Whether you are a successful, innovative entrepreneur or a small business owner running a business takes a lot of commitment and effort. There will be many ups and downs along the way. However, there is a clear line between small business ownership and entrepreneurship. There are subtle differences that usually set these two terms apart. Also, these two terms depict many similarities, as well. What are the similarities between entrepreneurship and small business ownership? Read the article to find out more information.
What are the similarities between entrepreneurship and small business ownership?
Both of these parties are usually purpose-driven and goal-oriented. Proactiveness, collaboration, passion, positivity, and self-confidence are important characteristics shared by both entrepreneurs and small business owners. Also, they are quick learners, innovative, and take risks positively to drive the business towards success.
Moreover, they have a constant need to learn and excel through new opportunities and avenues of growth. Entrepreneurs and small business owners differ in their level of risk, leadership style, team spirit, work environment, culture, etc.
Who is an entrepreneur, and what is entrepreneurship?
An entrepreneur is an individual who develops new business by himself/herself. They usually bear the risks related to starting the business and also enjoy a majority of profits and rewards.
An entrepreneur has specific characteristics in them. They are innovative, risk-taking, and even a source of new idea generation.
Entrepreneurs usually play a significant role in any economy as they continuously bring new businesses to the market. Successful entrepreneurs enjoy rewards such as profits, fame, and multiple avenues of growth and success.
Entrepreneurship is the process of planning, launching, and running a new business, which is, at most times, a small business while taking risks for the profits.
Who is a small business owner, and what is small business ownership?
A small business is a corporation that is privately owned, a partnership, or a sole proprietorship.
A small business usually has a few employees to run the operations and achieves a comparatively low revenue than a medium-sized business or a corporation. As per the U.S. Small Business Administration, a small business is independent and employs 500 people or less. Based on the industry and country, a small business is usually able to apply for support from the government and also qualifies for preferential tax policy.
The U.S. Small Business Administration has categorized small businesses based on industries using a set of specific standards. The below table depicts a particular classification.
| Specific Industry | Requirement (should not exceed below number) |
|---|---|
| Manufacturing and mining business | 500 employees |
| Trading (Wholesale Business) | 100 employees |
| Retail Business | Annual revenue of average $6 million |
| Construction (Heavy and General) | Annual revenue of $28.5 million |
| Contractors (Special Trade) | Annual revenue of $12 million |
| Agricultural Business | Annual revenue of $0.75 million |
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What is the relationship between small business and entrepreneurship?
Small Businesses tend to work with a set of existing and known products or services. On the other hand entrepreneurial ventures focus on new, innovative products or services. These products can be improvements of existing products or disruptive as well.
Due to this, the risk level of a small business owner and an entrepreneur’s face may differ vastly. In simple words, not all entrepreneurs are small business owners, nor are all small business owners entrepreneurs. Both of these parties differ from each other from many factors describe below.
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Similarities between entrepreneurship and small business ownership
Are you able to understand the similarity between entrepreneurship and small business ownership? Some people tend to use these two terms interchangeably as they show many similarities. Below are some of the similarities depicted by entrepreneurs and small business owners.
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- Organizational setup is usually similar
Both entrepreneurs and small business owners have only a few employees working under them or in the company. One person may have multiple roles, and they will have a wide array of responsibilities. For example, the small business owner might also be the accountant, manager, salesperson, etc.
- Simple decision-making process is observed
The decision-making process will be simple and easy as there are only a few members involved in both parties. A very lean management model observe in both small businesses and entrepreneurial ventures.
- Supports economic development
Both of these help to build the economy in the long term; they create jobs in society and also invent new ways to do things. Also, they tend to modernize industries.
- Purpose-driven
Entrepreneurs and small business owners are exceptionally driven. They are highly dedicated to investing their time and effort into their business.
Driven entrepreneurs and small business owners are usually reaching the stars. They strive to leverage all of their resources to achieve their maximum potential.
The majority of successful entrepreneurs and small business owners have a greater sense of purpose beyond themselves. They are driven by it. They put their efforts in uncovering their purpose and aligning it with the vision of the business.
- Passionate and positive at the same time
Passion is one of the most important traits of both entrepreneurs and small business owners. They genuinely love what they do and put their maximum effort towards achieving their goals and objectives.
They are willing to work a few additional hours for the success of the business. Also, they tend to get real pleasure and satisfaction from their work, beyond earning profits.
This is one of the most important similarities between entrepreneurship and small business ownership.
- Confident
Confidence comes into play when you know your competencies and abilities. Confidence helps both entrepreneurs and small business owners go a long way. It supports them to acknowledge their weaknesses and become better in the future.
A confident entrepreneur or a small business owner usually becomes successful by taking their businesses beyond their current comfort zones. Self-confidence helps them believe their goals and think that those are achievable with adequate dedication and commitment.
- Commitment to learn, look for new opportunities and grow
Another common trait shared by entrepreneurs and small business owners is seeking opportunities to grow and learn new things that will pave the way for business success.
They tend to look at every possible opportunity around them and use it to improve their business further. Commitment constantly motivates entrepreneurs and business owners. It helps them to maintain continuous persistence and face challenges and obstacles successfully.
- Goal-oriented
Both entrepreneurs and business owners are goal-oriented, and they put their maximum effort to achieve them successfully.
They are fully committed and determined to make their business a success. Also, they will try their maximum to overcome any obstacle that comes along their way. Moreover, they usually plan a highly strategic game plan.
Both these parties usually have a clear cut idea on what they want to achieve and how they are going to do it and where they want to be in a specified period.
- Always self-motivated
This is one of the most significant similarities between an entrepreneur and a small business owner. It is also one of the critical forces that decide the success of both of them.
Motivation is usually the ‘desire to constantly achieve things in life.’ They strive to succeed in everything they do. They continuously push themselves forward. This is self-motivation.
They show a lot of dedication to their goals. Also, they keep moving forward amidst all the challenges and obstacles coming ahead of them.
- Take risks and face challenges
Owning or running a small business or being an entrepreneur carries a lot of risks and challenges.
One of the key similarities between small business owners and entrepreneurs is taking risks positively. It dramatically helps them to distinguish themselves from their competitors.
In the modern business world, entrepreneurs and small business owners who take risks and challenges place themselves in leading positions. Both entrepreneurs and small business owners who have become successful are hard workers who have planned their work. Starting a new business will never be feasible unless there is an element of risk in it.
- Innovativeness
Innovativeness is another similarity shown by entrepreneurs and small business owners. Both these parties strive to grow the business to higher levels of success.
Innovation becomes a vital part of their journey towards business success. They can either seek new opportunities existing in the market or improve an existing one to a better product or a service.
Whether you are a successful entrepreneur or a small business owner, new ideas play a vital role in the business’s success. Innovations will continuously keep the products or the services of your business fresh.
Small businesses have better opportunities for innovation than larger organizations. Entrepreneurial businesses and small businesses can implement new ideas faster than larger organizations.
- Creative
Creativity focuses on thinking of innovative and new ways to develop your products and services. Whether you are a successful entrepreneur or a small business owner, there is always space for development. In simple words, creativity is ‘thinking the unthinkable’.
Both entrepreneurship and small business ownership come with a considerable level of risk. It helps both these parties to look at things differently and deal with uncertainty successfully.
Creative thinking has helped most entrepreneurs and small business owners make groundbreaking discoveries and make impeccable profits.
- Persistence
Whether it is a project’s rejection or a delay in achieving a goal, both the entrepreneur and the small business owner need to be persistent in achieving it.
Persistence helps them to look for solutions and options whenever something goes wrong in the business. In other words, this means pushing through the most challenging path or finding a new way to achieve it.
The persistence of entrepreneurs and small business owners helps them face the problems successfully and come out of them with more determination than before.
- Flexibility as a leading trait
Both small businesses and an entrepreneurial venture take a significant amount of time, effort, and funds to reach a certain level of success. Both these parties need to be flexible in adapting to change when facing challenges and obstacles.
Being flexible will provide the opportunity for small business owners and entrepreneurs to gain a competitive edge over the rivals. It also helps them to exploit new opportunities as and when they occur.
- Collaborative
Both entrepreneurs and small business owners practice collaboration and share that as a common trait. They delegate tasks among subordinates well and make a strong network with various people that are involved in the business.
This characteristic of entrepreneurs and small business owners help them to build the business to greater heights of success.
- Being proactive as a common trait
This is one of the vital characteristics shared by entrepreneurs and small business owners. They have initiatives in their hand and use them the moment they are required.
They are always innovative and do new things to make their business stand out from their competitors. This proactive personality of entrepreneurs and small business owners helps them identify new opportunities and growth avenues.
What are the differences between small business ownership and entrepreneurship?
The main difference between these two is those small businesses often deal with known and existing products or services when Entrepreneurs deal with innovations or business ventures. There are also other differences in risk levels, culture, strategy, objectives, approach, and long-term goals.
Most people use small business ownership and entrepreneurship interchangeably as both of these businesses focus on achieving goals with limited resources.
While an entrepreneur and a small business owner have many things in common, they also differ vastly from certain aspects.
So what are these differences between entrepreneurship and small business ownership? Out of many below are some important ones.
| Difference | Small Business Ownership | Entrepreneurship |
|---|---|---|
| Objective | Highly concerned on longevity and constant development. Focuses on day-to-day functions of the business Less focused on growth and profitability | Want to become innovative, hence introduce novel products to shake up the market Has an incredible idea or a concept behind the product Focused on growth and profitability |
| Leadership | Highly driven by little gains they achieve over time Focus on enhancing efficiency of operations than competing with rivals Highly patient and disciplined | Driven by their vision and mission that they want to achieve in the long term Focus on achieving the long term plan while motivating employees Highly influential and committed to achieving success |
| Team Spirit | Small business owners are usually calm and also objective Less focus on growth and profit. More focus is given to daily operations and functions. Presence of competition among teams and departments | Entrepreneurs are highly experienced and also specialized in their area of expertise. Continuously develops its processes to improve the effectiveness and efficiency of operations. Presence of friendly competition amongst departments and teams |
| Strategy for management | The strategy can be made flexible and possess a comparatively very low risk The focus is given to obtain a continuous flow of cash and work for the team | A long term vision with clear goals and objectives to be achieved |
| Level of risk | Works with a known product or a service, hence the risk level is comparatively low | Entrepreneurs are high risk-takers as they develop a product or a service that is novel to the market. Works with extreme uncertainty about the success of the product |
| Work environment | Usually has a very relaxed and a comfortable environment Less stress for the employees Small office space due to limited resources. It can also be working remotely. | Engages in proper time management and planning Proper allocation of resources Offices develop to enhance collaboration and teamwork. |
Conclusion
In summary, there is a lot of confusion in understanding the similarity between an entrepreneur and a small business owner. However, it can observe that there are many differences and similarities between entrepreneurship and small business ownership.
Both entrepreneurs and small business owners are goal-oriented and purpose-driven. They are usually risk-takers who pursue their vision towards success.
Most of the time, they are innovative and creative, and they strive to gain a competitive edge. Also, they are collaborative and proactive as they want to stand out from their competitors.
They are confident and self-motivated to succeed both personally and professionally. All these characteristics shared by both entrepreneurs and small business owners will help them become better and build a thriving business.
