Many of the articles I write are aimed at the entrepreneurial community, and I’m sure many of you consider yourselves to be entrepreneurs………but are you really?
I was recently challenged to answer the question “Is there a difference between being self employed, being a business owner and being an entrepreneur?”
I think we can all agree that the distinction between being self-employed and being a business owner is fairly clear.
Self employed people are those who do business as a sole proprietor or independent contractor or are in part-time business for themselves. In most cases they do not have employees and generally do not hire contractors.
Small business owners are those who own a business and hire employees, contractors or both. Their businesses are also recognized as being separate entities by the IRS.
But what about the difference between being a business owner and being an entrepreneur? Nowadays the terms tend to be used almost interchangeably, but I believe there really is a difference.
The Merriam-Webster definition of an entrepreneur is “a person who starts a business and is willing to risk loss in order to make money”, and I think it’s that idea of risk that really sets entrepreneurs apart. I have met a few true entrepreneurs over the years. They exude passion, almost to the point of craziness, and forge forward in the face of sometimes seemingly impossible odds. They take big risks (often with other people’s money) in the expectation of big rewards.
Distilling it down I think that real differences are:
Small-business owners have a great idea- They solve a specific problem, generally in their community. They know their business and target audience. They know what will make their customers happy. They serve their customers.
Entrepreneurs have big ideas – They dream big. They think big. They come up with ideas that haven’t been tested, diagnosed, or worked through. A lot of times they don’t even know if their ideas are possible, which gets them even more excited.
Small-business owners like things to be steady –They like to know what’s coming next and where it’s coming from. They make calculated decisions, where the outcome is clear. The result may not be huge, but it will typically keep them moving forward. They take small risks, that usually reap small rewards.
Entrepreneurs love risk – They step out on a ledge more often than not. They jump in with both feet knowing that if they put in their full effort, the risk will be worth it more often than not.
Small-business owners think about the things they need to finish this week – They have daily and weekly to do lists. They manage employees, work with customers, network with new customers, and keep everything rocking and rolling. They do a lot of “firefighting”.
Entrepreneurs are thinking ahead six months – While their team is thinking about what they’re doing that week, they tend to skip the now and focus on the future of the company. They have people to manage the business, and if they don’t, they soon will.
Small-businesses owners are sentimental with their businesses – They never plan on selling or handing their business off to someone else unless it’s family. They like making the decisions and running the day-to-day. Very often they run shy of making great hires because they see themselves as the expert, and they have problems delegating,
Entrepreneurs focus on scaling – They want to grow – and grow they will. Although they may not focus on selling the business, they set it up to run without them. They surround themselves with experts while they end up being the rainmaker.
So that’s my take on it. America needs small-business owners to hold the economy and entrepreneurs to propel it forward. One isn’t better than the other. But you need to know which one you are – a small business owner or an entrepreneur?