At first, I was assured that anyone involved in business should have known the answers to this question. Why I brought this up as a topic in this business blog is because not too long ago, I have just experienced a discussion with someone who runs business but doesn’t seem to understand the difference between an investor and an entrepreneur.
I don’t want to be judgemental but the discussion has made me wonder if the differences are really not that obvious for some business people.
Starting a company is not easy, otherwise everyone would do it and be successful. There are many ups and downs going on in the process. However, knowledge, strong will, passion and persistence are highly required to be an entrepreneur.
An investor only comes out when there’s necessity in doing so. In other words, no profitable potential means no investment. If I am going to be analogically speaking, an entrepreneur is a builder and an investor is a gardener.
So here they are, 10 top differences between an investor and an entrepreneur.
1. An entrepreneur focuses on the business operation, while investor focuses on commercial and financial sides of the business.
2. An entrepreneur comes up with new business idea, while an investor considers the existing business idea brought up by entrepreneur.
3. An entrepreneur usually approaches an investor for business financing. He will come out with proposal and business plan to assure the investor. An investor only approaches an entrepreneur if the business is potentially profitable.
4. An entrepreneur is passionate on the business and usually dedicated to his idea. Most of them are persistent and still stick to run the business, despite suffering from losses. An investor is much more practical to the commercial evaluation and may leave the business when it loses money.
5. An entrepreneur is usually more optimistic on the business. An investor is not that optimistic. They can be more optimistic if the business value is relatively high.
6. An entrepreneur is the one who run the business, though he may invest money, while an investor only invest money. He is not involved in daily operation.
7. An entrepreneur reports to the investor in a timely manner. An investor reads and evaluates the report.
8. Entrepreneur can begin a startup business without money, while money is the main tool for investor to start investing.
9. Entrepreneur knows the business more, since he manages its daily operation, marketing, sales, employees and customer behaviours. An investor knows the business based on financial reports and return on investment (ROI).
10. Risks on the entrepreneur are energy and time, while risks on investor is money and time.
Despite the above differences, there are some similarities as well:
- Both sides are the owners of the business.
- Both sides should have business minded.
- Both sides also known to be risk takers.
- They are also contributors of economy growth and financial aspect.
Either you’re an entrepreneur or an investor, there are two things you need to remember. The most important thing to be built is trust and the most important thing to be avoided is greed. If you understand these rules, you both can make a great team to a successful business venture.
If you have other opinions on the difference between investor and entrepreneur, let me know in the comment box below. Also, don’t forget to share if you find this blog post useful.