Is there a difference between entrepreneurs and business owners?
The terms entrepreneur and business owner are often used interchangeably. At a recent XPX-D.C. Metro breakfast, the two panelists were introduced as serial entrepreneurs and, it is true, each had founded four unique businesses. And although this was an Exit Planning Exchange event, these entrepreneurs did not talk much at all about how they transferred their ownership shares when they sold. Instead, they jumped right into the description of the next business they started or bought.
At one point, one of the entrepreneur panelists said, “I bought or started each of my businesses with the end in mind, with an eye toward selling.” This is also why you hear the term entrepreneur associated with venture capitalists. When a v.c. invests in a company, they want to know the exit for the liquidity event – usually a sale to a strategic investor or to another financial investor, or an I.P.O, within three to seven years of the investment.
But that doesn’t describe a lot of business owners I know. Most business owners, I believe, think longer-term. The business becomes part of his or her identity. The focus is on building the business, employing an ever-increasing number of workers, developing a paternalistic image and possibly passing the business along to family, but generally not thinking of a specific deadline to sell.
I think that this distinction is important for advisors who are advising owners – are they business owners or entrepreneurs?
What do you think? Is there a difference? What does that mean for them and for their advisors? Please share your thoughts.
Meaningful distinction you make, in my opinion, Mike between entrepreneur and business owner. I agree that the two terms are not synonymous, and that the distinction is helpful to those who advise either. To my way of thinking, the key distinction to an entrepreneur is that he/she is driven by creation of a product, service, or financial value. Creation is where identity resides. A business owner who is not also entrepreneurial can be satisfied to operate and maintain an enterprise that satisfies their various wants, needs and desires, including their sense of identity as you describe, but does not necessarily involve the act of creation. I might add that the business owner may develop a “maternalistic” image as well.
Michael you might be interested to learn that Seth Godin expressed his own views on this matter recently too. I’ve included a link below.
http://sethgodin.typepad.com/seths_blog/2011/10/questions-for-a-new-entrepreneur.html
This appears in my reading to be very much in accord with your own thoughts.
Andrew
I agree with you that there is a big difference. Ultimately I think it boils down to whether a) significant capital is required to start/grow the business and b) whether the individual wants to run THE business operationally (e.g., a chef who wants to run a restaurant) or wants to run A business (e.g., someone wants to create a chain of restaurants based on a concept he or she has). The former are business owners, the latter are entrepreneurs. The former are psychically satisfied making a living doing what they like, the latter get psychological satisfaction from the mere creation of a successful business.
Mike,
This is a great post. I couldn’t agree more. To me a business owner’s business is a job, while an entrepreneur’s business is an asset. Here is another article that might help solidify the point you are making here http://yoursmallbusinessgrowth.com/2011/07/12-steps-to-successful-entrepreneurship/.
Thanks for your spot on insight!
– Dino Eliadis
Andrew – Thanks. Some really interesting points in Godin’s blog post, especially regarding the stability a business owner might be seeking.
Ray – Your point about creation could reflect also on the differences in personality that creation implies, as well as activity of creation. Interesting distinction. Mike
The article you reference has great tips whether you are a business owner or an entrepreneur. In either case, the more successful the enterprise, the more options the owner or entrepreneur will have upon exiting. The article outlines good business behaviors either way for the path to success. Thanks for sharing, Dino.
Bruce – Interesting distinction that fits in well with the other posts. So, in your opinion, whether someone is an owner or entrepreneur may be determined at the moment the enterprise is conceived according to your definition above. Thanks. Mike