Source: So, which are you – a Small Business Owner or an Entrepreneur? We compare the similarities and differences between the two, so you can decide which category you best fit into. Samuel K. Burlum explains...
Both the small business owner and the Entrepreneur have significant impact on our economic system. They are both creators of opportunity for others, they both offer a product and/or service, and they both contribute to the success of the economy. So how do you know which one you are? There are some stark differences between being a small business owner versus being an entrepreneur; although both add great value to society.
Small Business Ownership usually means that a person owns a business that is tied to a limited geographic area, whereas an entrepreneur’s value proposition is not limited to any one community or location. Both the small business owner and the entrepreneur offer a product or service that others may need. The size of the audience in which each respective marketer serves is dictated by their reach, location, and vision. Small business owners are usually centered and consider themselves as the local authority for their respective town, city, community, or even county. The entrepreneur knows no boundaries, no boarders, no defined geographical lines, but rather focuses on the demographic of their market reach.
Both the small business owner and the entrepreneur take a risk to start their venture. They are equal in the aspect that they must invest hard financial investment, their time, their skill sets, and sweat equity in order to upstart their enterprise. The difference between small business ownership and entrepreneurship risk is the amount of risk one is willing to take and the scope of risk one is willing to endure. A Small business owner’s ability to take risk may be limited to how much capital they have available. They rarely ask for others to invest into their local business. Most small business owners will put their personal assets on the line to drum up the cash needed to start their business. The return on investment and risk is limited to the size of the market in which the small business owner provides their product or services.
The entrepreneur is a larger risk taker, willing to not only put all of their money and time on the line, but also has a business plan that allows for others to take a risk or invest into their idea as the growth plan evolves throughout different phases. The ability to gain a return on investment has far more opportunities because the entrepreneur’s offering is not limited to any one market. The entrepreneur sets higher sales goals, and extends their market reach to higher aspirations, therefore in order to achieve these goals, the entrepreneur needs to put even more at risk. For instance if the entrepreneur visions their product or technology being utilized worldwide, they will need more capital and resources to launch their idea.
The small business owner focuses on a proven business model that they can personalize and put to work. Most small businesses have a standard business model. Say you desire to own an auto parts store, hardware store, or hair salon; these types of businesses have an industry standard business model that fits the geographic locale in which that intended business is to service. A local retail business such as a hardware store or grocery market does not invent anything, they supply a local community with a select array of product offerings which they can purchase from a wholesale supplier. Even the planogram of the retailer’s store location has a standard recipe in line with their industry.
An entrepreneur follows a different path. The entrepreneur has to develop their own road map for taking their invention or idea to market. An entrepreneur may offer a product, technology, or unique service proposition; however, they are usually either the inventor or have a partnership with the inventor to take the product or device to market. This includes all the steps of research, development, manufacturing, distribution and service, while marketing and advertising the value proposition through all of the phases of its entry into the market place. If the product, technology or service does not yet exist, the entrepreneur must develop the methods and practices for each step in the process of creating, manufacturing and delivering their offering to market. This requires the ability to envision each moving part of the business when there may not be a business model that yet exists.
Even the style of planning and leadership is distinctly different between the small business owner and the entrepreneur. Small business owners plan a day to day schedule, a plan that may extend up to months at a time as their business model requires. Most entrepreneurs with a new idea to the market must plan for years ahead, because their market strategies may need far more time to develop. A small business owner may have to micro-manage their business enterprise due to the limited staff their business employs. Entrepreneurs can delegate more tasks from the to-do list to others as their enterprise grows. Entrepreneurs are also involved in more of the technical aspects of their value proposition, where they are part of the product or invention development process.
A study by the Quarterly Journal of Economics revealed that most small business owners are involved in businesses that require manual talents verses the entrepreneur, whose enterprise is based on high-level cognitive skills and creativity. The study further provides that entrepreneurs are naturally larger risk takers and their offering is not yet common to the market. Most small business owners are either merchants or service providers of specific needs relevant to a geographic market.
What makes the small business owner and the entrepreneur character so unique? They both share passion for their value proposition. Both types of business leaders feel their product or service offering will be of great benefit to the audience they are serving.