Small businesses are the backbone of most economies, in both developed and developing nations. There is no doubt that South Africa needs small business to aid with job creation as has been repeatedly stated by many politicians and economists. There is now even a government ministry dedicated to small business development. It is considered to be one of the only short to medium term solutions to deal with the unemployment scourge in South Africa.
Entrepreneur vs Business Owner
However, when the talk of small business ownership arises it is often in the same breath as entrepreneurship. The fact of the matter is that a small business owner is not necessarily an entrepreneur, and not all entrepreneurs are small business owners. There are several characteristics which differ among the small business owner and entrepreneur.
Characteristics of an Entrepreneur
Let’s take a quick look at some of the characteristics of the entrepreneur as taught in first year business management in most South African universities. Entrepreneurs are:
- Risk takers
In other words, entrepreneurs are people who come up with innovative ways to meet the needs of customers, using whatever means at their disposal to service their customer base. They also have a keen foresight to identify new opportunities and have a strong drive to succeed despite the obvious risk. This does not necessarily describe the small business owner.
Small Business Owner vs Entrepreneur
Although small business owners may refer to themselves as entrepreneurs, there is a distinction between a business owner and entrepreneur. It is not always a clearly demarcated difference. Small business owners usually indulge in tried and tested business models, like retail. The challenges in these business are not unique and innovation is rarely required.
Small business owners stick to a known formula which can be profitable with the right product and in the right market. Entrepreneurs on the hand are innovative, willing to embrace challenges and risks and focussed on finding solutions to problems rather than fixating solely on profit. This does not mean that entrepreneurship qualities are not found in small business owners and their operations.
Furthermore, small business owners may transition into entrepreneurs once the opportunity arises and finances makes innovation possible despite the risks.
Are you an entrepreneur?
What is evident though is that entrepreneurs are innovative and have a risk for appetite. They are willing to try ‘new things’ and shift away from the traditional business models where and when necessary. They may even create unique solutions (innovation) when other options do not suit their vision. At times this requires foresight even when the market research does not bode well for the product or service that will be on offer.
Entrepreneurs ‘make things happen’ by using their own innate characteristics as their primary tools. However, this does not mean that an entrepreneur is a ‘jack of all trades’. Just as important as being innovative and a risk taker is knowing how to work with people together, identifying the right abilities/skills in others and bringing it all together to achieve the ultimate goal.