The two are not always one and the same. Do you take risks? Are you innovative? Your answers could define how you see yourself.
Small business owners are entrepreneurs, right? That’s not quite what owners think. Only 18 percent of the 751 owners, partners and principals of companies with fewer than 100 employees called themselves “entrepreneurs” in a study conducted by The Hartford, an insurance agency.
“I am one of the 82 percent that do not call myself an entrepreneur,” wrote Gene Marks, a small business owner, in a column for The Washington Post. “I am not a risk taker. I do not have grandiose dreams. I have no plans to cure cancer, eradicate famine or fix global warming. I enjoy what I do and I’m happy that my business provides a livelihood for myself and my family.”
So what exactly is the difference between a small business owner and an entrepreneur?
Small biz owners tend to be risk-averse.
“We do not bet the farm,” Marks wrote. “We do not buy into huge, sweeping ideas that cause wide-scale and disruptive change, regardless how exciting the idea is. We would never spend our money on just an idea. It has to be a long-term profitable idea, supported by numbers and facts.”
Small biz owners have static revenue.
Tech startups get a lot of ink, as do companies riding the latest trends in apps or legalized pot. But they have a vastly different business model than most small businesses. “Every new tax, every new legislation, every new executive order—from requiring paid sick days to tariffs on foreign purchases to license and permit fees—is a cost that usually can’t be recovered,” Marks wrote.
Learn how NFIB is fighting to protect the future of small business.
Younger people are more likely to refer to themselves as entrepreneurs.
Those in their 20s and 30s were more likely to self-identify as entrepreneurs than their older counterparts surveyed by The Hartford, Business News Daily reported. One-quarter of millennial respondents chose the term entrepreneur, compared with just 16 percent of Gen Xers and 15 percent of baby boomers.
Entrepreneurs think the business climate is welcoming.
The entrepreneurial marketplace in the U.S. remains more accessible than most other countries in the world, according to a recent study by Harvard. Forty percent of respondents think that access to entrepreneurship is readily available in the United States, “thanks to the relative ease of securing financing [and] relatively few regulatory hoops to jump through,” The Atlantic reported.
Trouble is, all of the respondents were alums of the Harvard Business School—not your average small biz owner. In fact, that’s an “already selective group who likely have greater access to the capital and networks that can help small businesses thrive,” The Atlantic wrote.
Entrepreneurs consider themselves visionaries.
They say they’re looking to build a legacy for their families, as opposed to small business owners, who responded that they’re focused on maintaining their businesses at their current size and adding value to their local communities through their business, according to The Hartford study.
In addition, only 20 percent of small biz owners said they were innovative, compared to 45 percent of self-defined entrepreneurs.
Entrepreneurs rely on different types of funding.
Access to funding sources such as venture capital and angel investors is highly important, said respondents to the Harvard study. “But that’s not traditionally how most small business owners raise their funds. Instead, average Americans have long relied on things such as personal savings, home equity lines and smaller loans to fund their ventures—options that have been more difficult to come by since the recession,” according to The Atlantic.
If you’ve dreamed of making the switch, business coach Jim Palmer has this advice in a recent LinkedIn Pulse post: “It is never too late to move from being a small business owner to an entrepreneur and recreate an existing business to become one of multiple revenue streams that do more to create wealth than it would to simply focus on selling more of your goods or services through your current business.”
Which are you? A small business owner, an entrepreneur—or both?