Startup. Entrepreneur. Small business.  Our politicians use them as if they are interchangeable.  But, they are not- because of the mindset of those who are involved in the enterprises.  And, you need to know which one you are (or are considering), to understand what systems, controls, and assistance you may need to insure continued success.

I have been involved in new company development for decades.  (One was even a “skunk-works”, attempting to redefine an established company, changing its very nature from a mature, profitable business to one that served the business needs of the future.) My first “startup” began 40 years ago.  My next “startup” (actually 2) were 5 years later.  The next one- 7 years later (which led to spinoffs).  Enough.  None of these were part of the “dot com” boom- but they were all tech based.  However, my long-time associate (a venture capitalist) believes only one of them was really a “startup”, because only one involved venture or outside capital. I agree that this is the proper definition.  A startup is an entity based upon technical business that is venture capital (or public money) backed.  The risk reward ratio (when they succeed) is at least 10:1.  But, most, unfortunately, fail.  (By the way- when is a startup no longer a startup.  Is it the years since launch, revenue generated, or what?  Do you consider Facebook to still be a startup?)

My “startups” listed above were really entrepreneurial ventures.  The goal of an entrepreneur can be (nowadays) to generate lots of profit or to promote the efforts of non-profits (which need more and more business savvy).  The difference between an entrepreneur and startups or small businesses is the mindset of the entrepreneur.  If the entrepreneur goes after public or private capital, and the enterprise is of a technical nature, it is a startup.  (By the way, many entrepreneurs ACTIVELY elect to NOT become a “startup”- they don’t want the incessant drain of energy that accompanies being public and trying to maintain stock prices at one level or another.)  To differentiate the entrepreneur from the small business, we must first define the latter.

A small business could be a mom-and-pop store or a lifestyle business.  Business coaching, coffee shops, hardware stores come to mind.   Their competition is typically chain based (Ace Hardware, Starbucks) or much larger firms (McKinsey).  The small business survives by providing better products or better customer service- or both (not often).  Their key issue affecting small business is weathering economic conditions as they change. The difference between the small business and the entrepreneur is the degree of management and systems that are employed to maintain their business (including financial management) and their introduction of new technology.  (Here, I may insult some- but most lawyers are involved in small busineses.  Most lawyers work in entities of 5 persons or less, they resist change and technology, and operate to achieve a lifestyle for the partner.)

There’s also one more difference.  The DNA of the leaders.  No, not chromosomal, but their approaches to life.  Are they analytical?  Organized? Creative? Or Interpersonal?  Obviously, startups tend to be populated with analytics and organizers.  But, they need some “artists” among them- to create the product.  The startup may fail to attract the diversity it needs to sell its wares.  And, when there are booms (which is when many of them bloom), the analytic and operational (organized) foci help them cope with the growth.  But, as the boom evaporates, the latest and greatest technology is not winning the battle. They need the creative types to refocus the product to satisfy the aesthetics of the customer.

The entrepreneurs tend to have three of the four characteristics.  Which three depends upon the nature of their enterprise.  Generally, one of them is the creative side.  Their ability to grow the enterprise – and when to sell- depends upon their overall diversity.

The small businesses tend to have little DNA diversity.  This means there are less personality clashes, but it also means they may lose their way when the marketplace evolves.

Knowing your business type, you can determine what outside services may be needed to keep you in focus- and in business.

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