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.
Wahidin Wong is a digital marketer at Adkomu.com and an editor at Tobeeko.com. He is also a jazz and bossa lover.
People reacted to this story.
Show comments Hide commentsI think your article isn’t 100% correct. Not all entrepreneurs are involved in day to day operations of their businesses (these are very small entrepreneurs or small business owners). In fact, the main goal of entrepreneurs should be to get out of working “in their business” to working “on their business”
An entrepreneur is an investor, they invest money, time and energy into their venture. You are thinking of the hard core investor like Angel investors and Venture Capitalists, but there are many more types of investors including business owners, like I said who invest also into their venture in hopes of gaining a profit. So, yes, sometimes the lines are blurred depending on what exactly is happening and who is who.
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hey,
I love your article . You even included the commonality between entrep and investor. The reason I’m looking for answers is that I want the two disciplines because I can not fully commit to investing( I invested already, all of my stocks are super down), I still have so much to learn. Now my current flipping homes business is not doing great and I want to transition to a home based business that again I have so much to learn. currently I created my website(almakeit.com), tried some blogs and youtube videos(coach royal cuteness, initially intended for my niece and nephew). It doesn’t give me any buck. Do you have any apprenticeship program? Thank you again for your enlightening article.
ps: what is a url? your fill in box is asking for it.
Hi, Thanks for stopping by. Unfortunately, we don’t have apprenticeship program at the moment, but if you like blogging, we offer guest post which let you publish your ideas in this site. You can find out more about Guest Post here.
And a URL is a website address.
Dear Wahidin Wong,
Thanks for your great and useful article!
I have one question regarding the ownership of a business. Suppose, a new business idea is perceived by an entrepreneur. But the entrepreneur needs huge amount of money to get the business stand up and run. Hence, the entrepreneur would obviously decide to find an investor and let us assume that the entrepreneur did find one. So, in such a scenario, who actually is the “owner” of the business? The business, in one way, is totally an idea of the entrepreneur, while in another way, is totally funded (and hence running) by the investor (without the investor, the business idea was of no value as it would not have been brought into practice).
How is “ownership” of a business funded by an investor while designed by an entrepreneur decided?
In the case that both are the owners of the business, does this mean that both have the equal right in making business decisions? What if both of them have opposite thoughts on the decisions of the business?
Would you please clarify this ownership thing up for me?
In normal circumstances, both parties are the owner of the business. However, there will be a whole lot of discussions going on beforehand, to decide anything related to the business. Those include level of ownership, responsibilities, problem solving, etc.
Basically, everything follows the agreement rules out by both the entrepreneur and investor.