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Apr 3, 2023 · The difference between an entrepreneur and business owner comes down to motives, profitability, risk positivity, and more.
- Overview
- Key Points
- What is an entrepreneur?
- How do entrepreneurs differ from business owners and executives?
- What role does entrepreneurship play in the economy?
- What are the different types of entrepreneurs?
- The bottom line
Building a business from the ground up—and assuming the risk.
Written byKarl Montevirgen
Karl Montevirgen
Karl Montevirgen is a professional freelance writer who specializes in the fields of finance, cryptomarkets, content strategy, and the arts. Karl works with several organizations in the equities, futures, physical metals, and blockchain industries. He holds FINRA Series 3 and Series 34 licenses in addition to a dual MFA in critical studies/writing and music composition from the California Institute of the Arts.
Fact-checked byThe Editors of Encyclopaedia Britannica
The Editors of Encyclopaedia Britannica
•Entrepreneurship occupies an increasingly wide and diverse space of economic activity.
•The engagement of risk is a major factor that typically distinguishes entrepreneurs from other positions of business leadership.
•Entrepreneurs are agents of change and innovation who operate the gap between market demand and newly created or improved forms of supply.
Although all entrepreneurs must think innovatively to thrive, not all are innovators with a capital “I.” And although most entrepreneurs seek to grow their businesses, not all aim to scale to colossal proportions. Most just want to grow enough capacity to serve more customers, generate more cash, and/or get the bills paid while doing what they love.
An entrepreneur is a person who bears the economic uncertainties and risks of starting and running a new business to generate profit and economic value.
This kernel of a definition implies a myriad of business characteristics, capabilities, and conditions:
•Innovators. Entrepreneurs are agents of change with a bent for innovation, often disrupting conventional business practices with more cutting-edge ways to use labor, resources, and capital.
•Visionaries. Entrepreneurs have to be incredibly quick at forecasting business conditions to adjust their production ahead of the market.
•Disruptors. Entrepreneurs are often adept at exploiting discrepancies in production processes and costs in order to produce quality goods more efficiently and, sometimes, at a more competitive price.
•Number crunchers. Entrepreneurs are always on the lookout for supply and demand imbalances—gaps that provide opportunities for creating value and generating profit.
Entrepreneurs, small business owners, and corporate executives share one thing in common: A position of leadership. But although they also differ on many grounds, perhaps the biggest distinction boils down to risk, and whether the entity’s operations require the four entrepreneurial qualities above.
Entrepreneurs and business owners typically take on the largest share of business risk. In return, they often stand to earn the largest share of business profit. If the proverbial ship begins to sink, an entrepreneur and a business owner go down with it, whereas a company executive can either leave the ship (quit) or get escorted off (lose their job).
Many business owners display some entrepreneurial qualities. For example, opening the fourth pizza joint or craft brewery on Main Street might be financially risky. However, it’s not exactly disruptive or visionary.
Also, entrepreneurs often concentrate on the strategic elements of a business, which are particularly important in the early stages. Later on, the entrepreneurial spirit may cede control to a more tactical-minded executive leader.
Besides creating jobs and putting goods or services onto the market, what other vital role do entrepreneurs play in the economy?
Entrepreneurs bridge the gap between “what’s there” and “what isn’t there but could be.” Maybe it’s about bringing an existing product into a market that didn’t have it. Or maybe it’s about inventing and producing a new product that hasn’t yet been imagined. Such gaps provide entrepreneurs with a field of opportunity for producing value and reaping economic rewards.
Entrepreneurs have the advantage of iterating products rapidly on a trial-and-error basis. Mature companies, on the other hand, don’t always have this capacity due to their size and slower speed.
In short, entrepreneurs are essentially agents of change. They’re visionaries who drive the economy forward by developing new ways to produce value, whether it’s in the quality of the bread you eat or the futuristic functionalities of your latest AI software.
The diverse range of entrepreneurial enterprise is, to some degree, a function of the far-reaching creativity of the entrepreneurial mind. These categories—which don’t necessarily cover the entire spectrum—are dynamic, meaning they can easily blend into one another. Plus, you might notice overlap between some entrepreneurship and business ownership, as described above.
In other words, as you read this list, just know there’s plenty of subjectivity involved:
•Small-business entrepreneur. Entrepreneurs in this category own and operate small businesses. They may be interested in expanding the size of their company to a relative degree, but they’re not necessarily aiming to build a huge business.
•Scalable start-up entrepreneur. This type builds a business based on a concept, product, or technology that can be scaled into a much larger enterprise. Not surprisingly, venture capitalists tend to favor scalable start-ups, where business growth can often lead to outsize returns.
•E-commerce entrepreneur. E-commerce entrepreneurs specialize in selling products on their own websites or on other online sales platforms. Although most are probably selling their own products, some may be arbitrageurs who source products at a lower cost and sell at a higher price.
•Solopreneur. A solopreneur, short for “solo entrepreneur,” operates a one-person business. Solopreneurs operate independently, occasionally outsourcing tasks to third-party contractors (versus hiring employees) when needed.
Simply put, entrepreneurship is about taking on the risks of starting a new business. If you choose an entrepreneurial path, you become an agent of change, creating economic and consumer value by bridging supply/demand gaps, improving upon product or production inefficiencies, or creating products or services that are needed but don’t yet exist. Th...
Aug 18, 2024 · Learn about the differences between a business owner and an entrepreneur, including primary responsibilities and how each might run their business.
Nov 27, 2023 · Whether you’re a seasoned business owner or a budding entrepreneur, this exploration of the difference between an entrepreneur and a business owner will shed new light on your path, offering insights to help you navigate your journey successfully.
Nov 2, 2023 · Let's explore the differences between a business owner and an entrepreneur, understand their responsibilities, and determine which path may be more suitable.
Jun 15, 2023 · Although the skill sets of an entrepreneur and business owner overlap, a number of differences exist. An entrepreneur often focuses on developing a new concept or innovative idea, although anyone who starts a business is typically considered an entrepreneur.
But there are four major differences between business owners and entrepreneurs. Before getting into those differences, let’s look at the meanings of these words. What Is a Business Owner? A business owner is simply anyone who owns a business. A business owner is generally thought of as a person who both owns and runs a company or organization.
