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Top Differences Between Entrepreneurs and Small Business Owners

4 Mins read

People often use the terms entrepreneurs and small business owners interchangeably. After all, both of these refer to someone who owns and runs a business.

There are, however, several differences between entrepreneurs and small business owners, if you look beyond this definition. While both run a business, the way they approach their business differs.

Want to learn more about the top differences between entrepreneurs and small business owners?

Well, that’s what we will discuss in this post. Before that, let’s first learn the definitions of entrepreneurs and small business owners.

Definitions of Entrepreneurs and Small Business Owners

An entrepreneur is someone who undertakes high-growth, high-risk ventures. They start with an innovative idea and develop it into a business.

Small business owners are simply people who own a business, which they could have inherited or started themselves. 

Irrespective of whether you want to form an LLC or a Sole Proprietorship or a Partnership, you will be a small business owner. That doesn’t necessarily mean that you are an entrepreneur.

In the next section, you will find the key differences between entrepreneurs and small business owners. Keep reading.

Entrepreneurs and Small Business Owners: Key Differences

Now that you have a basic understanding of what the terms “entrepreneurs” and “small business owners” mean, let’s explore their key differences.


Entrepreneurs are typically highly driven and ambitious people who want to revolutionize the way things are done. In a way, entrepreneurs are change-makers and innovators, who don’t like the status quo.

Small business owners may or may not be as driven and often like to maintain the status quo. They simply want to ensure that their business is successful and have no other business aspirations. 

Risk Tolerance

Entrepreneurs like to take risks, especially if they think it can deliver better rewards. They like to experiment with new ideas and try different approaches instead of doing things in a set way.

Small business owners are usually risk-averse and don’t want to take any risks that could affect their business. They are often sentimental about their business and avoid taking any unnecessary chances with it.


Entrepreneurs are always pro-innovation and are proactively looking for new and exciting ideas. This also allows them to proactively anticipate future changes in the business landscape and adapt to the changing dynamics.

Small businesses owners are more reactive than proactive and lack the vision to quickly adapt to changes. They don’t foster a culture of innovation and are quite content with the way things are. Small business owners will only make drastic changes when they are practically forced to do that to ensure the survival of their business.

Size of the Business

Small business owners are usually people who run Sole Proprietorships, Partnerships, and even LLCs. The size of their business is small and they are not very keen on expanding their business a lot. As long as it is profitable, they will be content.

Entrepreneurs, on the other hand, enter the business with expansion in mind. They could start with a two-person firm, but eventually, they want to grow their business to the extent possible. Entrepreneurs, therefore, could run all types of businesses from a Sole Proprietorship to a Corporation.

Business Objectives

The key objective of small business owners is to run a profitable business and make a decent living. They are also often concerned with their reputation, especially if they’re running a family business. Their business objectives are simple—keep their clients happy, build customer loyalty, and earn a decent profit.

Entrepreneurs, on the other hand, are not satisfied even if the business is running smoothly and is profitable. They are always striving for more, more growth, more expansion, more ideas, etc. They would want to keep experimenting and bring in new products and services from time to time.

Investment & Funding

Entrepreneurs usually seek multiple investors to execute their innovative ideas successfully. They are not concerned about owning the business but care about what that business will become if they execute their plans well.

Small business owners usually prefer a sale line of credit from a bank. They may even invest their own personal savings, just to ensure complete ownership and control of the business. Once again, small business owners are risk-averse and prefer playing it safe, even at the cost of not raising enough money.

Involvement in Business Activities

Small business owners are usually more involved in the day-to-day operations of their business than entrepreneurs.

Small business owners are emotionally involved in their business and want to do whatever they can to help it grow. That is why they often even take up managerial responsibilities to oversee the day-to-day activities of the business.

Entrepreneurs, however, are usually involved only in the strategic and marketing decisions of the business. They would love to contribute in the big-picture strategies and plans, but not in the mundane day-to-day activities.

Are You an Entrepreneur or a Small Business Owner?

Hopefully, by now, you would have a clear understanding of the difference between entrepreneurs and small business owners. 

Which one of these do you think you are?

Read the points carefully and assess whether your business management style matches more with that of entrepreneurs or small business owners.

If you plan on starting a small business, you can think about which way you want to run your business. Do you want to take risks and expand your business or play it safe and earn a decent living?

The choice is entirely yours. Whichever you choose, do make sure that you make a solid business plan and start your business the right way. All the best!

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About author
Brett Shapiro is a co-owner of GovDocFiling. He had an entrepreneurial spirit since he was young. He started GovDocFiling, a simple resource center that takes care of the mundane, yet critical, formation documentation for any new business entity.
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