zimbabwe, Econet Wireless Group is a diversified telecommunications group with operations and investments in Africa, Europe, South America and the East Asia Pacific Rim. Once again, Dr. Strive Masiyiwa is not a small business owner, he is an entrepreneur.
If thought carefully, every type of business enterprise has an element of risk attached to it, nonetheless, entrepreneurial ventures are defined by high risk- otherwise, with the incentive of sure profits many entrepreneurs would be pursuing the idea and the opportunity would no-longer be very attractive. Normally, when risk is high, the odds will also be high that the rewards in-turn is bountiful as long as the plan is not botched. From a negative angle still, if the plan is botched, the losses from the failure could be so huge that the entrepreneur might lose big-time and take a long-time to recover. For example, not that you have to run your businesses like a casino, however, everyone knows that fortune favours the brave, and when you go to the casino and bet big, if you are fortunate enough you will reap a big fortune, and if you lose you will not only lose your fortune, you will also attract misery upon yourself. Some people even go to the extent of taking their own lives because they can’t withstand the humiliation, or the fact that they might be teetering on the brink of bankruptcy. This is exactly the same principle with entrepreneurial ventures, when you get it right you make a fortune, however, the downside is that when you lose, the losses might be of epic proportions.
Mostly with small business little innovation is required; however, entrepreneurial ventures might need to exhibit substantial innovation to build sustainable businesses. Importantly, innovation may be in the product or service itself, or in the business processes used to deliver that product or service. Competitive advantage is very important for any business, and innovation contributes to achieving it. Having a competitive advantage over your rivals, results in wealth creation. For instance, the most notable example of this is the Apple and Samsung jostling for the smartphone market. Fortunately, this article has been written a day after the launch of the Samsung Galaxy 4 in New York. Even before the product has hit stores, superlatives are being used to describe the launch of the product, as compared to any Apple launch of its products. Innovation no-longer just ends with the design and production of the products; it has extended its arm to the product launches and marketing campaigns. To expect a small business to engage in these extravagances, is like, to put it bluntly, like Chester Missing stated,” expecting Bloemfontein Celtics to win the Soweto derby, it will never happen because Bloemfontein Celtics will never play in the Soweto derby.”
More often than not, we are captivated by countless rags-to-riches tales of scrappy underdogs chasing entrepreneurial success under the pretext of small business ownership, and likewise, the opposite, small business success under the pretext of entrepreneurial ventures. The sooner we can draw the thick line between the two, the sooner economic development in Africa can be spearhead by the real entrepreneurs who are seeking to create change and growth.