I was speaking at a local business group recently. I had been introduced as an entrepreneur and at the end, this quesiton arose. Business owner or entrepreneur?
I always think about them as entirely different, different types of business, different personalities of owners. Yet more and more people consider being a business owner or entrepreneur is one and the same. The accurate answer is that anyone who owns a business is – strangely enough – a business owner, but by no means all of them are entrepreneurs. So beware the social media claims; many of them are entirely inaccurate.
We also tend to associate the word entrepreneur as contemporary. In fact, it emerged right back in the 18th century, and broadened from a dealer at that point, to include someone engaged in any sort of profitable go-between activity. It was only in the least hundred years or so that a more exotic, exicting destinction arose between business owner and entrepreneur, the latter to not just be an independent owner but a go-getter as well. Thanks to Merriam Webster for this history references.
In Start for Success I say that “the old definition of an entrepreneur as someone who starts a business and takes on financial risk in the hope of profit” falls short. The first question to ask in deciding if you are a business owner or entrepreneur is certainly to do with your motivation and mindset in starting.
Business owner or entrepreneur – distinctions
Many business owners acquire businesses rather than start them. They may be inherited for example, take over when the owner retires, be part of a family business. Alternatively, they may start as a very small business, either on their own or a couple of others, doing something they love to and often working under their own name (something I wish I had never done, but that is another story!). They will be the top-dog certainly, but work with others who have plenty of say, be it in a management structure or stakeholders.
So here is the first big distinction between business owner or entrepreneur. The entrepreneur starts a business because they see or invent a new business idea, a radical way or doing things or completely new product. It relies on their drive, their conviction to get it off the ground, but in turn that means they call all the shots.
The business owner will be doing something in established markets, with estabished products and aiming for customer satisfaction. The entrepreneur aims for market distruption with something original and innovative. They create a firm to bring that vision to life.
Business owner or entrepreneur goals
The business owner aims for customer satisfaction first and foremost because they see it as the way to grow and the way to secure their place in the market. Their risk tolerance is cautious at most, avoidance at least. Business owners are in it for the long term. Part of the reward is the lifestyle. Growth is usually done slowly, and with more of the same or very similar of the existing theme.
The entrepreneur will be thinking of the next step; usually the moment when someone else comes in to run things and they can step back, and invent the next great thing. They often have exit as a primary goal. They welcome risk and for them it is all about growth and making an impact, changing the status quo. Their growth plans are stratospheric. If they are local now, they want nationwide. If they are nationwide, they want global.
There is no good or bad, no right or wrong
The economy needs both. There is no reason why you shouldn’t be a business owner or entrepreneur, whichever suits you. We need to stop being snobby and seeing entrepreneurs as stars because it is confusing the definition. Business owner or entrepreneur, be happy, love what you do, and don’t pretend to be something you are not.