Are you a small business owner or an entrepreneur?
The ability to spot opportunities where there are challenges is the key difference between the two, writes Rick Ed
Over the years that I have been working with SMEs, I have become increasingly aware of the clear distinction between small business owners and entrepreneurs. Indeed, they can be placed along a continuum on a scatter chart together with tenderpreneurs and intrapreneurs.
Neither of them can be isolated in silos as each shares many of the other’s characteristics.Some individuals may have more of one trait than another.
It is also not that one is better than another; where a person appears on the chart is largely determined by what best suits their personality and circumstances. The economy needs both.
On the concept map, comparing the characteristics of a successful small business owner with those of a successful entrepreneur, it becomes clear that, to succeed, beyond their core competencies, both need an enabling environment and 'technical skills'.
Research shows that many of the causes of small business success or failure can be traced back to fixable technical skills like selling solutions to meet customers’ needs and managing cash flow.
It is true that both can survive, even succeed, when the economic, political or social environment is not conducive to business success.
The better both their understanding and application of key business skills, like marketing management, the greater the effectiveness of the business. It can be a great advantage to them both if they have the benefit of some sort of privilege - the enormous value of access to business advice and to role models cannot be overstated.
The spirit of entrepreneurship
However, the big distinguishing factor that gives the entrepreneur the edge is entrepreneurial spirit and all that this entails.
When faced with a problem in business, entrepreneurs intuitively look for a solution; small business owners get someone else to solve it. When faced with a challenge, entrepreneurs naturally see an opportunity; small business owners, an obstacle. When entrepreneurs see opportunity, they automatically take initiative. Entrepreneurs persevere, pushing through difficult times, chewing on broken glass.
The fact that entrepreneurs tend to be less risk averse, open to exploring new options and more persevering when the going gets tough explains why they more often succeed in challenging situations. This is a serious impediment for those small business owners who lack the entrepreneurial spirit.
Summing up her research paper on barriers and enablers for women entrepreneurs in South African townships, Director of Enterprise Development Academy at GIBS, Yogavelli Nambiar noted that there is a need to develop an entrepreneurial culture in communities. "Without assistance in psycho-social issues, all the skills in the world would be useless."
So which are you really, a small business owner or an entrepreneur?
About the author: Rick Ed at age 60 sold his business to a younger and more energetic management team. He now educates entrepreneurs on strategic decision making and sales. Rick is a business advisor at DoBetter.Business.