Entrepreneurship vs. Sole Proprietorship

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Written by David Ormesher on December 17, 2009

It's popular today to define an entrepreneur as anyone who works for him or herself. It makes sense. Anyone who has the courage to launch out on their own and "eat what they catch" is showing entrepreneurial instincts. There is the desire to "be your own boss," and the quickest way to that goal is to hang out a shingle and become a consultant.

In many cases, however, these businesses are not entrepreneurial. They're really sole proprietorships.

A sole proprietorship is a small company, often a single employee - the owner - that exists to provide a salary. There are many ups and downs, of course, but if it is successful, it provides a regular paycheck and supports a family. Maybe there's an assistant or secretary, but by and large, the sole proprietor is loath to hire employees. Sole proprietors left the corporate life to get away from the hassle of bureaucracy, employees, and management headaches.

An entrepreneur, on the other hand, is a builder. He or she is looking to develop a value creation engine that builds wealth, and this only really comes from scale. An entrepreneur is not afraid of growth. In fact, an entrepreneur recognizes that employees are critical to providing leverage to his or her vision. Entrepreneurs work best within their unique ability, and they succeed when they surround themselves with team members who compliment their skills.

Early-stage economies are made up predominantly by sole proprietors. In this case, these sole proprietors are not refugees from big corporations. They are farmers, shepherds, artisans, and collectors of scrap. In many cases they are simply carrying on their family tradition. In most cases, they don't have a choice between working for themselves and getting a job. They are simply making ends meet and putting food on the table for their family. In many cases, they are accidental business owners. But with an average of 35% unemployment in Africa, the model of a continent of sole proprietors supported by microfinance isn't sustainable.

What is needed in Africa is a strong entrepreneurial sector with the ability to create jobs and hire employees. In America, only one in ten is an entrepreneur with a small or medium size company with employees. And yet these entrepreneurs create 40% of America's jobs and generate 60% of its GDP.

At this point, most aid to Africa is either microfinance to sole proprietors or large bilateral loans to fund government budget shortfalls. There is little being done to encourage and mentor the growing group of entrepreneurs who are beginning to make a difference in their communities.

This is where GRDP comes in.

GRDP's mission is to pair successful executives and entrepreneurs from the United States with high-potential entrepreneurs in Rwanda. The goal is to help encourage and build a strong entrepreneurial sector in Rwanda that will create wealth, increase jobs, provide the tax base to fund local infrastructure and investment, and inspire Rwanda to live up to its highest aspirations and ideals.

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