If you’re interested in starting your own business, you might be wondering “what is the difference between an entrepreneur and a business owner?--if there is one at all. Knowing the answer to this question might be beneficial for you if you’re looking into starting an eCommerce business; or maybe you fancy a typical brick and mortar storefront. In that case, you’ll want to read a guide to learn whats a brick and mortar store!
Either way, knowing the key differences between an entrepreneur and business owner might just help you get started on the right foot in this saturated business world. More than that, it’ll help you decide which is right for you and how to develop your marketplace and strategy.
In this article you’ll learn everything you need to know about starting a new business venture. We’ll also explore the key differences between an entrepreneur and a business owner as well as career outlook for both.
What Is a Business Owner?
A business owner is a person who owns any type of business that provides goods or services to customers. The owner of a business should thoroughly understand their business inside and out, as well as have a fine-tuned understanding of their business industry (ie, finance, food service, arts, entertainment…etc). Any business owner can assume their full role once the business is operational. One can also start a business with one or multiple other people.
Business owners also only become successful when their business does; as their only source of income it is more than important that they take all necessary steps to ensure their business runs as smoothly as possible. In order to do this we suggest you learn the types of online businesses and why you may want to choose one over another.
Business Owner Example
Once you begin to explore business ownership in depth you’ll quickly learn that there are four types of business ownership: sole proprietors, partnerships, limited liability companies (LLC), and corporations.
Each of these types of businesses have different functions. Depending on the one you choose you will also have a different role within your company. Therefore, don’t just jump in headfirst. Take the time to learn about each individual ownership type and find one that fits you and your business best. We’ve taken the time to provide a basic outline of each type of ownership. However, we recommend that you still perform an in-depth analysis of each in order to gauge which is the best fit.
- Sole Proprietorship
A sole proprietorship is a business entity that has one singular owner, the person doing business. In a sole proprietorship there are no legal differences between an owner and business entity. Examples of sole proprietors include: freelancers, artists, and local grocery stores.
A partnership is very closely related to a sole proprietorship. The difference is that a partnership is managed by two people instead of one. The roles are divided amongst the two, usually based on personal strengths. Examples of a partnership include: physician groups, real estate firms, and law firms.
- Limited Liability Company (LLC)
What is an LLC? Well, an LLC is a business structure that has the purpose of protecting the owners from personal responsibility or debt. An LLC is a hybrid business structure that combines parts of a corporation with a partnership. Some examples of an LLC are Nike and eBay.
Finally, there are corporations; a corporation is a group of people (usually an organization) who have their states authorization to act as single business entities. As a result, corporations are taxed differently, have different rights and responsibilities, and can enter into legally binding agreements with other businesses. Examples of a corporation include Apple, Walmart, and Microsoft.
What Is an Entrepreneur?
An entrepreneur is a person who starts a business based off of their own ideas for a new good or service. Most entrepreneurs act alone and have the responsibility of finding funding that will finance their idea and provide materials to get started. Entrepreneurs assume all risks that come with starting their own business, and many start with a limited number of resources. It is not uncommon for an entrepreneur to have multiple streams of income as entrepreneurship can prove to be unsteady.
The main goal of entrepreneurship is to provide innovative solutions and ideas to an economy. So, their idea cannot already be active in the marketplace. As a result, it often takes a long time for entrepreneurs to churn out a profitable company. Moreover, they rely heavily on connections and marketing to get their ideas out there.
If you want to know how to become an entrepreneur, the immediate answer is simple: have a unique idea. From there it will take a lot of rejection, trial and error, and failure. Entrepreneurship is not easy, but if your idea is worth sharing, then the road to success is worth traveling.
5 Differences Between Entrepreneur vs Business Owner
While an entrepreneur and a business owner do have many similarities, it is their differences that you need to consider.
Here are some of the core differences between an entrepreneur and a business owner:
1. Getting Started
As a business owner you can come into your position through various avenues. Most often a business is inherited from family members (ie a mom, dad, or grandparent); another common way is by purchasing an existing company, fairly simple. As long as you're qualified you can inherit or buy a business from virtually anyone.
The same cannot be said for an entrepreneur. You must create your own idea that does not exist in the marketplace. Moreover, you are responsible for finding the funding to make your idea come to life. You can decide to start your business at any point, but it will be started from the ground up–which means you need to know how to market.
2. What You Have to Offer
Typically a business owner manages a company that exists to meet customers needs. The product or service is easily marketable, and has a large demand. Customer satisfaction is at the heart of a business owner's mind, and when the customers are satisfied the business is normally successful.
As an entrepreneur your main goal is not customer satisfaction (at least not immediately). In order to even get your product on the market you have to prove that it is unique and does not already exist. Innovation and creativity are two traits every entrepreneur has to have to be successful–the rest can come later. Entrepreneurship is said to be a very passionate job, and although it may not see as much success as a typical business it is very rewarding.
3. Who Is In Charge
Business owners are at the top of the food chain; however, they are supposed to take suggestions from any employee who works under them. This can include investors and board members who pride themselves in having ownership of a successful business. A business owner does not listen to his ideas alone. They are responsible for taking all ideas and suggestions into consideration in order to make the business better.
Entrepreneurs can choose to collaborate with as many or as few people as they choose. Since the market idea is yours, you really only need to listen to yourself when you’re just getting started. Of course, you can ask for guidance from another experienced entrepreneur. But in the end all major business decisions are up to you–you’re your own boss!
4. Risk Taking
It is the job of a business owner to mitigate potential risks to the company. Usually a business has been in operation for quite some time and unforeseen risks can end up being quite detrimental. Therefore, there are usually strategists who work closest with you to avoid these risks. Moreover, you must exercise extreme caution when exploring new ideas that have yet to be evaluated. Every decision you make will affect your customer base which is the most important factor.
Another word for entrepreneur is a risk taker. As an entrepreneur you already take a risk by coming up with a unique idea that may or may not see success. You have fewer options when it comes to investments and decisions, and most of the time, risk taking ends up with rewards. This means that you will often not even think of the possible risk, and instead will tend to focus on goals and interests.
Finally, at the heart of every business is a goal. For a business owner the main goal is maintaining profits and income. Operations are generally streamlined in order to generate more success. This is the best and easiest way to reach goals as a business owner while still being able to rapidly adjust to market change.
An entrepreneur's goals will continually change. At first, the goal is innovation, then it soon becomes marketing and networking, customer relations are usually last. This is one way to remain profitable as an entrepreneur. It might seem backwards at first, but you can't keep customers happy if you have none to begin with. Which is why innovation and strong marketing are the first goals every entrepreneur should have in mind.
We’ve just supplied you with tons of important information, but in the end the choice is yours. We understand you have a difficult decision ahead, which is why we suggest you do lots of research to make sure you choose the right path for you. If innovation is where your heart is, explore entrepreneurship in-depth.
However, if you’re thinking that becoming a business owner is the way to go you have a lot of options to choose from. Businesses today don't just exist on a concrete slab, most exist online in the form of eCommerce. Start by asking yourself important questions like “how do I start an ecommerce business,'' and “what are some cool ecommerce business ideas?” Once you have the answer to both you can begin to form an eCommerce business plan and the sky's the limit from there!