Know the difference between a CEO and an entrepreneur

There is a lot of ambiguity when it comes to differentiating between a CEO and an entrepreneur. There is a common assumption that if you're an entrepreneur, you are inherently CEO material. And if you're a CEO, you are, by definition, an entrepreneur. BUT it is a grave misconception.

Know the difference between a CEO and an entrepreneur

The ugly truth is that being an effective CEO, or an entrepreneur is two highly different skill sets because grounding a company and leading it isn’t quite the same!

Read on to identify which one you are.


Who is an entrepreneur?

An entrepreneur is one who has the vision for setting up a business undertaking after seeing an opportunity in the marketplace. They assume the financial risk in the expectation of turning the idea into a profitable business.

In the simpler sense, entrepreneurs build a marketing strategy, hire labour, purchase sources and financing, and supply leadership and management for the enterprise. Entrepreneurs play a vital role in the financial aspect, using the skills and initiative necessary to anticipate wants and convey new ideas into the market. Entrepreneurs who successfully thrive in taking up the dangers of a startup are rewarded with profits, fame, and continued development opportunities.

In a nutshell, what it requires to be an entrepreneur involve the following crucial choices:

  • Selecting the marketplace
  • Identifying the ideal customer
  • Setting goals
  • Building teams
  • Understanding the competition
  • Raising funds
  • Embracing change
  • Leveraging challenges

If you can rightfully take these decisions — fantastic! You have what it takes to be an entrepreneur.


Who is a CEO?

CEO stands for Chief Executive Officer. The CEO is the spearhead of the organization and has the ultimate authority to make final decisions.

A CEO defines the corporate culture, governs the companies’ overall mission and core values and makes sure all business is done in concurrence to that mission. He/she is responsible for creating, planning, implementing, and integrating the strategic direction of an organization in order to meet its financial goals.

The CEO makes certain that the organization’s leadership maintains constant cognizance of both the external and internal competitive landscape, prospects for expansion, customers, markets, new industry developments and standards.


Defining the difference between the two titles

The major difference between a CEO and an entrepreneur is that while a CEO has to be aware of the future, their primary job is to manage the present. They are in the position to gauge what's happening in the market today and are not supposed to spend hours thinking about what could potentially occur down the road.

They are not just titles. Rather, they are different approaches to work. The approach of many CEOs is to be risk-averse, whereas entrepreneurs tend to be more willing to embrace risk.

When you are starting out to build a company, you're an entrepreneur, constantly thinking about how to shake up the market and do something different. But after a certain point assuming all goes well and your company has grown, there arrives the need for a CEO.

A CEO, instead of thinking about how to expand into new markets, contemplates how to improve upon what has already been built. He/she must adopt a broader perspective. CEOs have budgets to work within, metrics to hit, and stakeholders to answer to. This means they have to function with a more formal style than an entrepreneur, and risk must be more deeply measured.

To conclude, while there are always exceptions, entrepreneurs don’t necessarily make good CEOs. Just because they’ve had an innovative idea and executed it doesn’t mean they’re equipped with the training, skills, experience or even the mindset necessary to run a business.