Small business is sometimes confused with entrepreneurship. There is a clear boundary between both, and today we will discuss the similarities and differences between small businesses and entrepreneurship.
What is the relationship between small business and entrepreneurship?
There is a fine line between an entrepreneur and a small business owner. An entrepreneur is someone innovative and creative. Entrepreneurs create startups while taking huge risks. Small businesses mainly deal with known and established services and products, so they take low risks in business.
If you want to know more about what makes an entrepreneur different from a small business owner, keep reading.
Before wasting any time, let’s dive straight into the details.
Entrepreneurship Vs. Small Business Owner
An entrepreneur is someone who creates a new innovative business by himself/herself. They take huge and unknown risks and then reap the rewards when successful. Entrepreneurs have specific characteristics in themselves. They are risk-taking, innovative, sharp-minded, and disciplined.
An entrepreneur usually introduces a new product or service to the market. Such entrepreneurial ventures have high potential growth with an equal level of uncertainty.
The modern economy benefits a lot from successful entrepreneurial ventures.
Many people dream of becoming entrepreneurs as successful entrepreneurs enjoy rewards such as fame, respect, status, and financial freedom. Usually, most people desire entrepreneurship as they want to have financial freedom. Financial freedom means having money work for you instead of you working for money, in short, passive income.
Small Business Owner
A small business usually deals with established and known products and services. Therefore, small business owners take known and calculated risks. The risks are low; hence the rewards are also low.
A small business is an enterprise that is privately owned, a partnership, or a sole proprietorship.
A small business usually has 500 or fewer employees to run the operations. Small businesses achieve a comparatively low revenue than medium-sized business or a corporation. 99.9% of businesses in the US are small businesses.
Similarities Between Entrepreneurship and Small Business Ownership
Entrepreneurship and Small business owners are usually purpose-driven and goal-oriented. Proactiveness, Self-confidence, Discipline, Passion are some of the qualities that both share. Both desire success of their business. Both take risks according to their level of risk tolerance.
Similarities between entrepreneurship and small business ownership:
- Both Manage Small Organisation:
Both lack capital, so there are only a few employees under entrepreneurs and small business owners.
Entrepreneurs and small business owners might have multiple roles in the business. They have a wide variety of responsibilities over their head. For example, an entrepreneur might act as a salesperson, accountant, and manager of the business.
- They Take Simple Decisions:
Unlike a large corporation, entrepreneurs and small business owners take simple but multiple decisions daily. These simple decisions might have little effect in the short term, but compound over a long time, they are crucial to the success of their business.
- Supports Economic and Social Development:
Both of these contribute to economic and social development. The more success the entrepreneur or small business owner gets, the more it benefits the local community as more taxes are collected. And the tax money is then used on local hospitals, police departments, schools, etc. Both create new jobs in society and also invent new ways to do things. They modernize industries.
- Both have Self-confidence:
Both are confident about their skills and abilities. They accept and trust themselves and have a sense of control in their life. They know their weaknesses and strengths and have a favorable view of themselves.
Both set realistic goals and expectations, communicate assertively and can handle criticism.
- They are very Disciplined:
Both entrepreneurs and small business owners practice obeying their rules, and they punish themselves when they do not. They train themselves to behave and work in a strictly controlled and regular way.
- They have Passion for their business:
Passion is one of the essential traits of small business owners and entrepreneurs. They are enthusiastic and excited about their business. Both love what they do, so they put their maximum efforts into accomplishing their desire goals and achievements.
- Both Desire Success:
There is a burning desire for success in both entrepreneurs and small business owners. They are willing to work additional hours for the success of the business.
- Both are Risk Takers:
Owning a business or being an entrepreneur always carries a lot of challenges and risks. Both are courageous as they take risks to achieve their goals and face the fear of uncertainty. No matter the outcome, either way, they grow through the process and become more resilient and confident.
- Hungry for New Knowledge:
They are always on the lookout for new information as they want to be informed about the changes taking place around the world. They have a great habit of reading a ton of books and blogs. They also have mentors from whom they gain new information and skills. They also take help from their peers to learn more things about business and general life. And this is one of the similarities you will find in every successful person. It is said, Bill Gates reads 50 books per year.
- Always Looking for Opportunities:
Both are always on the lookout for opportunities. They see if an opportunity is feasible, they capitalize it.
The Differences Between Entrepreneurship and Small Business Ownership
|Entrepreneurship||Small Business Ownership|
|Entrepreneurs take more significant risks – more significant risk means bigger reward||Small business owners take small to moderate risks – small risk means small reward|
|Entrepreneurs plans for the future||Small business owners focus on the present|
|Entrepreneurs are innovative||Small business owners stick to the same traditional businesses, which includes products/services that are well known and established|
|Entrepreneurs dream that their company will become huge in the future||Small business owners are more sentimental when it comes to their company|
Myths About Entrepreneurs
#1: Entrepreneurs don’t have time for family and friends
Lots of people think that entrepreneurs work nonstop. Meaning they don’t have time for their family, friends, and leisure activities.
Some days are more work-heavy than others, but that doesn’t mean they don’t have time for personal life.
Entrepreneurship comes with the benefit of being your boss; therefore, you decide when to work and rest.
#2: Entrepreneurs are only motivated by short-term money
Achieving a long-term goal is the primary motivation for entrepreneurs. Entrepreneurs are inspired by financial freedom, which comes with success as time proceed. Financial freedom is when your money starts working for you.
#3: Entrepreneurs are born that way
Many people think that entrepreneurship is in genetics, they are born that way, and that only people who have particular natural talents can be entrepreneurs. The truth is entrepreneurship is something that can be learned. Anyone can become an entrepreneur if they have the desire to become one. Entrepreneurship can be learned through experience and trial and error. Some people can learn the skill quickly, but no rule says entrepreneurship can be learned only by certain people. Entrepreneurs may be extroverts or introverts; they may be male or female, or they may be big picture thinkers or more focused on the details of an idea.
#4: You need MBA to become an entrepreneur
Entrepreneurship is a skill that is learned through practice and experience. You don’t need any business degree to become an entrepreneur. It’s not like business degree holders can’t become entrepreneurs, but you can become an entrepreneur without any degree.
Many successful entrepreneurs, such as Mark Zuckerberg, are college dropouts. They didn’t have degrees, but they are still super successful.