If you’re plotting your career climb to the top, you might be torn between working as an executive for a company or being your own boss. The differences between an entrepreneur and executive often lie more in their levels of autonomy, rather than the work they perform. Understanding the key differences between the two will help you decide which career goal is right for you.
Executives are the top managers at a business, either serving as department heads or as part of an executive management team that works closely with an owner or board of directors. Functional managers often take the title of director or vice president, such as director of sales or vice president of human relations. Those who help run the overall business form what is known as the C-suite, which consists of executives such as the chief executive officer, chief financial officer and chief operating officer. Other titles may include chief marketing officer, chief information officer, chairman of the board and president.
Executives are often more involved in long-term strategic planning for their areas than they are in the hands-on, day-to-day operations of departments. For example, a chief financial officer uses research and data to create strategies for maintaining cash flow, setting profit goals, managing debt, developing budgets and investing excess cash. Nonexecutive accountants and bookkeepers handle tasks such as sending out bills, making deposits and updating ledgers. A functional executive, such as a director of marketing, creates strategies for products, pricing, promotion, brand and distribution. His subordinates create the ads, promotions and social media campaigns. Executives are often the most highly paid at a business, also receiving perks, stock or attractive severance packages. Because they are often not business owners, executives have less financial and legal risk if a business doesn’t perform well. Executives must have team-building and persuasion skills because they often don’t have final say over company decisions. This is opposed to entrepreneur-owners who have ultimate authority on all decisions.
Entrepreneurs start or buy and manage businesses. They take titles such as president, CEO, owner or founder. If an entrepreneur has several equal partners, or is a subordinate to a key investor, he might take a general partner, president or CEO title. If the company an entrepreneur starts is incorporated and has a board of directors, the entrepreneur might be a member of the board of directors and take the title of chairman of the board.
Entrepreneurs are often business owners, although some focus on investing in others’ businesses or brokering business deals. Entrepreneurs often have product or service expertise, creating the business’s core sales revenue. If they launch a business, entrepreneurs write the business plan, secure funding and handle all paperwork associated with starting a business. As the president or CEO, an entrepreneur might sit at the top of the organizational chart, managing the executive team at a large business or all of the employees at a small one. An entrepreneur who starts a small business often starts out overseeing all areas of the company, using contractors, one or two key employees or performing all of the work himself. Entrepreneurs usually share in the profits of a business or reap the benefits of a company sale because of their ownership. On the downside, they might not be guaranteed any payment if the business doesn’t perform well and might even be personally responsible for a business’s liabilities. This highlights the risk many entrepreneurs are willing to take.