Small business owners and entrepreneurs are often seen as the same, but they are not always identical. Let’s explore why.

Key Takeaways

• Entrepreneurs usually take big risks, think about long-term goals, and aim to make an impact on a larger scale.
• Small business owners often focus on meeting local needs and supporting themselves or their families.
• Both are essential for meeting the needs of communities and the broader economy.

It’s common to hear the terms “small business owner” and “entrepreneur” used interchangeably, especially as more people in the U.S. work for themselves.

According to Pew Research, about 15 million U.S. workers are self-employed, making up 10% of the workforce. With the rise of the gig economy, many now work as freelancers or independent contractors, designing their own schedules and finding ways to earn a living on their terms.

It might feel like everyone is becoming an “entrepreneur,” but the reality is that being a small business owner and being an entrepreneur are not the same thing. This guide will explain the differences.

What Is a Small Business Owner?

A small business owner usually starts a business to serve a local community or a specific audience. For example, they might own a bakery, operate a plumbing service, or sell handmade furniture.

Small businesses are defined as independent companies with fewer than 500 employees. In 2023, the Small Business Administration reported that over 33 million businesses in the U.S. met this definition—accounting for 99.9% of all U.S. businesses.

Some small businesses grow from a person’s passion or expertise. Others may be inherited from family members. Small business owners typically aim to deliver value to their communities, whether locally or within a specific niche.

What Is an Entrepreneur?

Entrepreneurs are known for their big ideas and their drive to innovate. They dream of creating the next groundbreaking product or service and often think about how to scale their ideas on a national or global level.

The Global Entrepreneurship Monitor reports that there are over 33 million entrepreneurs in the U.S. These individuals include startup founders and tech visionaries, the kind who dream of building the next Facebook or Tesla.

Entrepreneurs are less likely to focus on one local market and more likely to aim for widespread impact, often envisioning their businesses as leaders in a global marketplace.

Key Differences Between Entrepreneurs and Small Business Owners

While both entrepreneurs and small business owners may operate small businesses, their mindsets and goals often differ. Here’s how they stand apart:

1. Risk

Entrepreneurs are risk-takers. They pursue high-growth opportunities, often facing significant uncertainty. While these ventures can lead to massive success, they also come with the potential for failure.

Small business owners tend to focus on minimizing risk. They usually prefer steady growth and stick to proven strategies that support long-term sustainability.

2. Vision

Entrepreneurs think big. They focus on large-scale innovation and solving problems in new ways. Their goals often extend far into the future.

Small business owners focus on immediate needs. Their vision is typically centered on daily operations and maintaining financial stability.

3. Innovation

Entrepreneurs constantly seek new ideas and advancements. They are drawn to cutting-edge technology and market trends.

Small business owners prioritize what works. They aim to sustain success within their established market or niche.

4. Scalability

Entrepreneurs dream of scaling their businesses into major enterprises. They often aim to sell or grow beyond day-to-day involvement.

Small business owners often have a deep personal connection to their businesses and prefer to stay hands-on, focusing on maintaining their current scale.

5. Goals

Entrepreneurs are often motivated by a desire to make an impact on the world or achieve significant financial success.

Small business owners are typically driven by the desire for independence, self-reliance, and the ability to support their families or communities.

Are You an Entrepreneur or a Small Business Owner?

The bottom line is that entrepreneurs and small business owners serve different purposes, and both are vital. Not every business needs to scale to massive success, and many are best suited to remain small and community-focused.

If you’re considering starting a business, think about what aligns best with your vision and goals. Are you more interested in steady growth and community impact, or do you dream of taking big risks to pursue groundbreaking opportunities?

Regardless of the path you choose, building a business takes hard work, dedication, and clarity about your long-term objectives. By focusing on what truly matters to you, you can create a business you’re proud of—whether that’s a local shop or the next big startup.