July 26, 2016 Last updated September 23rd, 2018 2,039 Reads share

The Main Difference Between Small Business Owners and Entrepreneurs in 2016

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The small business is a cherished piece of American business tradition. The classic Mom & Pop store is an image that has been interwoven into the story of American commerce and culture for generations. What’s more, small businesses play an extremely important role in the economy, even today in the 21st-century environment that feels dominated by major corporations.

In fact, the

What Exactly is an Entrepreneur?

The word “entrepreneur” gets thrown around a lot these days, especially in the immensely popular world of startups, and the term “small business” can also be a very broad one, as made clear by the report from the Office of Small Business Advocacy, so it’s important to understand exactly what type of person falls under each category.

This is not to say that the two terms are completely mutually exclusive. It’s a bit of a Venn diagram situation, but nonetheless, an important one to hash out so you can understand the difference and be perhaps a little warier the next time someone introduces himself or herself to you as an entrepreneur.

If we were to distil the difference between a small business owner and an entrepreneur down to one word, “stability” might come to mind. This is because the main distinction between small business owners and entrepreneurs comes in the way the two parties approach their respective businesses’ plans for the future.

While a small business expert typically gets into a certain industry in order to see stable, consistent profitability, an entrepreneur generally takes a different approach, striving for rapid growth of the business and high returns, with either an exit strategy in mind such as selling the business or the intent to reinvest any money earned back into the business.

As a result, small business owners are often very content to maintain the status quo, if that status quo means consistent profits back in the owner’s pocket. Entrepreneurs, on the other hand, will constantly look to take the business to the next level by scaling, automating tasks, and boosting productivity where possible.

Disruption Over Stability

It’s no wonder, then, the word “disrupt” is such a popularly used term in entrepreneurial circles, as entrepreneurs are always pushing to be on the cutting edge and are looking for brand new innovations to really shake up an industry. Small businesses, on the other hand, often go for more stable, secure, and familiar industries and marketplaces that will more consistently guarantee reliable returns.

Of course, money is still important for entrepreneurs. It’s downright necessary, in fact, for the success of their business endeavors. The key difference is how entrepreneurs and small business owners use that money.

While small business owners look for that stability and a reliable return, an entrepreneur might be more inclined to take any earnings and immediately invest them back into the company in order to scale it further. This “hyper growth” mode is pretty standard in bleeding edge marketplaces where entrepreneurs thrive.

The disruption favored by entrepreneurs can take the form of unprecedented business practices as well. Operating businesses remotely with distributed teams, for example, is becoming an increasingly popular choice among entrepreneurs today, if only for the sole purpose of saving money on things such as rent for an office space.

Generational Divide

What’s also interesting about these two different-but-related terms is that there appears to be a divide among different generations of workers in terms of how they identify themselves. A recent small business survey by Hartford interestingly revealed that while “small business owner” is still the preferred title among all respondents, more millennials identified themselves as entrepreneurs than did any other generation. This suggests that younger workers, who are entering the entrepreneurial space in greater numbers than are other workers who may be looking for something more stable and predictable, are perhaps more willing to take on greater risk and are the ones driving true innovation.

The same Hartford study looked a little further into what connotations go along with each self-identification, and the results showed precisely this difference in mindset between entrepreneurs and small business owners.

The survey asked each self-identifying worker to describe himself or herself, and for small business owners, the number one response was “I am doing something I feel passionate about or enjoy,” with “I am maintaining my business at its current size” coming in second.

Self-identifying entrepreneurs, on the other hand, describe themselves most by saying, “I am innovative,” and while “I am doing something I feel passionate about or enjoy” finished second among entrepreneurs, too, the top three was rounded out by the response, “I am always looking for the next opportunity.”


This is not to say, of course, that an entrepreneur is somehow better than a small business owner, or vice versa. Both roles serve incredibly important functions in our economy, and will most likely continue to do so, whether it’s small businesses driving steady employment or entrepreneurial startups shaking up industries with billion-dollar valuations and extremely high yields. Looking forward into your career, though, it’s important to know the distinctions between the two, so you can best map out your own plans.

What other distinctions have you found between small business owners and entrepreneurs in your own career, if any at all? Do you identify yourself as a small business owner or an entrepreneur, or both? Let us know in the comments below!

Images: ”Entrepreneurship wooden sign with a street background  / Shutterstock.com


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Christopher Jan Benitez

Christopher Jan Benitez

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