Entrepreneur vs Small Business Owner: The 7 Key Differences Explained Fully

One of the most important questions that aspiring entrepreneurs would have to answer, and do so quickly, is: should I become an entrepreneur, or business owner? And, what are the key differences between an entrepreneur and a small business owner?

While sharing some common ground, an entrepreneur and a business owner approach building businesses from very different mindsets and motivations. Understanding these core differences is crucial for determining which route truly aligns with your innate interests, abilities, and vision if you desire to start a business.

I will be using the term ‘starting a business‘ interchangeably to to mean both entrepreneurship and business ownership, depending on the context.

 

 

My goal today is simple: that through this comprehensive guide, you will be able to examine for yourself the central factors setting entrepreneurs apart from business owners across key areas like:

• Leadership style and strategic focus
• Priorities for growth, profits, and risk-taking
• Passions, personality traits, and work preferences
• Real-world examples of both business-building paths

Gaining clarity on these divergent approaches will provide direction on which road—entrepreneurship or business ownership—you should take to maximize fulfillment and success.

Key Takeaways

 

1. Defining Entrepreneur and Business Owner

 

First, what exactly is an entrepreneur, and what defines a business owner?

The Entrepreneur

An entrepreneur is an innovator who launches a new business around a unique technology, product, or service business idea. Entrepreneurs tend to possess these key qualities, including but not limited to:

• A passion for turning innovative ideas into reality
• An appetite for risk-taking and embracing uncertainty
• Intense focus on scaling up and rapid growth
• Comfort with bootstrapping and sacrifice for long-term gains

Rather than manage what already exists, entrepreneurs love building something new and disrupting established industries.

The Business Owner

Now let’s look at a business owner: a small business owner acquires or inherits an existing company, overseeing its operations and taking profits from its activities. A small business owner may have the following key traits including:

• Motivation tied to owning a stable, profitable business
• Seeking steady returns on investment (ROI) month-to-month
• Risk aversion and preference for predictability
• Contentment with incremental vs explosive growth

While many entrepreneurs pioneer uncharted waters, small business owners focus on the familiar. Now, let’s dive deeper into factors that set these two business-building paths apart.

2. Startup vs Existing Business

A core divergence involves the type of venture pursued:

Entrepreneurs gravitate toward creating brand-new startups and introducing innovative products, technologies, or services. They gain fulfillment from inventing and building vs maximizing short-term profits.

Business owners typically acquire existing businesses in established industries or inherit companies from family. Instead of trailblazing something new, they focus on improving operations, and customer experience, and making steady profits.

Some real-world examples:

• Entrepreneur: Mark Zuckerberg pioneered Facebook from his college dorm room.
• Business Owner: Purchasing an existing restaurant franchise like McDonald’s or Subway, or the convenience store in your neighborhood.

For entrepreneurs, the excitement lies in turning ideas into reality and watching startups flourish over time. Business owners seek the stability and predictability of running a company with proven financial viability.

Now, let’s explore how they differ in their appetite for risk.

3. Risk and Innovation

 

 

Views on risk-taking and innovation also diverge between entrepreneurs and small business owners:

Entrepreneurs feel energized by embracing major risks that come with unproven ventures. They possess an innovative mindset focused on turning ideas into disruptive businesses.

Business owners heavily prioritize stability and predictable growth. Instead of trailblazing into uncharted territory, they stick to established products and target markets. Unnecessary risks are seen as threats to steady profits.

Some examples:

• Entrepreneur: Elon Musk embracing huge risks to launch SpaceX’s reusable rockets.
• Business Owner: A McDonald’s franchisee focusing on proven products like Big Macs and fries.

Entrepreneurs feed off the uncertainties and challenges of unproven ideas. Owners view unpredictability as a distraction from smooth operations.

5. Mindset and Motivation

Beyond risk tolerance, significant mindset differences emerge between business owners and entrepreneurs:

Entrepreneurs maintain an opportunistic mindset, constantly scanning for problems and begging for innovative solutions. Bringing their ideas to life is the central motivator, outweighing short-term profits.

Many business owners adopt a more conservative, profit-driven mindset. Taking steady, predictable income from a business’s existing activities tends to be the primary incentive for owners.

In short, entrepreneurs run on vision while owners chase earnings. This shapes divergent strategies for how each leads and operates.

6. Management and Operations

 

 

For hands-on leadership, clear contrasts arise between how entrepreneurs and owners engage:

Entrepreneurs provide high-level strategic guidance to the startup but delegate day-to-day execution. Their energy focuses on long-term growth initiatives.

Business owners take a granular, hands-on approach to overseeing daily operations—supervising staff, monitoring financials, overseeing workflows, etc. Their priority is profits.

Entrepreneur Management Style

As leaders, entrepreneurs:

• Supply visionary direction to guide the startup’s path
• Recruit and manage teams of talented employees and advisers
• Shape company culture and motivate staff to achieve growth goals
• Oversee expansion initiatives, product/technology R&D, branding, etc.

They avoid micromanaging, instead trusting their teams to handle execution while they steer and develop strategy.

Business Owner Management Style

Business owners tend to:

• Directly supervise employees across departments and manage workflows
• Review daily/weekly financial statements, sales figures, inventory, etc.
• Make tactical adjustments to operations and staffing to maximize efficiency
• Verify company policies are followed across all activities

Unlike entrepreneurs, owners take a hands-on approach to managing workflow particulars, employees, and finances.

Next, the two paths diverge again when it comes to growth and profits…

7. Approach to Profits and Growth

Entrepreneurs gladly reinvest profits back into R&D, technology, real estate, hiring, etc. to speed up growth and expansion. Rapid, scalable growth takes priority over short-term gains.

Business owners intently monitor financials to maintain optimal profit margins month-by-month and quarter-by-quarter. Steady profitability trumps fast growth as their primary goal.

Entrepreneur Profits and Growth

More specifically, entrepreneurs:

• Funnel profits into technology enhancements, product development, marketing, etc. to boost growth
• Measure success based on user/customer acquisition and revenue scaling, not profit-taking
• Accept bootstrapping and minimal profits to pursue market-changing ideas

Uber co-founder Travis Kalanick once said: “The key is to sacrifice growth today for profitability tomorrow.” This illustrates the entrepreneurial mentality.

Business Owner Profits and Growth

Business owners, on the other hand:

• Pull regular profits from the business as returns for their ownership
• Prefer incremental gains that provide predictable income streams
• Avoid rapid expansion if it squeezes short-term profit margins

Owners focus squarely on profits, while entrepreneurs chase the thrill of hypergrowth and market disruption.

Examples and Case Studies

 

 

Looking at real-world examples highlights the mindset contrasts between entrepreneurs and business owners:

Entrepreneur Examples

• Jeff Bezos – Drove Amazon’s rapid expansion by relentlessly plowing profits back into growth initiatives like AWS and Prime.
• Sara Blakely – Took huge risks to launch Spanx and disrupt the apparel industry. Willingness to invest big in marketing paid off with soaring revenues.

Business Owner Examples

• Franchise owners – Those who purchase Subway or Jiffy Lube franchises aim for stability and predictable income from proven business models. They focus on the consistent execution of what works rather than reinventing the wheel.
• Multigenerational family businesses – Leaders who inherit businesses from parents or grandparents generally avoid risks that could jeopardize what past generations built. Preserving it trumps inventing anew.

Now that we’ve explored the key differences in depth, should you embark on the entrepreneurial route or follow the path of business ownership?

Should You Become an Entrepreneur or Business Owner?

Looking the above discussing on entrepreneur vs business owner, what should you become? Here are some important pointers.

When choosing between these two directions, start by looking inward. Assess your innate passions, abilities, and interests to determine which path offers the best fit.

Ask yourself:

• Am I more motivated by innovative ideas or predictable profits?
• Do I want to build something new or optimize what already exists?
• How comfortable am I with uncertainty and taking risks?
• Do I want to focus on strategy or day-to-day operations?

Beyond reflecting on your nature, also consider your vision for success.

Best Candidates for Entrepreneurship

You may be well-suited for the entrepreneur route if:

• You’re driven by innovative ideas more than short-term profits or stability
• You’re comfortable embracing uncertainty, setbacks, and risks
• You aspire to pioneer new solutions or disrupt established industries

Signs you may thrive as an entrepreneur include:

• You’ve always had big ideas and inventions you wanted to bring to life – Entrepreneurs are dreamers and visionaries at heart who turn ambitions into reality through determination. If you’ve always had a longing to create something new that makes a difference, entrepreneurship could be a calling.
• You excel at selling ideas and persuading people to back you – Having strong pitching skills and personal charisma is crucial to recruiting a great team, getting investors on board, and building game-changing products customers love. These persuasion abilities come more naturally to some.
• You see inefficiencies, annoyances, and problems everywhere – The instinct to scan surroundings and identify better ways is in an entrepreneur’s DNA. You can’t rest until you pursue solutions.

Best Candidates for Business Ownership

On the other hand, business ownership tends to best fit those who:

• Are driven more by profit margins and stability than trailblazing innovations
• Prefer predictable routines and results over uncertainty
• Enjoy perfecting operations vs pioneering ideas

You may thrive as a business owner if:

• You like feeling in control of details – Business owners want to be heavily involved across all operations from inventory to customer service. If you enjoy supervising procedures and micromanaging details, ownership may suit you.
• You’re numbers-focused with financial acumen – Shrewd budgeting, profit analysis, and cost control are crucial for owners. If you possess strong business sense and number-crunching abilities, this path may click.
• You value tradition and consistency – Business owners seek stability in what they build over many years. If you’d rather further a company’s legacy than take risks reinventing the wheel, ownership is likely a fit.

Of course, there are pros and cons to both pathways…

Pros and Cons of Each Path

 

 

Before deciding, it’s important to know the potential upsides and downsides of entrepreneurship and business ownership.

Entrepreneurship:

Entrepreneurship offers immense rewards, but steep risks as well:

Pros

• Ability to build something of your own
• Creative freedom to develop innovative solutions
• Huge potential for growth, scale, and profit
• Purpose-driven work and a chance to make an impact

Cons

• Extremely high failure rate for startups
• Long, unpredictable hours especially at first
• Minimal work-life balance and high stress
• Massive financial risk if the startup fails

Business Ownership

Small business ownership provides more predictability, but less explosive upside too:

Pros

• Owning a stable, established business
• Proven brand, reputation, and business model
• More manageable workload and risks
• Comfort of pulling steady owner profits

Cons

• Slower growth trajectory than startups
• Less ability to innovate or reinvent the wheel
• Lower profit potential than entrepreneurship
• Often confined to the business full-time

Carefully assess your risk appetite and personal aspirations. This will dictate which path offers the better fit.

Frequently Asked Questions

 

 

Here are answers to some common questions about entrepreneur vs owner paths:

Can I be an entrepreneur and business owner at the same time?

Yes, many successful entrepreneurs eventually start acquiring and managing additional businesses once their initial ventures take off. At that point, they begin shifting from entrepreneur to business owner mindsets.

Which path usually provides the highest income potential?

Both can provide substantial earnings in different ways. Successful entrepreneurs have the potential for greater wealth by building fast-growing startups. But risks are exponentially higher, and most startups fail. Business ownership generally offers a more predictable, stable income.

What background is best for becoming an entrepreneur?

Specific education or work experience matters less than possessing an entrepreneurial mindset and skillset. But background in areas like sales, marketing, technology, and finance can be very helpful when launching a startup.

Does entrepreneurship require special personality traits?

Typically, successful entrepreneurs share traits like comfort with risk, persistence, charisma, vision, passion, and comfort in working long, hard hours. A thirst for innovation trumps a desire for stability and work-life balance.

My Final Thoughts on Entrepreneur vs Business Owner

At the end of it all, while entrepreneurship and business ownership certainly overlap, some central distinctions emerge:

• Entrepreneurs gravitate toward trailblazing new startup ventures, embracing risk in pursuit of disruptive ideas. They focus heavily on accelerating growth.
• Business owners acquire existing companies or inherit them, seeking stability and steady profits over risky growth. They avoid reinventing proven business models.

Clearly assessing your innate skills, passions, interests, and risk appetite is crucial for determining which path offers a better fit.

By understanding these core differences, you gain clarity on which road—exciting entrepreneurship or steady business ownership—will ultimately lead to greater success and fulfillment based on your unique strengths and aspirations.