entrepreneur vs investor

Entrepreneur vs Investor: Which One Are You?

Elena Hudgens
By Elena Hudgens 9 Min Read

If we talk about business, we try to understand the process of making money and organizing factors of production. Generally, people get confused between the terms Entrepreneur vs Investor, due to some similarities in the money-making process. 

Profit-making has an equal share between both of them, for example, in entrepreneurship people produce and sell commodities, and investing includes the process of buying the stocks at present and selling them in the future for high profit. 

There is a modest difference between Entrepreneurship and Investor that is timely profit-making. For example, in entrepreneurship, you can earn according to your day-to-day production and selling of units. 

But, as an Investor, you need to have self-restraint and forbearance as you cannot pull out your money from the stock market the day you invest it. For debiting your invested amount, you need to wait for a period. 

Entrepreneur Vs Investor

  • An entrepreneur doesn’t worry about the existing business modules or processes, the idea is to develop an effective and efficient business system that can make a huge profit using the available factors of production.
  • An investor relies on the existing business ideas and setup while focusing on evaluating the best stocks that are very much appropriate for buying. 
  • An entrepreneur establishes the business through an idea and favorable propositions, whereas an Investor approaches an entrepreneur to make money through investing.
  • While being optimistic, an entrepreneur tries to expand his business from time to time, whereas an investor focuses on the future awful circumstances that can hamper the money-making process.
  • An entrepreneur has a qualitative vision for his business, while an investor relies on the quantitative and financial side. 

For establishing a strong business, an entrepreneur searches for efficient factors of production whereas an investor tries to identify the worthwhile and effective stocks that he/she can invest in. 

The meaning of an entrepreneur

An entrepreneur is a person who establishes a business using available factors of production for making profits. The risk that is pulled by a person for setting up an efficient business venture is called an entrepreneur.

The business idea is not conducted by a lone person but is a collective effort of a group of people. But sometimes, a lone person is also capable of manipulating the efficient business ideas that can prove successful as big as the ocean sometimes. For tips to become a successful entrepreneur, you can refer to this.  

Delivering the living examples of these kinds of entrepreneurs, for example, Jeff Bezos, Elon Musk, etc.

If we separate the risk factors from entrepreneurship then the recompense and profit make this field an adventurous and rewarding one.

A person investing understanding is the ability of a person to organize and develop a particular business enterprise into a major one. 

The risk that is entitled to the field of entrepreneurship creates a little hardship but once the field is set up then the only wait is for the profit, nothing else.

However, the people who turn into entrepreneurs or have family lineages into businesses often are very talented and skilled people with new modern innovative ideas. 

If you are attracted to entrepreneurship but have a doubt about the superiority of entrepreneurship vs investor, you can refer to this article

Types of Entrepreneurship

There are 4 types of Entrepreneurship:

  • Small Business Entrepreneurship
  • Scalable Startup Entrepreneurship
  • Large Company Entrepreneurship
  • Social Entrepreneurship

Small business Entrepreneurship

This type of Entrepreneurship is established at a small scale such as hairdressers, grocery stores, carpenters, etc. The main purpose of this kind of entrepreneurship is to feed the family and self.

Scalable Startup Entrepreneurship

This type of entrepreneurship is established backed by a vision to transform the world. The innovative ideas and strategies are always greeted that can make human life easier and secure. This model of entrepreneurship focuses on scalable business and experimental modules.

Large Company Entrepreneurship

This type of entrepreneurship is the prime of all other parts of entrepreneurship. It focuses on the trends and tries to develop products that possess the ability to satisfy the wants of people. People change their preferences daily, so the companies face huge challenges to deter the situation by delivering satisfying and innovative products to the customer.

Social Entrepreneurship

This type of entrepreneurship aims at solving social problems. The priority of entrepreneurship is to innovate and develop for the society excluding any profits.
 

What do you mean by an Investor?

If we compare more of entrepreneur vs investor, then we can find more differences and similarities. But first, we need to understand the meaning of investor and its value in the real world. 

An investor is a person or an entity who invests an amount of money while expecting financial returns. 

Following are the financial objectives of an investor:

Investors are into different financial instruments to fulfill their financial objectives and goals by earning a profitable rate of return. Things like stocks, bonds, mutual funds, real estate, etc are stated as Investment securities. 

We evaluated the difference between entrepreneur vs investor, but there is a slight difference between an investor and a trade. For understanding the term investor more, we need to analyze the difference between the term trader and an investor. 

Difference between an investor and a trader

                          Investor                               Trader
The investor is different from a trader.

He/she invests capital for long-term gain.
The mindset of a trader is to buy and sell
securities for gaining short-term profits. 

An investor must allocate his/her capital based on an expected plan that includes financial returns in the future.

Types of investments that an investor makes are :

  • Equity
  • Debt
  • Securities
  • Real Estate
  • Infrastructure
  • Currency
  • Commodity
  • Token

There is no such difference in the investors of any market. A person who invest in the business and someone who purchases a stock is both investors. A shareholder is a person who owns stock. 

Types of investors:

Retail investors

These kinds of investors are the individual investors who work on the behalf of the umbrella companies. Angel investors and Sweat equity investors are part of Retail investors.

Institutional Investor

These kinds of investors work for the institutional sector like government and private banks, LIC, etc.

For example, Pension plans on the behalf of working and retired employees, businesses that require funding, Endowment funds used by universities, etc.

Conclusion

After understanding the difference between entrepreneur vs investor, it’s time to know the future opportunities and scope in both fields.

Since technology is upgrading day to day, months to months, and year to year, there’ll always be an upwards movement in the entrepreneur field, on the other hand, investors will look upon new stocks and business engagements to invest in. 

It’s the independent choice of an individual person what to choose between entrepreneur vs investor. The basic requirement in both fields is the ability to work under risk measures if one has patience and enough capability to deter any challenges then his future will shine in any of the on-field between entrepreneur vs investor.

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Posted by Elena Hudgens
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Elena Hudgens is an entrepreneur with 10+ years of experience. She started her journey by building her own e-commerce website on Shopify and turned her $1000 savings to millions in just 2 years. Soon she started different ventures in which she failed and succeeded. And now, she's on a mission to help other entrepreneurs with her life and business lessons.
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