Entrepreneur vs. Small Business Owner: What’s the Difference


There has been a lot of talk lately about small business ownership and entrepreneurs.  What I have seen pretty consistently is the two areas getting pretty heavily mixed up.  What I have seen more so than any other terminology confusion in business lately has been the incessant confusion between the description of a small business and the description of an entrepreneurial venture.  I’d like to write about these two, and create some clarification on the key differences between them so the new generation does not make the mistake of confusing the two.

First off, let’s look at the definitions of the two terms, as the Merriam-Webster dictionary defines them:

  • “An entrepreneur is a person or group of people (Entrepreneurial Venture) who organize and operate a business or businesses, taking on greater than normal financial risks and potentially difficult tasks in order to do so.  Usually, the business is a new idea, and does not follow a model or plan that has already been proven workable before.”
  • “Small businesses are generally speaking privately owned entities such as corporations, partnerships, or sole proprietorships that themselves have fewer employees and/or less annual revenue than a regular-sized business or corporation does.  A small business differs from entrepreneurial ventures in that small businesses usually follow an already workable plan.  Such plans usually go along with a franchise, or they follow a model in whatever market that they are in that has already been proven to be workable.”

Key Differences Between the Entrepreneurial Venture and the Small Business

There are a few key differences between an entrepreneur and a business owner.  I can lay these out, so any doubt or uncertainty on what one is will be well understood.  The primary differences are things like:

  • Small business owners usually (about ninety percent of the time) deal with known and established products and services, whereas entrepreneurial ventures are for new and innovative offerings and products and services that are in their own way new and unique and to a large degree designed by the entrepreneur.
  • Small businesses aim for limited growth and continued profitability that is reliable and to a degree stable.  A great example is a local, privately-owned paint store that sells brand name paint products.  On the other hand, though entrepreneur ventures target rapid growth and high productivity returns on their new, innovative, special ideas.
  • Small businesses deal with known risks within their own field or marketplace.  Regardless of how the business owners are able to deal with those risks, the risks themselves are still relatively well known and predictable.  On the other hand, though, entrepreneurial ventures take the plunge with a lot of unknowns and a lot of big risks.
  • One of the most interesting differences here is that entrepreneur ventures generally impact economies and communities in a pretty big way, especially in the niche market that they are in or the community in which they are located.  This inevitably results in a pretty big, cascading effect on other sectors like job creation and job growth in the specific market or area.  Small businesses are in a lot of ways a lot more limited in this perspective of big change and such businesses remain confined to their own domain and group that they are a part of.

I hope this clears up some of the confusion on these subjects.  I want this area to be really well understood, as people should know well the terms and the truths about whatever venture or project it is that they are trying to get into.  The best way to succeed at something is to really understand that area very well.

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