When it comes to who runs a company, it’s common to use “entrepreneur” and “business owner” interchangeably. The terms aren’t synonyms, although there is overlap.
Consider the tech engineer who started a fast-growing company and now is selling shares in an initial public offering. Entrepreneur, for sure. Or how about a bakery selling delectable eclairs now run by the daughter of the retired founder? A business owner, yes, but not an entrepreneur by most definitions.
Here are some of the characteristics of entrepreneurs and business owners, with a spotlight on the key differences.
What is an entrepreneur?
An entrepreneur is a person who starts and builds a venture from scratch. Entrepreneurs are typically regarded as risk-takers, willing to invest their time, money, and resources without any guarantees of success. The entrepreneurial mindset—and a willingness to challenge the status quo and upend stable industries and markets—is essential for creating new products, services, and business models that disrupt markets and industries.
Entrepreneurs tend to be the dreamers and innovators in the business ecosystem, breathing life into unique ideas and groundbreaking solutions. Their ambitions sometimes are funded by angel investors or venture capitalists, who expect a substantial return in exchange for taking on such risk. Of course, anyone who starts a business is, by definition, an entrepreneur, even if their business doesn’t change the world as we know it.
What is a business owner?
A business owner is someone who owns a business, and often operates the business as well. They may also be entrepreneurs, but not necessarily, especially if they inherited the business or acquired it from the founder. Business owners are responsible for the daily operations of their companies and ensuring their product or service meets customer needs. They may innovate, but their focus is typically on the continuity of existing products, services, or operations rather than introducing radical market changes. A business owner might be the chief executive officer of a large corporation with many employees and locations. Or, they might work as a self-employed sole proprietor running an unincorporated business from home.
Business owners, either individually or in groups such as partnerships, play an indispensable role in countless types of businesses—from retail to hospitality. An owner’s success hinges on their ability to effectively run a business, manage resources, provide exceptional customer service for the company’s target market, and make prudent decisions that drive sustainable growth. They may self-fund their business, borrow from family or friends, or secure credit from a bank or other lender.
Entrepreneur vs. business owner
Entrepreneurship and business ownership are distinct approaches to business. Although the two share some similarities, a number of differences set them apart.
Risk-taking
Entrepreneurs often take on more risk by embarking on untested business ideas and venturing into unproven markets. This willingness to take big risks can pay off in the form of a successful company, innovative products, new markets, rapid growth, and enormous personal wealth. However, it can also lead to failure and financial loss.
Business owners, many of whom run small businesses, prioritize stability, profitability, and consistency over risk-taking. They are more likely to focus on proven business models and established markets, funneling limited resources into what’s tried and true. They may be less willing to take on debt or invest heavily in untested ventures, assuming only normal financial risks. This approach may lead to slower growth, but it also tends to be less risky and more sustainable over the long term.
Innovation
Many entrepreneurs spearhead innovation in the business world, upending the status quo, identifying gaps in the market, and creating novel solutions. Innovation is the lifeblood that fuels their entrepreneurial journey. They often engage in brainstorming, prototype development, and experimentation, aiming to create unique products or services—capable of shifting the market.
Many business owners—especially small business owners with limited capital—take a different approach to innovation. Although they recognize the importance of change as a mechanism for growth and staying competitive, their style tends to be more incremental and focused on enhancing existing products, services, or operations.
Use of technology
Entrepreneurs are often at the forefront of using emerging technologies and internet advancements—from artificial intelligence to blockchains. They seize on these digital tools as opportunities to innovate, disrupt markets, and create a successful business. Often, they build their enterprises around technology, making it central to their novel products and services.
Business owners view tech as a means to enhance existing operations, improve efficiency, reach more customers, and help their business grow. They may invest in upgrading their IT infrastructure, creating a strong web presence, optimizing their online marketing, and utilizing ecommerce platforms. For example, many brick-and-mortar store owners have adopted technology to enable digital commerce.
Scale
Entrepreneurs tend to start with a vision of creating transformative solutions that can be scaled. For them, scalability isn’t just an aspect of their business strategy; it’s often a central part of their vision. Typically, scaling is supported by venture capital or angel investment funding. Entrepreneurs focus on creating products or services that can quickly reach a large customer base, on a national or global scale, typically by leveraging the internet. To succeed, this requires a business model that can sustain rapid growth without a proportional increase in operational costs.
On the other hand, business owners—particularly small business owners—typically approach scale and scalability differently, often emphasizing stable growth and longevity. They are more likely to prioritize sustaining their business and gradually expand their customer base over time, often within a specific region or industry. Small business owners focus more often on a slower, more controlled scaling to ensure the quality of their products or services and maintain strong customer relationships.
Entrepreneur vs. business owner FAQ
Do entrepreneurs need different skills than business owners?
Although the skill sets of an entrepreneur and business owner overlap, a number of differences exist. An entrepreneur often focuses on developing a new concept or innovative idea, although anyone who starts a business is typically considered an entrepreneur. Some business owners are entrepreneurs, but many are not—they instead focus on managing day-to-day operations and overseeing a business’s finances, production, and workforce.
Can someone be both an entrepreneur and a business owner?
Yes, someone can be both an entrepreneur and a business owner. Many entrepreneurs are business owners, managing and building the business they created. However, if someone buys an existing business and operates it without initiating significant and innovative changes, they’re typically considered a business owner, but not an entrepreneur.
Can someone be an entrepreneur without owning a business?
Yes, someone can be an entrepreneur without owning a business. An entrepreneur is essentially a problem-solver who identifies opportunities and innovates to create value. Even an entrepreneur who is selling their business usually is still considered an entrepreneur after the sale.
Which role is more likely to take risks, entrepreneur or business owner?
Although entrepreneurs and small business owners both take risks, entrepreneurs embrace a much higher level of risk-taking by virtue of the fact that they start new businesses from scratch. Business owners, particularly those managing an established business entity, tend to focus more on minimizing risks to ensure stability, longevity, and profitability.
