Entrepreneur vs Business Owner [9 Difference Between Entrepreneur And Business Owner]

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You might be thinking of being a solopreneur over an entrepreneur. But do you know what is the difference between entrepreneur vs business owner? 

Well, today we are here to discuss the same and understand the differences between an entrepreneur and a business owner.

If you’re running a business, what label do you prefer: entrepreneur or business owner? Does it hinge on the level of risk you undertake, the industry you’re in, your business structure, or is it simply a matter of personal choice?

Whether you identify as an entrepreneur or a business owner is influenced by a mix of factors, encompassing your company’s ambitions, goals, and legal structure.


Differences between Entrepreneurs vs Business Owners

The difference between an entrepreneur and a business owner can be subjective—what one person considers an entrepreneur; another might see as a business owner.

So, what qualities define someone as an entrepreneur or a business owner?

According to the Oxford Dictionary, an entrepreneur is “a person who organizes and operates a business or businesses, taking on greater than normal financial risks in order to do so.” Given that 90% of startups fail, it’s evident that entrepreneurship involves significant risk.

While there isn’t a precise definition for a business owner, Shopify describes it as “one person who is in control of the operational and monetary aspects of a business.” Entrepreneurs fall into this category, but business ownership doesn’t necessarily come with the same level of risk that entrepreneurs face.

Other distinctions between the two terms involve more nuanced factors, such as the motivations behind starting a business, profitability, attitudes toward risk, and more.

9 differences between entrepreneur vs business owner:

1.  Risk Positivity vs Risk Aversion

2.  Innovate vs Make Money

3.  Long Term vs Short Term

4.  Individual vs Community

5.  Incorporated vs Unincorporated

6.  Rule Breaker vs Follower

7.  Inaccessible Capital vs Accessible Funding

8.  Local Growth vs National Expansion

9.  Stability vs Volatility

1. Risk Positivity vs Risk Aversion

Starting a business comes with inherent risks, but entrepreneurs usually embrace a higher level of risk compared to business owners.

For instance, an entrepreneur might aim to revolutionize an industry, whereas a business owner could initiate a business with a proven and established model. Despite both grappling with risk, entrepreneurs are inclined to actively embrace it.

2. Innovate vs Make Money

Entrepreneurs and business owners typically harbor distinct motivations when embarking on their ventures. While both likely share the goal of making money and constructing something from the ground up, entrepreneurs often set their sights on changing the world or revolutionizing their industry.

In contrast, business owners primarily aim to generate profits. Think about the disparity between a Silicon Valley AI startup and a local bookstore, for example.

3. Long Term vs Short Term

Entrepreneurs and business owners vary in their expectations regarding profitability. Entrepreneurs often initiate ventures that entail more long-term risk, resulting in less immediate profitability.

On the other hand, business owners typically seek short-term profits, as they commonly rely on established business models, strategies, and products.

4. Individual vs Community

Business owners actively engage in their communities, frequently sponsoring school groups or contributing to local charities. Their motives may involve building a positive reputation within the community or providing job opportunities to locals.

Entrepreneurs, on the other hand, may have fewer concerns about the impact of their business on the community. For instance, they might outsource professionals to assist in building their business, regardless of whether these professionals reside near the company’s home base.

5. Incorporated vs Unincorporated

The distinction between an entrepreneur and a business owner can extend to their incorporation status. A study highlighted in The Quarterly Journal of Economics discovered that entrepreneurs typically operate incorporated businesses, while business owners run unincorporated ones.

The researchers clarified that this difference is likely due to small businesses engaging in more routine activities, in contrast to entrepreneurs who take on more risks and, consequently, need personal legal protection.

Incorporation legally separates the founder from the business, whereas an unincorporated business involves the owner’s personal liabilities.

6. Rule Breaker vs Follower

The study also revealed that entrepreneurs tend to participate in more rule-breaking activities compared to business owners. It found that successful entrepreneurs often engaged in risky behaviors like skipping class, shoplifting, gambling, and more before establishing their own ventures.

Entrepreneurship inherently involves risk-taking and a willingness to bend the rules, while business owners typically adhere more closely to the status quo.

7. Inaccessible Capital vs Accessible Funding

Nearly 8 out of 10 small businesses rely on personal funding to kickstart their operations. Over time, they might explore funding options from banks, private investors, and other sources.

Generally, entrepreneurs have a broader range of funding sources at their disposal. For example, venture capitalists tend to invest primarily in businesses with high-growth potential.

On the other hand, business owners may encounter greater challenges in securing investments and often depend on local banks for loans.

8. Local Growth vs National Expansion

Entrepreneurs typically set more ambitious goals for their businesses. Most aim to expand their operations nationally, with some aspiring to achieve global growth. In contrast, business owners often keep their focus local, directing their efforts towards serving customers in their immediate area or region.

9. Stability vs Volatility

A business owner typically handles the day-to-day operations of their shop. Over the long term, they plan to maintain control while bringing on a few additional employees.

In contrast, many entrepreneurs initiate ventures with the aim of increasing the number of employees as the company grows.

This might involve hiring managers, executives, and possibly selling shares in the company or going public to raise funds. Entrepreneurs expect shifts in their role, while business owners mostly maintain the same functions.

Does an Entrepreneur Have To Be a Business Owner?

Not every business owner is necessarily an entrepreneur, but every entrepreneur is indeed a business owner.

Entrepreneurs initiate ventures, and consequently, they own a business. For instance, a startup founder in the tech industry can rightfully label themselves as both an entrepreneur and a business owner.

On the flip side, business owners aren’t always entrepreneurs. Operating a deli on the corner, for instance, doesn’t automatically classify the owner as an entrepreneur.

Self Employed vs Business Owner vs Entrepreneur

Self-employed professionals can classify themselves as either entrepreneurs or business owners, depending on the nature of their work. Interestingly, all entrepreneurs and business owners fall into the self-employed category.

For self-employed professionals, they often perceive themselves as the embodiment of their business. Whether they are writing articles or crafting financial projections for other companies as consultants, most self-employed individuals operate unincorporated businesses, meaning they bear responsibility for all debts and liabilities.

Determining whether a self-employed person fits into the entrepreneur or business-owner category hinges on the nature of their work. For instance, some self-employed professionals may write articles or create graphics for clients. Jobs like these typically don’t involve significant risk-taking or innovation, suggesting that they likely fall under the business-owner umbrella.

However, if a self-employed person plans to launch a startup with an innovative product, they may prefer to identify as an entrepreneur. In general, self-employed entrepreneurs contend with more significant risks compared to their self-employed business-owner counterparts.

Final Thoughts

Entrepreneurs versus business owners, it’s evident that these roles share common ground but also boast distinct characteristics. Entrepreneurs, driven by innovation and a thirst for risk, often aim to reshape industries and leave a lasting impact on the world.

They thrive on the unpredictability that comes with launching ventures and are more inclined to seek diverse funding sources for their high-growth potential initiatives. On the flip side, business owners typically embrace more established models, focusing on immediate profitability and stability.

Their goals often center around community engagement and maintaining a local presence, steering away from the high-risk, high-reward ventures that characterize entrepreneurship.

Ultimately, whether you identify as an entrepreneur or a business owner depends on a myriad of factors, including your risk tolerance, ambitions, and the nature of your work. Both play vital roles in the business landscape, contributing to its diversity and resilience.

As the entrepreneurial spirit and traditional business ownership continue to evolve, understanding these distinctions allows individuals to navigate their paths with clarity and purpose.

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