Entrepreneur in 1911: Schumpeter's innovator

How do entrepreneurs actually make money? Three ways: a salary they set themselves, which is often minimal in the early years; profit distributions once the business earns more than it spends; and equity — the ownership stake whose value is realized only if the company is sold, listed or pays dividends. Most entrepreneurial wealth comes from the third, which most founders never reach.

Across the US and most OECD countries, roughly half of new employer firms survive five years, and about a third reach ten. The often-quoted "90% of startups fail" describes venture-style outcomes, where anything short of a large exit counts as failure. Plain survival is far more common than the mythology suggests — and still far from guaranteed.

What is the difference between an entrepreneur and a small-business owner? The words overlap, but economists since Joseph Schumpeter reserve "entrepreneur" for someone attempting a new combination — a new product, method, market or business model — while a livelihood business repeats a proven formula locally. Both carry personal risk and set their own pay. A restaurant can be either, depending on whether it is copying or inventing.