Have you ever wondered about the difference between a business owner and an entrepreneur?
It's a common question among small business owners, especially those who are just starting out.
While the terms are often used interchangeably, there are some subtle differences between the two.
Business owners tend to focus on running their own businesses and making a profit from the successful operation of the company. They may have their own business ideas, but they typically don't take significant risks or innovate in the same way that entrepreneurs do. Their primary goal is to be their own boss and build a successful small business.
On the other hand, entrepreneurs tend to be more innovative and willing to take risks to create new businesses or products. They are often focused on building something new and disruptive, rather than just making a profit. They are hustlers who assume all the risk in the enterprise and are willing to go against the grain to achieve success.
While there is an overlap between the two, the main difference lies in their approach to business ownership.
Small business owners are more focused on the day-to-day operation of their own companies, while entrepreneurs are more focused on building something new and disruptive that could potentially change the game in their industry.
So, whether you're a small business owner or an entrepreneur, it's important to understand the difference and how it affects your approach to business ownership.
Starting a new business is exciting, but it's important to understand the difference between an entrepreneur and a business owner.
While both types of individuals are business-minded, entrepreneurs are known for their ability to innovate and come up with new ideas that can shake up the market.
Other business owners, on the other hand, may focus on a traditional business structure or simply try to improve on an existing successful business model.
One key aspect of entrepreneurship is taking risks and exploring uncharted territory.
This could mean starting a limited liability company, seeking venture capital, or even reaching out to potential customers who haven't been tapped into yet. Entrepreneurs often think outside the box and find ways to differentiate themselves from other store owners or unincorporated business owners.
One way to differentiate oneself as an entrepreneur is to focus on innovation.
This doesn't necessarily mean creating something completely new and never-before-seen, but rather finding new ways to provide products or services that cater to a specific customer base.
let's take an example:
An entrepreneur might take a traditional concept like selling insurance and create a tech-based website to offer this service in a more convenient and accessible way.
It's important for entrepreneurs to keep an eye on the market and understand the needs of potential customers. By doing so, they can ensure that their ideas are actually in demand and have the potential to succeed.
This may require some patience and a willingness to adjust plans as needed, but ultimately, the most successful entrepreneurs are those who are able to deliver a unique and valuable solution to the world.
Another point of difference between an Entrepreneur and vs small business owner is that every entrepreneur has the ability to set up a unicorn business ie. a startup that has a valuation of more than 10 billion USD.
But is that true for business owners?
Small and Medium-sized businesses often operate in competitive markets offering similar services and products as their competitors. This leaves them in a highly competitive space when compared with entrepreneurs.
Competition often eats up the margins and leaves them fighting for the market share, whereas entrepreneurs take huge risks and often try to open up a new market segment that can disrupt the space.
This often leaves customers with a single choice for the first few years, until competition kicks in. This helps them to make profits and sustain exponential growth, which results in gaining huge valuations for the company.
A business owner has a mindset to avoid risk as far as possible and make a tangible profit, within the margins allowed in the market. These meager margins do not leave him with many choices, for innovation and growth.
There’s a huge difference between the long-term vision of an Entrepreneur vs a Business owner.
An entrepreneur's vision is a strategy to build on his product and enable his company to gain good profits/salary as fast as possible, whereas, for a business owner, the vision for growth is entirely organic.
Through his long-term entrepreneurship vision and risk-taking capacity, eyes exponential growth but the prospects tend to limit themselves for a traditional business owner.
Does that mean business owners aren’t innovative or can’t look at the same exponential levels of growth?
If a business owner decides to let go of the traditional approach and looks to differentiate and innovate, this can be a game-changer for him.
In fact, a business owner is always better poised to take risks as he often has a steady stream of income coming in from his business and can easily spend time on research and innovative products.
This differentiation and new product development will create absolutely massive growth for his business and turn it into a big enterprise.
It's always a great vision that creates great people and great empires.
Entrepreneurship is all about the state of mind. Once you think you can do it, you will find a way, no matter the hurdles or circumstances that lie ahead.
Another difference between an Entrepreneur and vs Business owner is the hustle and challenges one has to go through in the initial stages of his business.
Does that mean a business owner does not go through the same hustle and effort?
Both business owners and entrepreneurs have to run their companies and manage the day-to-day operations that include Finances, HR, Sales & more. But the level of risk and effort involved for an entrepreneur is far greater than that of a business owner.
Let's take the example of a random business owner coming up with a franchise or restaurant chain and at the same time, an entrepreneur with a Cryptocurrency startup.
The business owner can expect some returns once he opens up the franchise and if everything goes well, he will start generating revenue from the very first month.
At the same time, an entrepreneur with a “Cryptocurrency” product has to overcome the challenges of educating the customer, marketing his product, convincing a VC for a substantial amount of funding, and has to hustle for 2-5 years before he could start generating some revenue.
No wonder many tech entrepreneurs like Elon Musk, Steve Jobs, and Bill Gates started from their garages and had to sleep in their offices as they couldn’t afford the rent.
As an entrepreneur, it's always a bonus if you have monetary support from your family or an investor.
But if you don’t have the support, it's not impossible as many have proved to become great successes without riches, and succeeded in their entrepreneurial journey.
Most Business owners have a registered Limited Liability Partnership or a Private limited company that makes their organization a separate entity.
This is often not the case with entrepreneurs and is a major difference between an Entrepreneur vs a small business owner.
Most entrepreneurs start with little money and have an investment that creates a financial liability for them.
Does that mean an entrepreneur can not create a Pvt limited firm?
The scenario is only true for an entrepreneur who has just started and does not have the capital or financial support to pay for lawyers or registration fees to form a Pvt ltd firm.
But once he is able to raise some funds, he can easily register as a limited liability. Nevertheless, an entrepreneur despite being a limited liability firm always has additional pressure from investors who want to get their money back and gain profits.
In the case of a New or family-run business, that’s not often the case. They have steady growth and just a few or no investors to answer to. This provides freedom and removes any Ethical liability toward the investor.
Risk is an integral part of all businesses, no matter if you are an entrepreneur or a small business owner.
But there is a major difference in the intensity of risk that is associated with being a business owner vs an entrepreneur.
What is that risk?
As a business owner, the intensity of risk is low owing to the fact that you are operating in an already marked territory. You know there’s a market, there's competition, and a potential to grow organically. This reduces the unknowns and the best way to be successful at it is to figure out a way to gain more market share.
Whereas in the case of an Entrepreneur, the risk gets big with a new or highly differentiated product that often eyes at opening a new niche segment. There’s effort involved in educating the customers, understanding their needs, and testing the market even before you could come up with a business.
This increases the risk for an entrepreneur,
“Without Risk, There’s No Reward”.
An entrepreneur can outsmart a business owner within 3-5 years gaining valuations of 5-10 billion USD. This is worth a lot more than a business owner can ever imagine, even working with generations of his family.
It's important to mitigate risk as a business owner, but calculated risks or gambles can create a huge difference in the outcome. You can always find a way to set apart a small sum of money you're willing to gamble on a new product; losing 100% of which does not make any significant financial trouble.
Once we have gone through the differences that separate an Entrepreneur from a Business owner, it's important to conclude.
Is becoming an entrepreneur beneficial for you or are you better off being a business owner?
Small business owner vs entrepreneur takes a lesser risk and has a steady stream of income that can start coming in from day one. Whereas being an entrepreneur can land you all the riches you've dreamt of for some time.
After all, it all depends on your life’s vision, the ultimate goal, and what makes you happy. If being innovative and trying new things gives you the joy and happiness you've longed for, entrepreneurship is an excellent choice.
But If you are someone who just wants a steady income and financial freedom, to spend time with his family and follow some of his newfound hobbies then being in business can be a nice steady ride for you.
There’s risk and effort involved in both. You can be rich and successful following either of the paths, but if you are someone who wants fame, and recognition and wants to contribute something tangible to society, there’s no doubt that Entrepreneurship is the right choice for you.
Does a small business provide a sure-shot path to becoming financially independent?
There can be immediate ups and downs in the market when demand can go up and suddenly go down. There can be market disruptions by a new product or service that can make your business go obsolete within months. This can create a ruckus in your business. But it's for you to get over it and find out ways and new solutions to the issue at hand.
Neither entrepreneurship nor having a small business offers any guarantee if you're not willing to invest in it. You have to put in Time, Effort, Hard work, and Perseverance and create systems within the business to achieve success.