Answer this one question to find the difference between an entrepreneur and a small business owner

Which would you prefer:

  • To stand back and admire a beautiful wall you had built brick-by-brick, or
  • To imagine what that a beautiful brick wall would look like in an area where the people had never before experienced brick walls?

In many important ways, how you respond to that question will embody for you the difference between an entrepreneur and a small business owner, and where you land on the continuum between the two.

As a society, we need people who prefer both of those scenarios. The work involved with each is difficult and requires its own set of skills. There is significant risk along each path. People fail at both.

Like risky business?

If you take the most pleasure in building something to completion, you shouldn’t feel that you’re any less important than someone who is willing to take greater risks. And, if you’re a big risk taker, don’t feel bad that you usually don’t like to stick around to see projects to their ultimate ends.

There are, however, some individuals who relish both aspects of this commercial yin-yang relationship. There are risk takers who are so passionate about a single industry or product that they put everything on the line in the beginning – to get their business going – and continue to invest themselves until the business is fully developed or they come to the end of their career.

But, I think that more often the responsibility of long-term growth and management falls to others, making the stories of founders who get booted out all too common. And this brings us to the reason why understanding and appreciating the difference between an entrepreneur and a small business owner is important.

If you currently own a business, or if you are in the process of planning to open a business, what perspective are you working from? Are you planning to get the business going and then position it to sell – or hand over management to someone else – and move on to your next project? Or, do you envision your business to be your life’s work for the foreseeable future or perhaps until retirement?

Choosing the right plan

How you respond to these questions will have a large impact on the type of business you found and the way you manage it. If you believe that the entrepreneurial route suits your personality best, you need to start a business that comes with a greater degree of risk. Your plan, product, or service needs to be more unique and have a greater “upside” potential. You need to demonstrate that its potential is obtainable, but you don’t have to “carry the ball across the goal line.” Tom Taulli has a good article on Forbes that covers a lot of the essentials for selling a startup.

If you want to build a solid small business and stick with it through all of its growth cycles, you don’t need to take as big a risk in the beginning. However, as you work to establish your business and navigate the economic cycles, you will certainly find yourself coping with enough risks to keep you challenged!

Here’s another difference: If you’re taking the entrepreneurial route, you would be inclined to make a “go-no-go” decision more quickly. You need to get a minimum viable product out there and see what the upside potential is. However, if you’re founding a less risky business for steady, long-term growth, it would be wise to invest more of your time in your project.

Confusion is costly

The problem comes if you get your wires crossed and end up investing a huge chunk of your life and your money in a risky, entrepreneurial project that you mistakenly believed would provide you with a stable, long-term business, or you start a garden-variety small business thinking that you can flip it in a short time frame and make a big return on your investment.

The key is that you know the difference between an entrepreneur and a small business owner and match your personality and expectations to the projects you start.