People tend to use entrepreneurship and small business interchangeably to describe a business with limited resources seeking to achieve a certain objective. While this may be true, the similarities end there. In reality, entrepreneurs and small business owners tend to have opposite views on their objective and approach. So what are the differences between entrepreneurship and small business?
In this post, we’ll cover the various characteristics of both a small business and an entrepreneurial venture to describe the main differences.
What are the differences between an entrepreneurial venture and a small business?
A small business is an organization, partnership or sole proprietorship that has fewer resources and annual revenue than a medium or large company.
An entrepreneurial venture is the concept of starting a small business to offer a product or service with the intention of disrupting an industry or maximizing profit.
Objective: Innovation, High Growth, and Profit. Entrepreneurial ventures aren’t just concerned with making money, they want to make more. They’re the ones that dare to shake up a market by introducing an innovative product or feature or become the most recognized brand from the quality of service or production. Entrepreneurial ventures are typically founded with a great idea or concept behind them.
Leadership Traits: Highly Motivated and Influential. Entrepreneurs are visionaries. They can see the forest for the trees, the overall plan towards success that no one else can see. Entrepreneurs know how to keep people motivated while also holding them accountable.
Team Traits: Experienced and Specialized. Team members of an entrepreneurial venture are constantly improving their processes and finding ways to do their work more efficiently and develop more unique products and offerings. They may also have a sense of friendly competition between teams as they constantly look to improve themselves.
Management Strategy: High Risk and Long-Term Planning. There’s a misconception that entrepreneurs are always taking risks without any plan. Conversely, some believe they are veterans in business development. In reality, they are simply attempting to develop an idea, service, or product under extreme uncertainty, and planning as much as possible to minimize waste and loss. This can apply to the college student with a startup, or the CEO leading his fourth company.
Environment: Fast-paced and Competitive. Businesses looking to grow don’t have time to waste, and often rely on smart time management and prioritization. Their offices are designed to encourage collaboration and discussion, while also promoting productivity.
Examples of Entrepreneurial Ventures: Startups, Mobile App Developers, Indie Game Developers, Retailers, Ad Agencies, Fashion Brands.
Objective: Maintaining regular business. Small businesses aren’t always concerned with growing or becoming more profitable, they just care about the work they do day-to-day. Their goal is to ensure longevity and continual development.
Leadership Traits: Patience and Discipline. Small business owners are more driven by small gains over time and improving efficiency than competing with other businesses. They want to ensure the business continues to operate smoothly and steadily.
Team Traits: Calm and Objective. While small businesses can still be competitive, they are made up of individuals who care less about wins or profit and care more about their recurring duties and obligations.
Management Strategy: Flexible and Low Risk. The overall strategy is to ensure that there is a continuous stream of work and money for the team. While there may be uncertainty early in the business, after reaching certain milestones, small businesses become comfortable in their processes and routines.
Environment: Relaxed and Comfortable. A small business has a calm and quiet environment so everyone can do their work without any stress or concerns. Because of the limited resources, small businesses may operate out of smaller offices than other firms, or may even work remotely from their homes.
Examples of Small Businesses: Local Bars, Clinics, Law Firms, Consulting Firms, Freelancers.
While entrepreneurs and small businesses have a lot in common, they are fundamentally different in terms of goals, strategies, and culture. Remember that entrepreneurs are looking for growth in profit and scale, while small business owners focus on building steady work and income. Neither one is particularly better than the other, but the two management styles can make a difference depending on the line of work.
Choosing the Right Work Environment
Regardless if you’re a small business owner or an entrepreneur, it’s important to align everyone on your team towards that vision. A big part of your overall strategy is choosing where you work. Level Offices provide options for both kinds of leaders, from open areas that encourage discussion and networking, to private offices and suites just for your team. Book a tour with Level today.