With the world still abuzz about Facebook's recent initial public offering, more and more college – and even high school – graduates might have their hearts set on being the next great entrepreneur.
But there might also be graduates out there who want to take a more practical route and start a small business.
Now there is absolutely nothing wrong with entrepreneurs. They've helped change and impact the world and have certainly made a substantial amount of money.
But for every Mark Zuckerberg, there are thousands of flops. Before making any big financial decisions on what kind of career you want to pursue, it's important to understand the difference between being an entrepreneur and owning a small business.
Small business owners have many different objectives than entrepreneurs.
First, small business owners are seeking a regular income, while entrepreneurs seek an exit value of their company or innovation. A small business owner is looking for self-employment, while an entrepreneur is looking for financial freedom.
And an important difference: small business owners start and grow their business through bank loans, while entrepreneurs depend on investors to gamble on their idea.
Small business owners focus on their product or service and deliver it consistently.
Entrepreneurs are continually innovating and thinking of the next product. They're never satisfied with the status quo.
If you work better concentrating on one thing at a time, you're more fit to be a small business owner. If you thrive on chaos, love action and are willing to fail several times before hitting it big, maybe an entrepreneurial route is the right one for you.
“Entrepreneurs and (small) business owners have a different relationship with their companies,” writes Gene Marks, a contributor for Forbes.
“Entrepreneurs view their companies as assets. Something to be developed, shaped and readied for market. And then sold for a profit so that they can move on to the next 'big one.'”
One of the biggest differences that Marks argues is that entrepreneurs prefer their passion over making profits.
Zuckerberg likely didn't start Facebook for the money and small business owners that make a high salary may not like their job all the time, but both can be happy.
All good business ideas need money to get started. A small business owner develops a plan to not only make money for himself and his employees, but also a plan to pay off his small business loan. Entrepreneurs have a much harder task.
They need to not only pay back their investors share, but also help those investors make money. There is never a guarantee on a great idea.
But that's the difference between a small business owner and an entrepreneur. The latter is willing to fail, while the small business owner just wants stability.
There's a piece of legislation heading to the U.S.
Senate called Startup Act 2.0 that aims to improve the landscape for entrepreneurs. AOL co-founder Steve Case is on a panel to help craft the legislation. In a recent article he wrote for TechCrunch, Case writes, “Let's urge our leaders in Washington to defy the odds once again in 2012 so that our entrepreneurs can usher in a new wave of iconic, American companies.”
Entrepreneurs attempt to the defy the odds with each idea.
Small business owners develop a stable plan to improve their life and the community their business operates in.