Entrepreneur vs. Business Owner: Is There a Difference?
Are you a business owner or an entrepreneur? Perhaps more importantly, which one do you want to be? The difference between a business owner and an employee is clear, but the difference between an entrepreneur and a business owner may be less obvious. It’s easy to use these terms interchangeably as entrepreneurs and business owners share many similarities, but there are a few key differences.
Knowing the differences between an entrepreneur vs. business owner can help you figure out which you are.
4 Differences Between Being an Entrepreneur vs. Business Owner
#1: How You Start Your Businesses
Business owners can come into an ownership position through various avenues. You might purchase or inherit an existing company or start your own business. Business owners are generally steady, often preferring to follow proven ideas and business models. Typically operating within your local community by providing a product or service, small business owners often build a business by focusing on either a single idea or a few ideas and perfecting them.
Entrepreneurs tend to start a business with a new or innovative product or service that does not exist in the marketplace. Rather than following an existing business model, entrepreneurs usually start with limited resources and planning and are ready to jump in feet first. Entrepreneurs are responsible for managing all aspects of a business from the start, taking on all the risks and rewards of the business venture. By throwing caution to the wind, these types of people are shouldering a majority of the risk when starting their business.
#2: What Your Goals Are
For many business owners, the main objective is often to create a job that provides for them and their family and be their own boss. Business owners often value financial security, leading them to focus more on steady growth and profitability. Many business owners are closely involved in the companies’ everyday operations and management. Business owners tend to focus on how to streamline their operations and improve their ability to operate a sustainable, profitable business while maintaining freedom and flexibility.
Entrepreneurs start a business following a passionate idea. If they believe their product or service will make an impact, and hope to profit from their efforts, they may be taking an entrepreneurial approach. Entrepreneurs often have a variety of goals, but one of the biggest is often to create something new and to strive for a big dream.
#3: How You Perceive Risk
Business owners generally take only calculated, incremental risks to grow a business steadily. They may start a business being cautious and prioritize business decisions to mitigate risk while delivering on measured goals. While this can help someone make less risky decisions, it can also prevent them from making big decisions that could positively impact their business. If this is more like you, it’s important to ask yourself how you calculate risk and what you’re willing to do to succeed.
Entrepreneurship is inherently risky as the effort of pursuing what could be a unique idea that may or may not result in success. For this reason, entrepreneurship typically attracts people who see the risks as an exciting challenge rather than a disclaimer. Entrepreneurs are often focused on fast growth, trying to design better products or reach larger markets. This can lead them to taking more significant risks in the pursuit of success.
#4: How You Generate Funding
Financing and loans are often more achievable for traditional business owners due to realistic financial planning and projections. In particular, owners that go into franchising often find it easier to obtain a business loan or financing because franchises have an established brand and established business model, which appeals to lenders who view it as less risky compared to an unproven commodity. If you’re looking for an option with less risk and more obtainable funding, franchise ownership is an option to consider.
Many entrepreneurs don’t have access to the same resources as more established businesses. Because there is more risk involved, entrepreneurs often need more help securing financing. They may even be unable to apply for a loan in a company’s first year due to their high risk. Instead of traditional business loans, entrepreneurs’ startup funding is typically self-funded or funded by family and friends, investors, partners, or venture capitalists.
Business Owner vs Entrepreneur: Which Are You?
If you’re thinking about starting a business, consider whether you’re more of a business owner or an entrepreneur. Although there are differences between entrepreneurs and business owners, both are essential.
Franchising is a form of business ownership that appeals to many who want to take the leap into business ownership but with the systems in place as guardrails to guide you down the path to success while also enjoying help and support when you need it. The style of ownership may be slightly different from entrepreneurship, but the goals of owning and making an impact on your community are often the same.
If being a business owner is interesting to you, contact us today to explore options in franchise ownership with Neighborly today.