To most people the terms entrepreneur and business owner are one and the same. Although they are obviously related, there are differences and I found myself wondering “am I more of an entrepreneur or a business owner?” The answer was something that I didn’t know! Time to do some research I told myself, and really understand what both were.
Entrepreneurs and business owners both run businesses, however they differ from each other in some key areas. Finding out more about what both terms mean will help you to decide which direction you may want to take. This can only mean greater focus and better ability to grow your business.
What Is An Entrepreneur?
The Oxford dictionary identifies an entrepreneur as: “a person who sets up a business or businesses, taking on financial risks in the hope of profit.” To me, and based on what I know or thought I knew of business owners and entrepreneurs, this definition didn’t really sound like there's much of a difference between the two!
The general opinion on websites like entrepreneur.com and Investopedia is that an entrepreneur is someone who starts a business or businesses based on an idea for a product, service or technology which they fully believe in. They find funding, and pull in the resources needed to bring their concept to life generally at high financial risk. There is a general consensus that entrepreneurs start off alone, taking big risks and massive amounts of work and responsibilities to do whatever it takes to become successful.
It is also generally believed that entrepreneurs focus on innovation and transformative business ideas. Their businesses are assets to them and often there is little sentimental value attributed to them. They are dreamers and big idea thinkers.
What Is A Business Owner?
Fundsnetservices.com defines business owners as …”a term that refers to individuals who establish and operate an entity that is engaged in commercial, industrial or professional activities with the purpose of deriving profits from its successful operations.”
In this article Tony Robbins says “Passion is the biggest key to becoming a true business owner.”
They are typically people whose business offers products and services that benefit their customers. Their business generally means something to them on a personal level and is used as their main source of income. It is common that the business is part of their family legacy, and they may have inherited it from their parents. It’s a source of personal pride, their livelihood, a place they want to retire in and ultimately be remembered for. Business owners usually have been working in their niche or industry for some time and have a great understanding of it. Sometimes the business owner was working in the business in a lower position and has climbed the ranks to eventually own it. The business idea or concept may not necessarily have been their own, but they run the business or have taken it over.
The Key Differences.
As you can see from the definitions outlined above, both share similar characteristics. In fact all entrepreneurs are business owners, however the reverse is not true.
From reading some of Tony Robbins’ blog posts on the subject like this one, I get the distinct impression that a business owner is a job title and “entrepreneur” is more of a mindset.
There are some key differences which we will outline below. These differences are important when defining who you are in business.
Growth, and Companies as Assets.
Entrepreneurs are laser focused on growth, and the ability to use their business as an asset to enable them to push on expanding their entrepreneurial projects.
Very few entrepreneurs get started on their path with the intention of keeping their vision small and their business manageable. Maximum growth and scaling their businesses to enable greater profits is the motivation. Their passion for their business project pushes them forward.
Business owners take a more measured approach to growing their business. They do not bet the farm on one idea or product and prefer small incremental changes which profit and grow the business over time. They play it safer.
Attachment and Sentimentality.
In complete contrast to most entrepreneurs, business owners tend to see their business on a much more personal level. Many take a sentimental approach to their business and would not jump at the opportunity to sell if it came their way.
Profit is of course important to them, however it is not the driving force and motivation behind many of their decisions. They know their industry and are comfortable in their surroundings. This is their livelihood, and not something that they will part with easily.
While extremely passionate about their business idea, service or product, entrepreneurs are not as attached to their project as business owners. They may have multiple ideas which they want to work on, so selling a business at a profit before they see it mature is not an issue.
Entrepreneurs Are Risk Takers.
Being an entrepreneur means being more open to risky ideas. Their business ideas usually involve a higher percentage of risk than the average business owner would be happier with. The fact that they embrace risk does not mean that they jump two feet into a project blindly. They typically research their idea thoroughly before deciding to pursue a project.
Small business owners take risks also. However the risks they decide to take are generally low and offer slow steady progress to their business. When they make an investment in a new product or aspect of their business which needs improvement, it is typically a risk which would not sink the business if it fails. They do not go all in on black and their gambles are small.
Entrepreneurs Are Thought Leaders.
Successful entrepreneurs generally use their knowledge to grow their idea and business project, and create value for their future asset. Many entrepreneurs become passionate thought leaders who share what they have created as well as their time, skills and knowledge with others.
Business owners lead more practical professional lives, and focus on areas of their business like calculating profit margins and the daily operations of their business. Both can be extremely passionate about their business but they approach them in completely different ways, and express their passions differently.
Planning Ahead.
Checklists, daily calendars, routines and business structure are all areas of great importance to business owners, and areas they will spend most of their time and energy. When they make plans for their business, it tends to be weekly and monthly, and the daily operations take precedence over long term goals. This is because their businesses are part of their lives and something personal to them.
To most entrepreneurs the big picture, and what the business looks like in six months, a year and beyond is what they spend their time thinking about. They delegate the daily operations to others and outsource projects and tasks so that they can plan ahead.
Conclusion
I started researching this topic with a view to help better understand what drives me, and how do I identify myself in terms of, am I a business owner or an entrepreneur. What I have found is that business owners are far more common than entrepreneurs, and that even though people may identify as an entrepreneur, they probably are not. As mentioned already, all entrepreneurs are business owners, however not all business owners are entrepreneurs.
For the most part when you look around you at the electricians driving past you in their van, the coffee shops in your village and the corner shop owners, you are looking at your everyday business owner. Someone who is doing what they are doing because it pays their mortgage, puts food on the table and gets their kids through college. They know their industry and could do what they are doing blindfolded (although hopefully that electrician in his van can see where he is going!). They are out to make a living, not change the world and there is nothing wrong with that.
The spirit of entrepreneurship definitely resides in my mind and body, however I would say that I am more of a business owner than an entrepreneur. While I do have some grand plans, and tend to look to the future while outsourcing the daily operations, I am not a massive risk taker and the mortgage needs to be paid!
If you found yourself wondering the same question that I did, you may have other questions which I can help you with too. Our introductory consultation is designed to find out what you and your business need and how we can best help you. Get in touch and let's find out exactly how we can help your business.
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