What’s the Difference: A Comparison Between Entrepreneurs and Small Business Owners

You might think that small business owners are the same as entrepreneurs. But, there’s a subtle difference in mindset that puts them firmly in two different camps. Here’s what you need to know.



An entrepreneur is a person who starts and runs a business, often with limited resources. He may or may not have a plan, and he may or may not take into account all the risks ahead of him. He is focused on risk, however, and manages it with the goal being to get the business off the ground. The business idea is usually a new innovation of some kind, maybe a new kind of product or service.

An entrepreneur isn’t interested in the familiar, or existing technologies or business models.

Because of this, being an entrepreneur is risky. Many entrepreneurs are willing to put their financial security and career on the line to take risks on an idea, even if it’s untested. They’re willing to spend time and capital on an uncertain venture with the hope that it will pay off.

Entrepreneurial ventures require a highly enterprising individual to arrange for capital and raw materials, manufacturing, and skilled employees. They need to think up the product or service, get it to market, and then figure out an exit plan.

According to the Sawaya Law firm, a Denver personal injury law firm, these kinds of businesspeople are also at a greater risk for a personal injury suit. Because the ventures they engage in are inherently risky, they need more business liability insurance than other businesspeople.

They may need umbrella policies to protect their personal assets, and to keep from being sued if employees, or customers, are injured using, making, or testing their new idea.

Entrepreneurship is different from:

Inheriting an existing business from a friend or family member.

Working for other businesses

Being a commissioned salesperson

Selling already available goods and services (i.e. a franchisee, dealer, or agent)

A Small Business Owner

A small business owner can be said to be a mix of entrepreneurship and a more traditional business person. Small business owners do take risks, but they take measured risks. They typically do not take the types of risks, and do not innovate, like entrepreneurs do.

Small businesses usually deal with known and established products and services. They may sell for another business, for example, like a dealership, an insurance company, or a real estate agency. They may buy into a franchise and operate under the banner of a larger brand, or they may take an existing business model, like a restaurant, car wash, or car repair service shop, and adopt it to their own brand.

Small businesses deal with known risks.

Many small business owners do not employ other people, and instead operate solo operations. However, they can employ others if the business grows large enough.

Finally, whereas entrepreneurs tend to “think big,” small business owners tend to be more localized. They operate in a local area, and may only affect their local community.

Paul Mello works as a small business consultant. He enjoys meeting new people and seeing their business ideas, helping them to forge ahead to success. Paul is a contributor to business blogs too, look out for his articles around the internet!