An entrepreneur is a person, who establishes the industry and undertakes risks, whereas capitalist is the person who provides capital for the industry. If the capitalist also undertakes risks, along with providing capital, then he will be called as the entrepreneurs.
Difference between Entrepreneur and Capitalist
Hence, there is much difference between entrepreneur and capitalist, which can be explained, as follows:
1. Meaning
An entrepreneur is a person or group of persons, who carries out activities relating to the establishment of industry and innovations.
A capitalist is a person who provides capital for any industry.
2. Status
The entrepreneur is the owner of the industry.
The status of the capitalist in the industry is that of a debt provider.
Related: 8 Difference between Entrepreneur and Manager.
3. Nature of Functions
The function of the entrepreneur (owner) is to undertake risks.
The function of the capitalist is to make capital available.
4. Reward
The entrepreneur gets profits as a reward for his services and risks.
The capitalist gets interested as a return on the capital invested by him.
5. Policy Formulation
Normally, the entrepreneurs perform the functions of policy formulation for the industry.
Normally, capitalists do not formulate the policies. Although, presently board of directors of the companies includes the representatives of the finance providing institutions.
Even then, Financial Institutions are not recognized to be an entrepreneur.
6. Undertaking of Risks
The entrepreneur faces several risks and uncertainties in the establishment of industries and activities of innovations.
The function of the capitalist is to invest capital.
He has not to undertake risks like entrepreneurs.
Related: 21 Types of Entrepreneurs (Explained With Examples).
7. Certainty of Income
The income of the entrepreneur is uncertain. He may or may not earn profits.
The interest receivable by the capitalist on investment is certain. Hence, his income is certain.
8. Status of Industries
The status of capitalists and entrepreneurs may be normally the same, in small businesses and industries.
In large scale businesses and industries, normally, it is not so.
In companies, the shareholders are in the status of entrepreneurs and creditors are in the status of the capitalist.
Thu, now you know the difference between entrepreneur and capitalist.
Read More:
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- 12 Qualities of Effective Leadership in an Entrepreneur
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