Entrepreneur Vs.

Small
Business Owner, Defined
By Shobhit SethAAA |

http://www.investopedia.com/articles/investing/092514/entrepreneur-vs-small-
business-owner-defined.asp

An Entrepreneur is an individual who starts and runs a business with limited

resources and planning, taking account of all the risks and rewards of his or her
business venture. The business idea is usually a new innovation, product or
service, rather than an existing business model.

Such entrepreneurial ventures target high-returns, with high level of uncertainty.

The entrepreneur is willing to put his or her financial security and career at stake
to take risks on an idea, spending time as well as capital on an uncertain venture.
(Who were the 10 Greatest Entrepreneurs?)

Entrepreneurial ventures require the enterprising individual to arrange for capital,

raw materials, manufacturing locations and skilled employees necessary to
produce a good or offer a service. Marketing, sales and distribution are other
important aspects which are controlled by the entrepreneur.

Today’s technological advancements (like online ventures) have allowed the

entrepreneurs to skip a few mandatory needs (like procuring manufacturing
facilities, door-to-door marketing) or outsourcing selected functions (like
marketing, sales & distribution), but the risk is still borne by the entrepreneur.

Entrepreneurship is different from:

• Inheriting and/or running an existing businesses (family owned, co-owned)

• Working for other businesses or entrepreneurs for a salary
• Being a commission agent
• Selling already available goods or services as a franchisee or dealership
There is a very fine line between running a small business (SB) and an
entrepreneurial venture (EV) as they have a lot in common. Initial stages of both
SB and EV need significant hard work and dedication, but over a period of time
very few SBs become EV. The following guidelines help to differentiate between
the two.

What are the primary difference between Small Businesses and

Entrepreneurial Ventures?

• Small Business usually deal with known and established products &
services, Entrepreneurial Ventures are for new innovative offerings
• SBs aim for limited growth and continued profitability while EVs target
rapid growth and high productivity returns
• Small Businesses deal with known risks; Entrepreneurial Ventures take
deep dive with lots of unknown risks
• EVs generally impact economies & communities in a significant manner,
which also results in a cascading effect on other sectors like job creation.
Small businesses are more limited in this perspective and remain confined
to their own domain and group.

A few myths which exist about entrepreneurs:

• Entrepreneurs take uncalculated and unknown risks without any

plans – Partially True; entrepreneurs do take uncalculated and unknown
risks but they do keep limited resources, plans as well as bandwidth for
dealing with the unknowns to a limited extent
• Entrepreneurs start business with a revolutionary invention – Partially
True; not all entrepreneurial ventures are true breakthroughs. Most are
identifying and capitalizing on a mix-n-match approach. Google (GOOG)
did not invent the internet, McDonald's (MCD) did not invent the
cheeseburger, Starbucks (SBUX) did not invent coffee. It’s the
identification and capitalization of the idea and rapid growth rate with
cascading impact that makes the venture entrepreneurial.
• Entrepreneurs venture out only after significant experience in the
industry – Most entrepreneurs are young, inexperienced individuals, who
follow their passion.
 • Entrepreneurs complete extensive research before taking the first
step – Unless an existing business is setting up a new business line on a
new concept, entrepreneurs start with very limited or no research.
However, they do have good awareness about the potential of their
offering, which gives them the confidence to go ahead with the venture and
risks.
• Entrepreneurs start with sufficient capital and sound business
plans – Capital is the foremost requirement of any entrepreneurial venture.
Most entrepreneurs fail to secure capital from outside sources, unless they
already proven themselves with a running prototype. Hence, most
entrepreneurs start out with insufficient capital and a risky and uncertain
business plan, with an aim to secure capital along the way with a working
model or prototype to impress capital providers.

A few simple examples of Entrepreneurs and Entrepreneurship:

• Products Space:

Trading goods - like buying wholesale lots of branded shampoo at wholesale

rates and selling them at retail rates at your retail shop or online (through sites
like ebay.com) - does not constitute entrepreneurship.

However, manufacturing your own innovative distinct homemade herbal

shampoo, getting a patent of the same and marketing it for business using the
same sales channels will qualify as entrepreneurship.

The Africa-based KickStart organization (not to be confused with Kickstarter) has

been building low-cost, low effort yet high yield products like a low effort soil
press, a machine that processes sunflower seeds into cooking oil, and manually
operated water pumps operated with minimal effort.

• Services Space:

Offering that extra room in your property backyard for a monthly rent is a simple
rental business.
Building a service based model around this can be a fantastic entrepreneurial
idea.

Airbnb implemented the mix-n-match entrepreneurial approach to build a

community network of all such available rental places in an area, city or country
and made it available for tourists. Without owning a single property, their
innovative business model offers a win-win situation for all parties. The owners
get short-term high paying tourist customers instead of long term low paying
rentals. Tourists benefit from relatively low costs and a secured home-like stay.
Airbnb benefits from service charges for offering this buyer-seller marketplace
model, owing and controlling the sales channel without owning a single property
needing high investments.

Similarly, buying a few cabs and running them through employed drivers is a
common business, but not entrepreneurship. Building a large network of such
cab owners and providing on-call cabs on need and availability basis allows profit
opportunities without the need for owning a single cab.

Nothing in this world comes free. In the first example, the entrepreneur takes the
risks on time, effort and financial investments needed for manufacturing the
herbal shampoo, getting necessary licenses and handling legal disputes arising
of any consumer complaints and competitions. In the latter example, the
entrepreneur is accountable for ensuring reliable community of property owners
willing to offer proper facilities, as well as ability to handle conflicts arising
between various parties.

So what does it take for being a successful entrepreneur?

There are several theories put forward by researchers at leading institutes about
entrepreneurship. There is no “one size fits all” model defined for
entrepreneurship. Depending upon the nature of business idea/ market/ products
or services offered for sale, the success stories vary a lot.

Broadly speaking, entrepreneurship either originates from passion or from

identifying suitable business opportunity.
A person who is very passionate about developing electronic circuits may
(accidently) develop a great appliance. Such an individual may not necessarily
have the business thoughts in mind, but he is driven by pure passion. He doesn’t
listen to anyone, goes by his gut feeling and one day develops a great product
which can be well marketed to offer extremely high returns. He fits the first
category of “passionate” entrepreneurs.

A businessman with sharp business acumen sensing a profit opportunity with a

mix-n-match approach will fit in the latter category.

Irrespective of the originating category, an entrepreneurial idea, if well nurtured

and correctly driven, can transform into a very profitable business venture.

The Bottom Line

There is no single definition or standard case study to define an entrepreneur.

The entrepreneurial ventures come with a lot of variety depending upon the
personal characteristics, local and regional issues and external factors.
Embarking on an entrepreneurial career path for “Being Your Own Boss” is
exciting – just make sure to do your homework about yourself, the offering as
well as other external factors.

Read more: Entrepreneur Vs. Small Business Owner, Defined

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vs-small-business-owner-defined.asp#ixzz3siHOTEZO
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Entrepreneur or Small
Business Owner: Which One
Are You?
By Nicole Fallon Taylor, Business News Daily Assistant EditorAugust 30,
2015 06:20 am EST
http://www.businessnewsdaily.com/8327-business-owner-versus-
entrepreneur.html

You run your own business. How do you

describe yourself to others when talking
about what you do? Are you a small
business owner? An entrepreneur? Or
something else? And more importantly,
is there really a difference between
these terms?

According to the 2015 Small Business

1Credit: lassedesignen/Shutterstock
Pulse Survey by insurance provider and
financial services group The Hartford, business owners say there is a difference
— and they don't all want to be called the same thing. The Hartford surveyed 751
owners, partners and principals of small companies (fewer than 100 employees)
and discovered that 51 percent call themselves "small business owners" and 18
percent call themselves "entrepreneurs." Another 26 percent prefer the term
"business owner," while the remaining 6 percent chose other names like "mom
and pop shop owner" or "social entrepreneur."
Younger survey participants were more likely to self-identify as entrepreneurs
than their older counterparts: One-quarter of millennial respondents chose the
term entrepreneur, compared with just 16 percent of Gen Xers and 15 percent of
baby boomers. [What Is Entrepreneurship?]
The Hartford also asked each group about their defining characteristics. Self-
described small business owners said they are maintaining their businesses at
their current size and adding value to their local communities through their
business. Entrepreneurs, on the other hand, see themselves as visionaries who
are looking to build a legacy for their families. While the two overlapped in the
following areas, the survey revealed that more entrepreneurs related to certain
statements than did small business owners:
• I am always looking for the next opportunity: 30 percent of SBOs versus 41
percent of entrepreneurs.
• I am looking to grow my company significantly: 23 percent of SBOs versus 30
percent of entrepreneurs.
• I am innovative: 20 percent of SBOs versus 45 percent of entrepreneurs.

Regardless of business owners' preferred titles, there's one driving factor that
unites most of them, and that's passion. Fifty-six percent of all respondents (60
percent of SBOs, 44 percent of entrepreneurs) described themselves as doing
something they are passionate about or enjoy, and nearly half said they started
their business to pursue their passion.

Want to know more about how entrepreneurs feel about their work? Business News
Daily asked 15 business leaders and founders what entrepreneurship means to them.
- See more at: http://www.businessnewsdaily.com/8327-business-owner-versus-
entrepreneur.html#sthash.9Wdwa5tz.dpuf