The terms “entrepreneur” and “small business owner” are often used interchangeably. However, it is crucial to understand the significant differences between these two roles when you want to start a business.
In this blog post, we will explore the distinctions between an entrepreneur and a small business owner, shedding light on their unique characteristics, mindsets, and approaches to business. By the end of this article, you will have a clearer understanding of which path suits your aspirations and goals.
An entrepreneur is a person who not only starts, organizes, and manages a business venture intending to make a profit but also takes risks, innovates, and creates opportunities. They are often characterized by their ability to identify and pursue business opportunities, take initiative, and adapt to changing market conditions.
Here are some features commonly associated with entrepreneurs:
We discussed these traits in more detail in a previous article in this series, titled “12 Traits of Successful Entrepreneurs”, and it’s important to note that not all entrepreneurs possess every single trait mentioned above. Still, these are commonly associated characteristics in the entrepreneurial world.
Here are some examples of successful entrepreneurs. I’m sure you have heard of most of them:
These are just a few examples of successful entrepreneurs who are well known. There are many more inspiring entrepreneurs around the world.
A small business owner is an individual who operates and manages a business with relatively few employees and a relatively low level of revenue and assets compared to larger corporations. He or she is often referred to as “self-employed”.
Small business owners are typically involved in the day-to-day operations of their businesses and make critical decisions regarding strategy, finance, marketing, and personnel.
They may have started the business from scratch or acquired an existing one, often connect closely with their customers and play a vital role in their local communities.
These attributes and responsibilities are essential for effectively managing their businesses and achieving long-term success.
As you will no doubt recognize, these activities occur in every business. The difference is that larger firms have dedicated teams looking after each of these activities, unlike a small operation where they fall under the realm of the owner, who may or may not seek assistance from outsourcers.
There are countless real-world examples:
These examples demonstrate the diversity across various industries. Local companies play a vital role in the economy and contribute to their local communities by providing products, services, and employment opportunities.
While there can be some overlap between the roles of small business owners and entrepreneurs, there are also some key differences:
Mindset and goals: Entrepreneurs often desire to innovate, disrupt markets, and create new ventures with high growth potential. They typically focus on scaling their business and may pursue multiple ventures. On the other hand, self-employed owners tend to have a more localized focus and aim for stability and sustainability rather than rapid growth.
Risk tolerance: Entrepreneurs are generally more comfortable taking risks and embracing uncertainty. They are prepared to invest significant resources to pursue their vision, even if it means a higher chance of failure. While still taking risks, small business owners often have a lower appetite for risk and prefer to maintain a stable and profitable business.
Size and scalability: Entrepreneurs typically aim to build scalable businesses that can grow rapidly and potentially disrupt industries on a larger scale. They often seek external funding and may have ambitions to expand globally. On the other hand, small business owners typically operate on a smaller scale and focus on serving a specific local market or niche.
Innovation and disruption: Entrepreneurs are more likely to introduce innovative products, services, or business models that disrupt existing markets or create new ones. They constantly seek opportunities for innovation and differentiation. While still capable of innovation, small business owners often focus on providing quality products or services in established markets without necessarily seeking disruptive change.
Role in the business: Entrepreneurs tend to be more involved in the strategic aspects of their ventures, such as vision-setting, securing funding, and market positioning. They may delegate operational tasks to others as they focus on growth. Small business owners are often more hands-on in the day-to-day operations of their businesses. They may be directly involved in various aspects, from customer service to financial management.
It’s important to note that these differences are not absolute and can vary depending on individual circumstances. Some entrepreneurs may start as small business owners and evolve into entrepreneurial ventures, while some small business owners may adopt entrepreneurial mindsets and pursue growth opportunities.
As you reflect on the difference between entrepreneurship and being self-employed, note that both options offer opportunities for success and fulfillment but require different mindsets, goals, and approaches.
Take the time to reflect on your personal aspirations and goals before making this choice. By delving deep into your passions, strengths, and long-term objectives, you can align yourself with the path that resonates with your true self.
Consider your appetite for risk, desire for innovation, drive for growth, and your preferred scale of operations. Focusing on these aspects will enable you to make an informed decision and embark on a journey that aligns with your values and aspirations.
Whether you are an entrepreneur aiming for disruptive innovations or a small business owner focused on building stability and serving a local community, you can enjoy a fulfilling and successful professional journey.
Other articles in this series on entrepreneurs include:
12 Traits of Successful Entrepreneurs
7 Essential Skills for Entrepreneurs to Unlock Their Potential
Small Business Owner vs. Entrepreneur: Understanding the Difference
How to Overcome Fear of Failure as an Entrepreneur
The video on this page includes a photograph of Sara Blakely by Gillian Zoe Segal, CC BY-SA 4.0 , via Wikimedia Commons.
It also includes a photograph of Oprah Winfrey by vargas2040, Cropped by OsamaK, CC BY-SA 2.0 , via Wikimedia Commons
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