Often, the terms small business and entrepreneurship are used by individuals interchangeably when referring to a business that is seeking to accomplish specified goals with very few resources. Though this is true, this is probably the only similarity between the two. In the start, most entrepreneurial ventures are small businesses; however, all small businesses are not entrepreneurship.

Entrepreneurship essentially involves coming up with an idea, formulating a business around it, and managing the business, while also assuming its risk. An entrepreneurial venture typically starts as a small business and then grows. In contrast, a small business is a business that a person or a small group of individuals own or manage. The owner has a direct impact on the decision making process. There are very few employees in a small business and its market share is also quite less.

In this article, the different features of small businesses and entrepreneurship will be discussed and the key differences between the two will be presented.

Definitions and explanations


Entrepreneurship refers to the process in which a business opportunity is identified by an individual, who uses this idea to formulate a business. It represents the ability and readiness of an individual to develop and look after a business and manage its risks so as to achieve profits in the long run. A person who shows willingness to take up such risks is called an entrepreneur. Entrepreneurship is a challenging field because it is not guaranteed that the business will achieve success. Nonetheless, majority of the entrepreneurs are risk takers and are very enthusiastic about their ventures. Entrepreneurs comprehend that when the risk is higher, the returns will also be higher. There are a few qualities that are common to successful entrepreneurs: they are able to develop a competitive advantage, bring together a team that is highly competent and skilled, exhibit high technological expertise, are hardworking and loyal, have a high risk taking ability and perform effective money management.

An entrepreneurial venture starts operating as a small business. However, it is likely to exhibit rapid growth because the entrepreneurs are in the constant lookout out for opportunities to take higher risks and hence, advance their business. They are not worried about making high profits; rather, their objective is to use creative methods while carrying out their business and to sell innovative products or services.

Small business

Small business is owned and managed by a single person or a small group of people. The capital is contributed by these few individuals, who are involved to a large extent in the decision-making process. There are a limited number of employees in a small business, hence it is quite easy and convenient to manage. The scope of operation of this kind of business is quite small and they have a small share in the market.

The key objective of a small business is to generate profits. However, as the owners are not keen on evaluating and taking up new business opportunities, they have limited profit making ability.  The most popular kinds of small businesses are sole proprietors and partnerships.

Difference between entrepreneurship and small business

The main points of difference between entrepreneurship and small business has been detailed below:

1. Meaning

Entrepreneurship is the process of identifying a new business opportunity in the market and starting and developing a new business. It typically commences operations as a small business and achieves growth subsequently. A small business is one that is owned and controlled by an individual or a small group of people and has a limited scope and market share.

2. Objective

The main objective of entrepreneurship is to develop a new and innovative product or service. Entrepreneurs usually start a business because of their passion towards it. This is why they will continue carrying out their business without thinking about the risks they face or the profits they are making. The key objective of small businesses, however, is to generate profits. Hence, when they come across situations when they face excessive risks, they often suspend their business to prevent losses.

3. Business expansion

Entrepreneurship achieves rapid growth and development because entrepreneurs are always seeking new opportunities. They are always looking for change and are never content with their current situation. On the other hand, there is limited scope of development in small businesses. This is because small business owners do not seek new business opportunities and are satisfied with whatever success they achieve.

4. Attitude of owners

Entrepreneurs and small business owners are both self-employed; however, they exhibit different attitudes. Small business owners are satisfied with whatever success they achieve and do not try to change much. On the other hand, entrepreneurs are always seeking to change and develop. They exhibit an energetic attitude, instead of being comfortable with their existing situation.

5. Innovation

Entrepreneurs are famous for their willingness to innovate and create new things. On the other hand, small businesses owners usually do something that is already being done by entrepreneurs.

6. Market share

The vision of entrepreneurs is quite often to influence and affect the entire world. Hence, their business usually has an impact on a large number of people, and their market share is usually quite high. On the other hand, small businesses have a smaller share of the market because they provide service to a small number of people.

Entrepreneurship vs small businesses – tabular comparison

A tabular comparison of entrepreneurship and small business is given below:

Entrepreneurship vs Small business
Recognizing and exploiting a new business opportunity in the market A business that is owned and controlled by an individual or a few individuals
Creating and developing a new and innovative product or service Making profits
Business expansion
Experience rapid growth and development Do not experience growth
Attitude of owners
Have an energetic attitude and are always looking to change and develop Are satisfied with their situation and do not wish to change or experience growth
Exhibit high degree of innovation Are not innovative; carry out a business that has already been established by an entrepreneur
Market share
Have a high share in the market Have a low market share

Conclusion – entrepreneurship vs small business

Most of the entrepreneurial businesses start off as small businesses; however, because of their enthusiasm to expand and exploit development opportunities, they achieve success in a short span of time. Nonetheless, from the economic perspective, both these businesses are very important. They help in eliminating significant levels of unemployment that is a critical issue all over the world. Small businesses and entrepreneurial ventures have also helped in the use of local resources and in bringing about technological development. Hence, both kinds of businesses are vital for economic growth and prosperity.