Difference between small-business owner, entrepreneur noted

By Marcus Green
The (Louisville, Ky.) Courier-Journal

LOUISVILLE, Ky. — Ellen Christian was burned out and scared. After a hysterectomy she credits with saving her life, she left a well-paying corporate job troubleshooting computers in 1995 to start as a jeweler's apprentice, learning the trade from scratch.

It had taken the brink of death for Christian to realize she needed a drastic career change.

"Before I died," she recalled, "I wanted to create something beautiful."

Now Christian, 52, has joined millions of small-business owners — operating her 6-month-old jewelry-design business from her home studio.

Is she both an entrepreneur and small-business owner? The terms are often used interchangeably.

But they are not the same, according to Bruce Kemelgor, a University of Louisville professor who has studied the distinctions between the two types of people. Kemelgor contends small-business owners and entrepreneurs have different goals, strategies and styles.

"Most small businesses are a reflection of what one might call a lifestyle business or an income-substitution business," he said. "People are starting small businesses to substitute for the income they might earn by working for another business or another corporation."

That includes the legions of people who strike out on their own, leaving a job they despise. Those exiles from corporate America seek a certain lifestyle: a stable business, informal operations, the involvement of family members and slow growth.

"Entrepreneurs, on the other hand, are interested in businesses that have growth potential and can really appreciate," Kemelgor said.

The goal is for the businesses to grow rapidly, establish market share and become take-over targets in five to seven years.

Those ventures are characterized by aggressive strategies and frequent shuffling of employees as the companies hurtle toward an initial public stock offering and ultimate sale. Entrepreneurs and investors want a relatively large and quick payout.

For someone starting a business, it's not always necessary to understand the differences, Kemelgor argues. But it could help to know that many venture capital firms finance only ventures with the potential for high rewards, in the medical or information technology fields, for example. Mom-and-pop retailers need not apply.

A label "is the least important issue, and I don't think people should be self-conscious viewing themselves as being categorized or stereotyped as belonging to one or the other categories," said Kemelgor, who works with small businesses through the College of Business and Public Administration's Small Business Institute.

He believes a startup's emphasis should be on defining a market, whether it's a corner grocery in an underserved area or a breakthrough technology that will revolutionize medicine.

"They can't simply become another 'me-too' operation and feel as though they can make a living out of being just another hairstylist, just another variety store," he said.

Christian, a client of the Small Business Institute, fits this mold. With custom jewelry created in her garage studio, she provides an alternative to the mass-produced pieces sold by major jewelers.

"I have no desire to ever be a store," she said. "My goal is to find the exact right niche, make 50 to 60 pieces a year and have a waiting list of a year to get one of my pieces."