Many people consider the terms “entrepreneur” and “business owner” to be interchangeable. Although the two expressions are certainly related, they aren't identical. Learn how entrepreneurs are different and find out which one describes you best.
Entrepreneur vs. business owner differences
Both terms refer to someone who owns and operates a company. The distinction is less about choosing one label over the other and more about the person's role, goals, and approach to building the business.
Typically, a business owner is the individual who is responsible for the company’s ongoing operation and performance. They may have started the company themselves, inherited it, or purchased it. Their priorities often focus on maintaining customer relationships, improving profitability, and creating sustainable, long-term growth.
Entrepreneurs generally identify an opportunity and create or develop a business venture around it. Some people refer to it as “building a better mousetrap,” a phrase that points to an entrepreneur’s ability to find a problem in a given market and then solve it with their venture.
Entrepreneurs might also enter the market with the goal of selling their company to a larger, more established business. This doesn’t mean that entrepreneurs are inherently bigger risk-takers than business owners. It simply means that they may approach the market from a different perspective.
You don’t have to choose between being a business owner or an entrepreneur as the terms are not mutually exclusive. Instead, they simply refer to the way that you enter a market and in some cases may explain your goals for the business you own.
Different paths to business ownership
Starting a business from scratch is only one way to become a business owner. Entrepreneurs and aspiring business owners may take several paths depending on their experience, resources, goals, and the opportunities available to them. Common paths include:
- Starting a new business: Launching a company based on your own idea, product, service, or business model gives you the most control over how the business is built, but it also means creating the operation and customer base from the ground up.
- Buying an existing business: Purchasing an established company may provide an existing customer base, employees, revenue, and operating systems. It may also require significant financing and due diligence before the purchase.
- Taking over a family business: Some people become business owners by taking over a company owned by a parent or other family member. The transition may provide the advantage of an established operation while creating its own challenges around leadership, management, and modernization.
- Buying into a venture: An entrepreneur might become a business owner by purchasing an ownership stake in an existing company or joining a partnership. Responsibilities, decision-making authority, and financial interests depend on the structure of the agreement.
- Franchising: Buying a franchise allows an owner to operate a business using an established brand, business model, and support system. In exchange, franchise owners typically have less flexibility than someone operating a completely independent business.
8 differences between entrepreneurs and business owners
Although entrepreneurs and business owners are both experts at running organizations, they differ in key ways. Get to know some of the biggest contrasts between these two types of business experts.
1. Entrepreneurs focus on growth and view their company as an asset
Entrepreneurs are known for taking a growth-focused approach to their companies. Few entrepreneurs start a business with the intention of keeping it small and manageable. Instead, most focus on scaling their business to produce as much as possible while generating maximum profits. Entrepreneurs who adopt this focus on growth tend to view their company as an asset that they may eventually sell.
While some entrepreneurs aim to sell their businesses to the highest bidder, others prefer to retain ownership over their companies. Those who enjoy the ownership aspect typically organize their companies to run independently.
2. Business owners may be sentimental about their business
While most business owners do have plans for their companies to flourish, they tend to be less growth-oriented than entrepreneurs. In fact, many small business owners tend to take a sentimental approach to their companies. Rather than developing plans to sell off their company and make a profit, they often view their business as their own.
Some small businesses may not be meant to scale and eventually sell. Many small business owners want to own their single location that they founded, and their plans may involve passing the business down to another family member.
3. Entrepreneurs often take more risks than business owners
Entrepreneurs are rarely satisfied with their business's status quo. Instead, they often want to design better products, reach larger markets, and make a major impact as soon as possible. That's why they tend to take more risks than small business owners do.
Although entrepreneurs are celebrated for their tendency to take risks, the chances they take are much more deliberate than you might think. They rarely embrace risk blindly. Successful entrepreneurs typically understand how to assess the potential positives and negatives, and they tend to take risks when doing so may help them get closer to their goals.
4. Small business owners hold steady
As a general rule, small business owners don't avoid risk completely. When they do take risks, however, they tend to have an overly cautious approach. They take care to assess the risk to the company and consider all the downsides. When the potential problems appear small, and the payoff seems virtually certain, they are more likely to move forward.
That's because small business owners tend to prefer slow, steady progress over explosive growth. They typically opt for incremental evolution that offers clear benefits over sudden changes with uncertain outcomes.
5. Business owners tend to be less technical than entrepreneurs
No matter what type of company they have, small business owners tend to be less technical than entrepreneurs. Business owners often focus on more practical sides of running their company, such as projecting revenues and calculating profit margins.
In contrast, succeeding as an entrepreneur generally requires technical skill and a drive to use their knowledge to generate value. As a result, many entrepreneurs become passionate leaders who strive to share their skills and knowledge with others.
6. Business owners set daily and weekly tasks
Most small business owners operate at a comparatively slower pace. Many business owners develop to-do checklists that focus on weekly or daily tasks, and they accomplish them one by one. That's because the majority of business owners are closely involved in the everyday operations and management of their companies, including overseeing employees and interacting with customers.
When they make big plans for their company, business owners typically think in terms of the upcoming month or quarter. Then they translate their quarterly goals to daily and weekly tasks.
7. Entrepreneurs frequently think and plan ahead
Unlike business owners, entrepreneurs tend to think big when it comes to plans. Rather than planning one week at a time, they typically plan for the next six months or year. They often leave the day-to-day planning to their teams while they focus on long-term growth instead.
In some cases, this planning strategy is essential for entrepreneurs, especially if they plan to seek funding from investors. In other cases, this method is a result of an entrepreneur's drive to accomplish more and meet goals more quickly.
8. Entrepreneurs usually start with a new idea
Many of the ideas of an entrepreneur are new; however, they also tend to build upon an already existing idea to improve it. They are looking to create products and services that are more helpful to people as well as very profitable.
Finding your place in the market
If you're trying to decide whether you're an entrepreneur or a business owner, you may not need to choose. Your approach to business may change over time, and you may see yourself in several different descriptions depending on where your company is in its journey. You might be focused on creating something new, building a stable and profitable operation, expanding into new markets, or finding a balance between growth and flexibility.
Consider where your priorities are right now. Are you looking for new opportunities and willing to experiment with different ways of doing business? Are you primarily focused on strengthening the company you've already built? Are you pursuing rapid growth, or is maintaining a profitable business that supports your employees and customers more important? None of these approaches makes you more or less of an entrepreneur or business owner. They simply reflect what you're trying to accomplish.
Wherever you land on the scale, having a trusted lender in your corner is an important part of growth. SmartBiz Bank® may be able to help you scale your business. Find out if you pre-qualify for a loan today.
FAQs
What is the difference between an entrepreneur and a business owner?
An entrepreneur is generally someone who identifies an opportunity and creates or develops a venture around it while a business owner is someone who owns and takes responsibility for a business. The terms overlap, and one person may be both an entrepreneur and a business owner. The biggest distinction is often the person's role and approach rather than a formal business classification. An entrepreneur may emphasize opportunity, innovation, or creating something new while a business owner may focus more heavily on operating, maintaining, and growing an established company.
Can you be an entrepreneur and a business owner?
Yes. In fact, many entrepreneurs become business owners when the venture they create develops into an operating company. Someone may also continue to think and act entrepreneurially after becoming an established business owner. The difference between the two has more to do with how the company’s owner views and handles the business after it’s open and operating sustainably.
Is every business owner an entrepreneur?
Not every business owner is an entrepreneur. A person may become a business owner by purchasing an existing company, taking over a family business, or becoming an owner without being the person who originally created the business or developed a new business concept. Whether someone is best described as an entrepreneur depends more on how they approach opportunity, innovation, and business development than simply whether they own a company.
What is the difference between entrepreneurship and small business ownership?
Entrepreneurship generally centers on pursuing opportunities, creating or developing ventures, and finding new ways to provide value. Small business ownership centers on owning and operating a company, which may involve maintaining a profitable operation, serving customers, managing employees, and building long-term stability.
Do entrepreneurs take more risks than business owners?
Entrepreneurs may be more comfortable pursuing opportunities with uncertain outcomes, particularly when testing a new product, business model, or market. However, successful entrepreneurs typically evaluate potential risks rather than taking them blindly. Business owners also take risks, particularly when hiring employees, investing in equipment, expanding operations, or taking on financing. The amount of risk depends more on the individual, business strategy, financial position, and goals than on whether someone is called an entrepreneur or business owner.
What type of business owner is more likely to focus on growth?
There isn't one type of business owner who is inherently more focused on growth. An entrepreneur may prioritize rapid expansion, new markets, or developing new products while another entrepreneur may prefer to build a smaller, highly profitable company. Growth strategy is ultimately determined by the owner's goals, resources, market opportunities, and willingness to invest in expansion, not by the title they use.
