The difference between business and startup
It’s time to draw clear lines in this topic. With a twenty-first century outside, it’s a little bit weird even to discuss it.
So, business means that you take an existing business model, realize it, and make (or not) money. The keyword here is the EXISTING BUSINESS MODEL. This is supposed to mean that all its elements (valuable proposition, sales channels, expenses, necessary partnerships, etc.) are validated in practice by others and work properly.
The goal of a business is to make money.
Key features of a business:
– It already exists
– You can buy a franchise
– There is a lot of theory on how to start it alone
– You can hire a director and entrust him with a project
Examples of businesses:
– A restaurant
– Mobile games production
– Construction company
– Motor vehicle production
Startup is a condition of your inception BEFORE BUSINESS, when one or more elements of a business model are unknown. There could be a lot of unknown stuff or just a few things.
For instance, Tesla is a startup with a lot of unknown elements. It is clear what product to sell. It is also clear to whom one should sell this product, for which price, and through what channels (dealership or website). However, it is unknown how many people will buy this product (market), how often you will need to repair this product (economy of a project), when a product will become profitable (it’s also an economy of a project), etc.
The aim of a startup is to get the facts and to fill up the missing elements of business models with these facts.
Key features of a startup:
– There is no exact analog
– It’s impossible to purchase a franchise
– There is a theory, but it is not enough to minimize risks to 0%
– It’s impossible to hire a director with an MBA and get a success
Examples of startups:
– A restaurant that is open overnight only and only selling a 5$ fish with a delivery
– A construction company that is selling 3D-printed roundhouses by a subscription
– Production and sales of self-balancing intellectual scooters for cities
And finally, why are most of the businesses bankrupting even though their business models are well-known? This is mainly because new businesses are started by amateurs who make a lot of mistakes at the stage of planning, and even more – at the realization stage. Those businesses that replicate their model (e.g., MacDonald’s or WeWork) have a very high percentage of success when opening subsidiaries.