(There is a Difference)
Small businesses are everywhere. These micro corporations form the very backbone of the entire nation’s economy.
They create jobs, employ millions and keep money flowing in the local community. The scale of the economic crisis would be unimaginable without these small enterprises.
However, the word “Entrepreneur” has been gaining a lot of attention in the media recently. It turns up everywhere you look.
This may have created a bit of confusion as to what exactly a small business is and how its owner is a different breed of business person than an entrepreneur. The difference is widely unknown and essential to understand if you fall into either one of the two categories.
Here’s a look at how the two differ.
The Scale of Ideas
A lot of business start off with just a simple idea. There’s a gap in the market, a glaring problem that needs to be resolved. There’s an opportunity to serve and the small business owner embraces this opportunity wholeheartedly. They set out to form a company that serves the local community and makes their customers happy. It is a business that is traditional and well targeted to a certain audience.
An entrepreneur, on the other hand, is set apart by the sheer scale of his or her idea. They think big, very big. The ideas they have come up with have never been explored before. They cannot be tested, referenced or diagnosed. Often there is no set historical data for what is being attempted, so an entrepreneur is basically setting sail on uncharted territory. The fact that the ideas may seem crazy and impossible at times does nothing to discourage an entrepreneur. Instead, it drives them.
The Attitude towards Risk
Small business owners are not exactly averse to risk. They like taking risks, but calculate them thoroughly before taking the plunge. They hold steady for the most part and like to know what’s coming next. The outcome needs to be clearly visible for anyone looking to take risks as a small business owner. As a consequence, the small business owner may get good results, but not necessarily extraordinary ones. But extraordinary may not be the small business owner’s aim in the first place. Consistently moving forward in a disciplined way is the small business owner’s overall goal.
The entrepreneur, on the other hand, is a risk taker like no other. They step out onto ledges more often than not and sometimes fail or succeed spectacularly. The attitude to risk is completely different for an entrepreneur. They understand that more often than not the size of the potential success is worth the risk, and they take the plunge knowing they’ve put in as much effort as they possibly could.
The Time Horizon
The weekly and daily to-do lists are what small business owners live by. The lifestyle involved with running a business on this scale requires near constant hands-on work for managing employees, communicating with customers, networking with suppliers and just keeping the ship on course. The time and effort required to manage just the mundane tasks becomes so overwhelming the small business owner adopts a myopic view and it’s common not look more than a few weeks or months ahead into the future.
The primary difference with an entrepreneur is that they think about the big picture stuff much more often. Their mind is constantly working on new ideas for growth and expansion of their brainchild. The entrepreneur understands that the day-to-day work at the business needs to be properly managed but that is not where their passion lies. They often find a way to delegate this daily management to someone else so that they can focus on the bigger moves and the creative thinking that drives them. Whereas a small business owner might be happy to have a successful stable company, the entrepreneur is always thinking of what more can be done.
The Emotional Attachment
Small business owners can be a little sentimental when it comes to their businesses. Only on the very worst days will they even casually think about selling or giving the business to someone else to run, but that thought always passes. They enjoy making the day-to-day decisions and running the whole operation so much that they don’t even consider retirement most of the time.
Entrepreneurs are just as emotionally attached to their business but the focus here is on the growth rather than ownership. Relentlessly expanding the business is the thing that drives entrepreneurs the most. To achieve this growth the business needs to grow beyond what a single individual, the owner for example, can handle by themselves.
The business ends up growing to such a scale a team of managers and experts is needed to make the whole thing work. At this stage the entrepreneur has created a business that can run and sustain itself without him or her. And once that happens, they wouldn’t think twice about selling it if it was a smart deal that allowed them to pursue another passion project.
The nation needs everyone to participate to the best of their abilities for the economy to run smoothly. Whether you’ve realized that you are a small business owner or entrepreneur depends entirely on your mindset and your future goals.
Both forms of business and both types of business owners are needed equally, but it helps to know which type you are so that you can work towards achieving what you really want.
About the Author: Andrew May is a longtime business and finance attorney who specializes in FINRA arbitration. As the founding member of his own boutique firm, May Law, he’s passionate about helping small business owners and entrepreneurs alike with whatever legal issues come their way. Andrew also enjoys guest blogging on a variety of industry publications. Click here to learn more.