Entrepreneurs vs Business Owners
February 13th, 2007
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Is there a difference between an entrepreneur and a business owner? Can you be one and not the other? Or be the other and not the one? Or be neither and still be self employed? Does it make any difference what you are, or probably more importantly, what you call yourself?
There’s an interesting discussion brewing about these questions in the StartupNation community.
I suppose it only matters if you feel that you act differently based on the moniker definition you would use to describe yourself. If it really doesn’t matter to you what you’re called, then it doesn’t matter what you’re called. Right?
Take a look at what other entrepreneurs … er, business owners … think about this.
Maybe you have something to add?
February 13th, 2007 at 2:48 pm
Coincidentally, I have been in a number of discussions on this topic in recent weeks.
The labels I have been using are a bit different: small business and corporate business owners but I guess entrepreneurs can be used in place of the latter.
I think there are tremendous differences between the two. Ask someone that has been both or has worked for each and they will likely concur.
The difference is not related to the size of the business, as the monikers suggest, frequently ’small businesses’ can be quite large. Although there are overlaps and examples of one type that exhibit signs of being the other, here are some difference that I have seen and experienced in my years:
[b]Entrepreneur or Corporate Business Owner:[/b]
- works towards a longer term vision with an acquisition or merger as a primary exit strategy. Sometimes a IPO is in the sights. The point being that an exit is planned and anticipated. The exit is not ‘pass it on to my heirs’ or ‘wind it down when I retire’. The Entrepreneur see their company as an investment as well as an excellent place to work. They will sell the company one day and start another. They may already know what the next one will be.
- works towards standard practices and behaviours such as common accounting practices, boards of advisors and directors, documented policies and procedures, effective delegation,
- focused on generating value for the company. This frequently involves generating profits. With a sale on the horizon, profits are frequently important. The company is more than their job, it is an investment.
- The proverbial buck does not stop with the CEO/Owner. The CEO reports to a board, the board to the investors.. yes, the CEO may occasionally be the only shareholder but she understands that they must be accountable to someone if their vision is to be realized.
- The Entrepreneur or Corporate CEO perceives themselves as working for the company / vision / future.
[b]A Small Business Owner:[/b]
- can often do anyone’s job.. and still does on occasion. They are often the centre of a cult of personality; they are the centre of the wheel. They know everything that is going on at their firm.
- usually does not report much in the way of profit to the government (or anyone else) and spends a fair amount of time tasks related to this, assuming their company is profitable.
- does not spend a lot of energy making sure their financial and operations activities fit into any industry best practices. Since there is no real goal of selling, they don’t really see the need to waste all of this time. Note: They may say they would like to sell but their actions say differently: they are not focused in building business value, they are not looking for ways to make their company attractive to potential buyers.
- the firm runs their way.. and it frequently runs like a well-oiled machine.
- The Small Business CEO perceives themselves as the company working for them.
I don’t want to set the impression that one is better than the other because I do not think that is true. I am a small business owner and now I am working hard to become more corporate. I have worked for both and I would say I have enjoyed working for a small business more.. but my career was better developed by corporate work.
I think the main differences between the two are A: the attention paid to building the value of the business, and B: how the head honcho perceives themselves in the organization
Jim
February 16th, 2007 at 11:56 pm
Interesting take Jim, but I’m not with you on making corporate business owner analogous to entrepreneur and excluding small business owner as non-entrepreneurial.
I think the term entrepreneur describes a continuum along which what you describe as corporate business owner and small business owner are overlapping segments. Both are entrepreneurs because they have assumed the risk for their own enterprise, they just have very different goals.
I think you are dead on in describing the differences between "corporate business" and "small business." In simpler terms, the key difference between the corporate business owner and the small business owner is one of perspective. The corporate business owner spends the largest portion of their time [u]working on the business[/u] and works in the business as needed but the small business owner spends the largest portion of their time [u]working in the business [/u]and works on the business only as needed.
I grew up in a family small business, then spent several years working in the largest accounting firm in the world (very corporate at $10 billion+ although structured as a limited liability partnership). Now that I run my own accounting firm, I am trying, as it sounds like you are, to blend the advantages of both perspectives.
June 22nd, 2007 at 4:07 am
I think every business owner has the potential to be an entrepreneur, but many business owners sit on their entrepreneurial potential. For me an entrepreneur is someone who goes that extra mile beyond the creation of a life style business. Thus, not every business owner is an entrepreneur, but many more could be.
Our work is all about lighting the fire and supporting people to move to the next stage of success.
Within the UK we have a latent phenomena of ‘fear of success’. The implications of being successful means that people may lose their friendship groups and even be questioned by their family. It sounds bizarre, but I have been exploring this psychological phenomena for many years. I would be interested to see if it arises in the US?
If we can overcome this we can help more business owners become entrepreneurs.
What do you think?
Prof David
http://www.21stcenturyentrepreneurs.co.uk