Differences Between Enterprise and Management (Leaving Cert Business): Revision Notes
Differences Between Enterprise and Management
Understanding the key roles
In the business world, two crucial roles work together to create and run successful organisations: entrepreneurs and managers. While these roles are often confused or used interchangeably, they serve very different purposes and require distinct skill sets.
Entrepreneur: A person who spots new opportunities or gaps in the market and takes financial risks to start a new business. They often own the business and focus on turning innovative ideas into reality.
Manager: An employee responsible for the day-to-day operations of a business. They use leadership skills to motivate workers and ensure tasks are completed efficiently to achieve the entrepreneur's vision.
How entrepreneurs and managers work together
When a business first starts or remains small, the founder often wears both hats - acting as both entrepreneur and manager. However, as the business grows, it becomes essential to separate these roles. This happens because the characteristics and skills required for each position are quite different, and it's rare for someone to excel equally at both.
The entrepreneur provides the vision and direction, while managers use available resources to achieve the goals set by the entrepreneur. This partnership is essential for business success.
Key characteristics and skills
Entrepreneur characteristics
Successful entrepreneurs typically demonstrate several key traits:
- Risk-taking: Willingness to invest money, time and reputation
- Proactivity: Taking initiative rather than waiting for opportunities
- Confidence: Belief in their ideas and abilities
- Creativity and innovation: Ability to think differently and spot new opportunities
- Ambition: Drive to grow and succeed
- Flexibility and adaptability: Ability to change direction when needed
- Future-focused: Always looking for the next opportunity
Management characteristics
Effective managers need different qualities:
- Charisma and people skills: Ability to inspire and lead teams
- Problem solving: Finding solutions to daily operational challenges
- Initiative: Taking action when issues arise
- Flexibility: Adapting to changing business needs
- Hard work: Commitment to achieving targets and deadlines
Essential skills comparison
Enterprise skills focus on big-picture thinking:
- Decision making for strategic direction
- Delegation of responsibilities
- Risk management and assessment
- Networking and building relationships
- Goal setting for the organisation
Management skills centre on people and operations:
- Leading teams effectively
- Motivating employees to perform well
- Communicating clearly across all levels
Management activities involve daily operations:
- Planning work schedules and targets
- Organising resources and workflows
- Controlling quality and performance standards
The six key differences in contribution
Understanding how entrepreneurs and managers contribute differently to business success is crucial:
1. Risk exposure
Entrepreneurs accept significant financial and personal risks. They may lose money, damage their reputation, and sacrifice family time if the business fails.
Managers face limited risk exposure. Unless they own shares in the company, they typically only risk losing their job if the business fails, not their personal savings or assets.
2. Daily business involvement
Entrepreneurs establish the business structure and hire managers, then focus primarily on growth opportunities and strategic development.
Managers handle day-to-day operations, ensuring targets are met and employees complete their tasks effectively.
3. Employment status
Entrepreneurs work for themselves, contributing their skills towards growing and expanding the business they own.
Managers are typically employed by others and apply their skills to manage the business operations successfully.
4. Qualifications and training
Entrepreneurs may lack specific formal training in areas like marketing or finance. Their main contribution comes from their natural enterprising abilities and business instincts.
Managers usually have specialised training in one or more business areas and hold relevant qualifications in business or management. They contribute professional knowledge and proven skills.
5. Financial rewards
Entrepreneurs have potential for high profits since they typically own most company shares. However, they also face the possibility of significant losses.
Managers receive a set salary and possibly annual bonuses. They may also invest in company shares to receive profit dividends, but with more predictable, stable income.
6. Innovation role
Entrepreneurs identify market opportunities and develop original ideas for new businesses or services.
Managers ensure these innovative ideas are properly implemented through overseeing design, marketing, sales and other operational aspects.
Real-world Example: Terry Clune and Taxback.com
Consider Terry Clune, founder and CEO of Taxback.com. As a student in Germany, he discovered he was paying 50-60% tax and decided to solve this problem by starting a tax refund business.
Clune demonstrates both entrepreneurial and management characteristics - he spotted an opportunity (entrepreneurial) and built systems to deliver the service efficiently (management). This shows how successful business leaders often combine elements of both roles, especially in growing companies.
Key Points to Remember:
- Entrepreneurs create businesses by spotting opportunities and taking risks, while managers run businesses by organising people and resources
- Different skills required: Entrepreneurs need creativity and risk-taking abilities; managers need leadership and organisational skills
- Risk levels vary greatly: Entrepreneurs risk personal finances and reputation; managers typically only risk their employment
- Both roles are essential: Successful businesses need entrepreneurial vision AND effective management to thrive
- Roles can overlap: In small businesses, founders often perform both entrepreneurial and management functions until growth allows specialisation