5 Competencies of an Entrepreneur vs. Small Business Owner

5 Competencies of an Entrepreneur vs. Small Business Owner

About a week ago I received a really good article “Is there a difference between entrepreneurs and business owners?”  It states what I’ve said for years as people throw around the term “entrepreneur” like it’s something that you wake up one day and decide you’re going to be one!  Nothing could be further from the truth.

The problem is many who would call themselves entrepreneurs is they really are small business owners in disguise.  They could become an entrepreneur if they only mastered the competencies of entrepreneurship.  But, that means that they must admit that they’re not currently an entrepreneur, but instead an entrepreneur in training.

True entrepreneurs have learned to create something self-sustaining.  This requires some very specific competencies.  Let’s take a look at what it takes to call yourself an entrepreneur!

Identify a Need (Problem)

While many will say there are many people that demonstrate this competency, I would agree.  Any good manager has this skill, but, it is the entrepreneur that knows how to create cash flow from a problem.  It is this innate ability to see opportunity in the marketplace that allow them to replicate success over and over again.

Create a Solution

Entrepreneurs are natural problem solvers.  Again, a skill that many others possess, but entrepreneurs have a distinct ability in solving a problem.   They see the opportunity created by a problem and attack it with abandon.  With laser-like focus they are able to create something innovative; something that involuntarily attract attention.  It creates buzz.  And, through this buzz the entrepreneur creates what most inventor struggle in vain to do – make piles of money!

Generate Cash Flow by Selling Their Solution

Generating cash flow is about more than just making money.  It’s about maximizing the efficiency through which an order moves through the operational cycle – tuning your revenue engine.  If this isn’t your understanding of cash flow I would highly recommend reading the post “Cash Flow: An Entrepreneur’s View.”

Once you’ve mastered the cash flow challenge, then what?  How about increasing the horsepower of your revenue engine!

Demonstrate Scalability

You increase the horsepower of a business’ revenue engine by increasing sales.  But, increasing sales means you have to produce more of what you’re selling.  That meaning scaling your entire operation and this is where small business owners fall short.  Many have a hard time “letting go of their baby” and delegating, so their business stagnates because of its most scarce resource – THEM!!!

This is a bad situation in which to be, as it will not allow you to get to the next step.  An even sadder fact is that some small business owners work for decades at their business and are never able to turn it into cash.  A harsh reality when it was their retirement plan all along!

Get Investors to Buy-In to Their Solution

The final competency is the “exit” for an entrepreneur.  This usually means selling their business for a pile of cash that allows them to retire.  For most it’s too late.  They’ve caught “the bug”, so they never really retire.  They love the love the thrill of creating a self-sustaining business so they move on to solve the next problem (opportunity) they can find out there!

Transitioning from Small Business Owner to Entrepreneur

For those stuck in a small business, don’t fret.  If you’re stuck it’s because you haven’t mastered one of the competencies of entrepreneurship.  Find the help you need to focus on you deficiency and correct them.  When you have mastered them you’ll be amazed at how easy it is to find a buyer.

The problem is usually you don’t think like an investor.  So, you’re not doing the things that will make your business appealing to a buyer/investor – cash flow and scalability!!!

For those entrepreneurs out there, would you agree or not and why?  Are there other competencies that you believe entrepreneurs demonstrate vs. small business owners?

Transition from Owner to Entrepreneur


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4 thoughts on “5 Competencies of an Entrepreneur vs. Small Business Owner

  1. Dino, I agree completely with you. I am not an entrepreneur yet, but have been a business owner (plumbing) until recently. I always knew there was a difference between the two , but like many business owners, was completely consumed with my business, and did not have the energy to find out what the problem was. I did want to grow the business initially, tried, but the pain of growth was too great for me (without a mentor or guidance), so I became disillusioned and disinterested in the business to the point that I had to get out. Looking back now, I was fortunate with customers paying on time – I often charged 50% upfront if I was supplying goods – if they didn’t pay that then I knew I would have problems with them paying the final bill, so most times dropped the customer. I would have benefited from your simple explanation of cash flow at the time. The scalability for me, I think, was probably the biggest issue. I have friends running businesses and I can see the pain they experience because they do not want to delegate. This is a trust issue I suspect. I always wanted to duplicate myself but I should have realised that the “duplicates” may not be identical to me and would do things differently to the way I would do them, and probably achieve the same result.
    I am concentrating on the things that make an entrepreneur now, so have started walking my path.
    I hope this is able to help business owners who want to grow and those that are scared of growth – there is help out there and often for free……best regards, John

  2. great points altogether, you simply gained a new reader. What would you suggest about your post that you made some days ago? Any positive?

  3. Nice post. I was checking constantly this blog and I’m impressed! Very helpful info specifically the last part 🙂 I care for such information a lot. I was seeking this certain info for a long time. Thank you and best of luck.


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