What’s the Difference Between an Entrepreneur and a Business Owner?

Although they sound alike, the terms “Entrepreneur” and “Business Owner” are very different. Whether you are an independent practitioner, contractor, or just curious about what these words mean, I want to explain why they are so different.

Entrepreneur

An entrepreneur is an individual who takes great risks to create something new in the marketplace.

This is not the same thing as:

• a traditional business owner who runs an existing business,
• a startup “entrepreneur” who is paid a set salary,
• a commissioned agent (like an Independent Contractor), or
• a franchisee who sells goods under the direction of a franchisor.

(source: Investopedia)

Qualities of an Entrepreneur

In order to be called an Entrepreneur, ALL of the following should be true:

• Starts a business independently (no “safety net”)
• Spend significant money upfront for capital, raw materials, manufacturing, marketing, distribution, and employees.
• Is responsible for ALL risks.
• Is rewarded only if the business succeeds.
• Enjoy being in control of their destiny.
• Has ownership and equity in the company.
• Receives value from the company’s profit margins.
• Determines the vision, mission, and strategic direction of the company.
• Has full authority to make strategic decisions for the company.
• Can hire and fire
• Has the right to transfer, benefit from, and dispose of an asset or property.

(Incidentally, all of the above are also true of Business Owners.)

What Makes an Entrepreneur Unique

An Entrepreneur is different from an Owner because she or he:

• Provides a new (not existing) product or service.
• Seizes new opportunities to innovate and try things “outside the box.”
• Takes a huge risk by staking their financial security and career on the venture.
• Is not paid unless the venture is successful.
• Views their company as an asset to be developed, shaped, and readied for market.
• Builds systems that can run even if they are not present.
• Focuses on creating a scalable model that can be sold to someone else.
• Hires the right people and relies on them to get the job done right.
• Driven by growth as a critical part of success.
• Sees all purchases as an investment.
• Generally believes that TIME is the most valuable possession.

Owner

An individual can be called a “Business Owner” when she or he partial or full financial control of a business entity and receives a financial profit from its success.

Business Owners come in all shapes and sizes. They can be:

• a solo owner/operator,
• a sole proprietor with employees,
• a practitioner with staff, or
• the CEO of a corporation with several divisions.

Qualities of an Owner

In order to qualify as a Business Owner, certain things must be true. An Owner is someone who does all of the same things as an Entrepreneur; she or he:

• Starts a business independently (there is no “safety net”)
• Spend significant money upfront for capital, raw materials, manufacturing, marketing, distribution, and employees
• Is responsible for ALL risks.
• Is rewarded only if the business succeeds.
• Enjoy being in control of their destiny.
• Has ownership and equity in the company.
• Receives value from the company’s profit margins.
• Determines the vision, mission, and strategic direction of the company.
• Has full authority to make strategic decisions for the company.
• Can hire and fire
• Has the right to transfer, benefit from, and dispose of an asset or property.

(All of the above are also true of Entrepreneurs.)

What Makes an Owner Unique

An Owner is different from an Entrepreneur for several reasons. She or he:

• Provides products or services that already exist in the marketplace.
• Duplicate processes that are already being done and are proven to work.
• Has a back-up plan; they do not (usually) stake their financial security and career on the venture.
• May choose to receive a salary even if the venture is unsuccessful.
• Views their company as an extension of themselves, not necessarily as an asset to be sold eventually (many Owners liquidate the company when they retire, rather than selling it as a turn-key business).
• Is involved in daily tasks; do not create self-managing systems.
• Focuses on getting work done, not on creating a scalable model.
• Feels they must be involved in daily tasks to get the job done right.
• Is driven by stability, not necessarily growth.
• Sees purchases as an expense.
• Generally believes that MONEY is the most valuable possession.

Side-by-Side Comparison

Here is a chart that shows the differences between an Entrepreneur and an Owner.

The Entrepreneur-Owner Comparison Chart

	Entrepreneur	Owner
Products and services	Creates new products or services that don’t yet exist in the marketplace	Creates or sells products or services that already exist in the marketplace
Opportunities	Innovative; thinks “outside the box”	Duplicates processes that are already being done
Financial risk	Stakes their financial security and career	Has a backup plan; risks are not as high
Salary	Is not paid unless the venture succeeds	May receive a salary
View of the Company	Company is an asset to be sold	Company is an extension of themselves
Daily Tasks	Builds systems so their presence is not needed	Is very involved in daily operations
Scalability	Focused on creating a scalable model	Focused on getting work done
Involvement	Hires the right staff to get the job done right	Oversees daily tasks to get the job done right
Drive	Driven by growth	Driven by stability
Purchases	Sees purchases as an investment	Sees purchases as an expense
Value	Sees TIME as the most valuable possession	Sees MONEY as the most valuable possession

Conclusion

As you can see, there are some definite differences between the role of an Entrepreneur and a Business Owner. Consider which of these may be true for you, or whether your role might be an Independent Contractor or Employee.

Read more: What’s the Difference Between an Employee and an Independent Contractor?

Read more: Which Titles to Use if You’re an MLM or Direct Sales Rep

Read more: 199 (Potentially Dangerous) Titles Used by MLM and Direct Sales Reps

 

I encourage you to use a Devil’s Advocate approach to analyze job titles being used in your company. By presenting a clear picture of the specific roles of each person in your organization, you will be able to speed up communication and clarity with your customers, employees, and vendors.

Interested in hearing how you can reverse staff turnover and increase your profit margins? Find out more here.