Big Ideas:

• Social Entrepreneurs focus on doing good in the world, not only profits.
• IdeaMensch summarizes the work of 33 social entrepreneurs making a difference.

IdeaMensch has a great post providing examples of  33 social entrepreneurs. These social entrepreneurs are proof that talented individuals can indeed make a substantial difference to the world.

Some of my favourite examples are:

Emile Cureau and Rachel Cope are developing a charitable web app called LazyAngel that allows Internet users to fight child malnutrition for free.

Print a Forest, aims to plant 75 trees for every tree used for printing on paper.

Matt Flannery is the co-founder of Kiva, the original global microfinance platform. Kiva benefits low-income entrepreneurs by offering microloans from people like you and me.

Kendra Stitt Robins is the founder and executive director of Project Night Night, a nonprofit organization dedicated to providing care packages for homeless and transient children living in shelters across the country.

Take a moment now to read about all the social entrepreneurs on IdeaMensch.

Action Items

• Get some inspiration and read about the 33 social entrepreneurs.
• Think about how you can shift your business or job to doing a little more good in the world?
• Profits are not enough for a meaningful life, plan on how you are going to make a difference.

Related posts:

1. Introductory Guide to Social Entrepreneurship
2. The Rise of Social Entrepreneurship
3. The Young are Taking Over the World

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Big Ideas:

• Social media connections are weak; real world meet ups are still essential.
• Smaller conferences focused around an activity build stronger connections.

The Rise of Anti-Conferences

It is more important than ever to make real world connections than ever, but conferences? Spending a few days with thousands of people frantically handing out business cards is a difficult way to establish meaningful connections.

TheNextWeb reported on the rising trend of anti-conferences:

I can go and swap my business card with 500 people at a conference, but at a smaller event I can make 100 solid relationships with people that last a lifetime.

Unconferences have been around for a while providing an unconventional and creative setting for people to meet and network, but I’m witnessing a trend for the conference aspect of an event, (thousands of participants watching a speaker, bad coffee, organized networking) being thrown out of the window and more activity conscious events being organized. Friends who went on Summit Series, an event for entrepreneurs on a charted cruise ship that sailed round the Bahamas, were raving about their yoga/music and shark tagging expeditions as well as the relationships they made onboard.

Social media has made it easier than ever to connect with thousands of people around the world, but most of those connections are tenuous at best. Real and lasting relationships come from  intimate real world gatherings where the focus is on something other than generating immediate leads.

Having attendees participate in activities like rock climbing, hiking, yoga, wine-tasting or cooking classes is a great ice breaker that immediately creates shared experiences.

Action Items:

• Organize a sporting or cultural activity for clients, suppliers and/or acquaintances that focus on people, not business.
• Make a consistent effort to meet other professionals without a hard sell. Focus on them, not you.
• Set aside 30 minutes a day to support and connect others online. Again, NO sales pitches.

Related posts:

1. How Web Videos Power Global Innovation – Another Great TED Video
2. Is Social Media Making us Less Human?
3. Social Capital is More Valuable than Money

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Big Idea:

• You can’t optimize yourself to greatness, outrageous results require outrageous actions.

Entrepreneurship, Lady Gaga Style

Love her or hate her, there is no denying that Lady Gaga is a superstar. She knows how to shock, entertain and continually push the bar. From bikini stage outfits to arriving at an awards ceremony in a man-carried egg, Lady Gaga knows how to make a splash.

Most businesses don’t think like Lady Gaga. Playing by the rules and doing what everyone else is doing is much safer than taking bold risks. That is why the state of business is so damn lousy. How often are you wowed by a company?

The Problem with Businesses

Ramit Sethi of Iwillteachyoutoberich.com wrote something that has bothered me for a while:

Years ago, American Airlines removed one olive from each first-class salad, resulting in a savings of $40,000/year. They are a massive public company with huge scale, so you can’t get those kinds of results. But the principle — focusing on small actions that give you incredibly huge results — is something you can do.

I am a huge fan of Ramit and I certainly believe in the idea of the Pareto Principle or the 80/20 rule where focusing on high impact areas can deliver disproportionate results, however I don’t think American Airlines cutting an olive from salads falls in that category.

Far too many businesses strive to cut costs and get more efficient as a way to success. That mentality might of worked in the industrial age, but we are long past that stage.

Do you think Lady Gaga has achieved the level of success she has because she is more efficient or better at cost cutting than the hundreds of thousands of less successful performers?

So many businesses are obsessed about keeping labour costs to some predetermined percentage of sales. Squeezing even an extra 0.1 percent can potentially add a lot of money to immediate profits but at what cost? Companies bullshit about how important customer service and employee satisfaction are, yet try to cut worker hours down to a bare minimum. The result is overworked, stress out employees and customers that are not getting satisfactory service.

What if those companies took a hit up front and actually increased the amount of staff on hand? What would be the long term benefit of a less stressed workforce or customers that can actually get the assistance they need?

United Airlines cut the olive from martinis in business class. Do you think those passengers noticed? I know some that did. What is the cost of an olive per business class traveler? They are saving five or ten cents on a fare that can be thousands of dollars.

That type of cost cutting is short sighted and self-defeating. I wonder how much the consultants were paid that provided the idea to cut an olive from the two airlines? My guess is that companies spending their time counting olives have much bigger problems to deal with.

Seth Godin said,

We see one organization after another, left unchecked, pushing miners or laborers or bureaucrats to exhaustion, all in the name of enhanced productivity.

Cash flow and costs are important but you can’t optimize your way to greatness. (Unless you do it to an extreme, Walmart style.) Instead of trying to giving your customers as little as possible, how about taking a cue from Lady Gaga and go full out for every interaction?

Action Items

• Are you running your business with an accountant or entrepreneur mindset?
• Are your trying to be more efficient or are you growing a business?
• Instead of trying to cut from your customers, think about where you can add more value.
• What small thing could you do for your customers or staff that would generate disproportionate results?
• Is there merit in diverting a portion of your marketing budget to making current customers happier? It is much cheaper to keep a current customer than it is to find a new one.

Related posts:

1. Do you Run a Business or a Company?
2. Social Capital is More Valuable than Money
3. How David Beats Goliath – Break the Rules to Succeed

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Big Ideas:

• Have many investors compete to fund you all at the same time.
• Scarcity tactics get people to buy, use those principles for investors, customers and hiring.

Venture hacks has a good, simple post on raising money for your startup.

Don’t talk to one investor at a time, talk to all of them at once. It’s the only way to get market-clearing terms.

Meeting every investor over a short period of time creates a positive feedback loop of social proof and scarcity that closes deals.

A big splash takes more time and money up front, but it generates much better results over the long haul than a slow grind.

Action Items:

• Can you ‘launch’ the funding stage of your business just like you are going to launch the business after you get money? A burst of excitement with a group of investors will be more effective than grinding it out one by one.
• Can you use similar scarcity tactics to get customers competing to buy from you? Limited time offers, auctions and early bird bonuses can all add that early buzz to quickly establish momentum.
• Look at hiring the same way. What do you have to do to get a flood of applicants competing to work for you? Can you bring many applicants in the same room together to show them that your firm is the place to work.

Related posts:

1. Social Capital is More Valuable than Money
2. Build a Company in Two Days: Speed in the IdeaEconomy
3. Is Your Business the Right Size?

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Big Ideas:

• You can’t win against bigger or more skilled competitors if you follow the same rules. Create your own rules to succeed.
• The underdog has to outwork the competition in unexpected ways.

Malcolm Gladwell has a great article in The New Yorker on how underdogs can triumph against more skilled opponents. (Thanks to Karol Gadja for the link.) There are many great military and sports examples of how unconventional strategies and outworking your competition are the only ways to succeed.

When an underdog fought like David, he usually won. But most of the time underdogs didn’t fight like David. Of the two hundred and two lopsided conflicts in Arreguín-Toft’s database, the underdog chose to go toe to toe with Goliath the conventional way a hundred and fifty-two times—and lost a hundred and nineteen times

Insurgents work harder than Goliath. But their other advantage is that they will do what is “socially horrifying”—they will challenge the conventions about how battles are supposed to be fought.

This type of strategy is at the heart of all business model innovation. As the old saying goes, “you can’t out Amazon, Amazon.” If you want to compete against established players you need to create new rules that favor your style of company.

• Selling T-shirts is a commodity business. Threadless.com turned it into a monthly design contest where customers vote on the best designs.
• Apple doesn’t compete on price and features with other computer companies. It sells premium priced, beautiful computers that work better because they monopolize the hardware and software.
• Installed software is expensive to buy and maintain. SaaS (Software as a Service) applications turn those purchases into a monthly subscription where data is always backed up and the software is always current.
• Discount European airlines can make more money from selling hotels, rental cars and upsells than they can from the flight itself. That is how they can give the flights away for next to free.
• Starbucks has a limited food selection that is shipped out of a central location. Great local cafes bake fresh pastries right on the premises.

Action Items

• What can you do to change how your industry works?
• Could you give away your main product in order to upsell other services?
• What unique skill or knowledge can you use to compete against larger companies?
• What is the biggest bottleneck in your industry? How can you completely bypass that bottleneck?
• Instead of selling services sporadically, can you charge a monthly subscription for an ongoing solution?

Related posts:

1. Practically Radical: Four Simple Truths About Leading Change and Making a Difference – William C. Taylor
2. Rejuvenate your Business Model with the Question Framework Exercise
3. Do you Run a Business or a Company?

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Big Ideas:

• Start ups need a different type of marketing expertise than more established companies.
• Growth hackers can focus on scalable and repeatable ways to grow your business.

Sean Ellis of Startup-Marketing.com coined a fantastic term, Growth Hacker.

Once startups are ready to scale, their biggest challenge is often hiring someone capable of leading the growth charge.   A marketer with the right talents and approach can kick some serious ass once product-market fit and an efficient conversion/monetization process have been proven.

After product-market fit and an efficient conversion process, the next critical step is finding scalable, repeatable and sustainable ways to grow the business.  If you can’t do this, nothing else really matters.

The Problem with Most Businesses

I have seen many marketing and social media consultants put so much emphasis on high level strategy, positioning, branding, logo design, etc. that the basic and easy opportunities to generate leads and customers remain neglected.

• Who cares about your beautiful $20,000 brochureware website, if there is no content there to attract organic traffic or entice visitors to want to learn more about your offering?
• Your professionally planned social media implementation doesn’t matter if your customers are online neophytes. Getting thousands of followers that will never be interested in your business is even worse.
• Instead of looking at more effective ways of advertising, perhaps you should deliver a product or service worth buying.

A talented growth hacker can help you find the low hanging fruit to maximize your marketing budget.

Action Items:

• A compelling business model comes first. You better have a good scalable way to create value for customers and get paid for it.
• Make your business stand out from competitors. What value propositions do you offer? Make sure this is clearly communicated without the generic marketing fluff like “Customer service is our highest priority.”
• Deliver on your value propositions. Service and quality in English speaking countries is so lousy now. The cheapest marketing is to actually care about customers.
• Craft a unique story. If you want to be remembered, do something memorable. Check out my post on how a real estate agent uses bacon to stand out.
• Research the keywords your customers are searching for and then optimize your website for those phrases.
• Create online content your customers want to read, watch, listen to and share.
• Develop effective lead nurturing campaigns to convert casual browsers into interested customers.
• Have clear calls-to-action on all your marketing materials.
• Engage people online and offline as humans with real conversations, not marketing pitches.
• Consistently deliver more than you promise.

Am I missing anything? Let me know in the comments.

Related posts:

1. Is Your Business the Right Size?
2. The Gamification of Business – Example of Kurasushi in Japan
3. Business Model Management is the Only Way to Stay Competive

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Big Ideas:

• Is your business the right size?
• Are you expanding to satisfy your ego or because it is essential for your business?
• There is a right scale for every business, straying from that point will harm your economic viability.
• For most businesses, there are diminishing returns on investments in staff or technology.

Bigger is not Better

Talk to any entrepreneur and you will find someone that wants to grow a business. There is a natural assumption that bigger is better. Bigger may be better for our egos, a fifty employee company sounds much better than a five person company, the problem is that bigger is not always better for our bank accounts.

My wife and I ran a small service business for about ten years. In the beginning we worked hard, cared a lot about our customers and grew steadily. It wasn’t long until we were making a great income and were turning customers away.

Then we started to expand. We hired more staff and opened new locations. We noticed immediately that every new employee or investment we made contributed less and less to revenues and profits. The work my wife and I could do with minimal hassle, required 3 or 4 outside staff or would require exorbitant salaries to attract rock star talent. The worst part was that my time was being spent on boring administrative tasks that added little real value to our customers. Suddenly I was focused on hiring, training, managing, sales, marketing, accounting and countless other tasks that kept popping up. By expanding, my wife and I were working more and making less money.

Sure it was foreseeable that we could have reached a point where we could have afforded to hire staff to do all the administrative work, but that was not an incremental growth level. It would have required us to be 5 or even 10 times bigger than we were. It would have taken a lot of time and money to reach that higher level, and even then it was very likely that we would have been too big for the market to support.

Eventually, we decided against the growth and scaled back to just the two of us again with non-essential work like accounting, web development and graphic design outsourced to professionals. We made more money with shorter work weeks, longer holidays and much less hassles.

The Right Size

In the blog post, An atomic theory of business size, Seth Godin points out that a business can not only be too big, but it can also be too small.

Rightsizing your business is one of the most important decisions you can make. Just because you’re thriving at one scale doesn’t mean that a little more effort or a little more investment magically take you to the next. They probably don’t.

Several times I’ve run businesses that the market liked but couldn’t find the right scale… adding more people didn’t add a significant enough amount of revenue, and fewer people would have cost us our customer base. Just because it’s a good idea doesn’t mean that there’s a scale that works.

How to Really Get Big

Growth for growth’s sake is foolish. If you have a successful business that is generating good profits and it is work you enjoy than be happy where you are and invest your free time in projects you enjoy.

If you really need to change to the world, than look for a better business model. With innovative uses of technology and new business models, it certainly is possible for small teams to accomplish amazing things. However, it is unlikely that any company will miraculously achieve phenomenal returns just by scaling the old business model. Doubling staff will not double sales, and it definitely won’t double profits. Doing more of what you did before will only bring more administrative hassles.

Action Items:

• Is your business the right size?
• Is your optimal profit level at a higher or lower revenue level?
• If your business can’t effectively scale up or down, are you satisfied at the level you are at?
• If you can’t find the right scale, maybe it is time to completely reinvent your business model?

Related posts:

1. Do you Run a Business or a Company?
2. Business Model Management is the Only Way to Stay Competive
3. Business Plans are Dead: Unplan Your Business

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Big Ideas:

Use the Question Framework Exercise to discover new business models and better ways to create value for your customers.

Let’s face it, most businesses are pretty underwhelming. They offer similar goods at about the same price points, generally with lousy service. For every Apple, there are dozens of other companies competing on price. For every, Zappos, there are countless competitors basically doing the same as everyone else. Creativity and innovation are the only ways to stand out above the competition. That generally means radically reinventing your business model.

The Question Framework Exercise

Here is my Question Framework for developing new business opportunities. It is best done with a diverse team of people but it can be valuable for individuals as well.

Don’t dismiss any ideas. The entire point is to examine the furthest extremes to see if there is any value at that edges. That is how breakthroughs are achieved. You can’t incrementally improve your way to a new business model. That is exactly the reason small and nimble startups are devastating old industries. Blockbuster didn’t create Netflicks and Microsoft didn’t create Google. They couldn’t have. It would have required a radically different way of thinking.

The Question Framework Exercise can help you discover radical and  compelling business models. Doing what everyone else is doing is the road to declining profit margins and intense competition.

Get out some flip charts or paper the walls of a room and write the following questions at the top of each section:

Who? What? Where? Why? When? How? How much? How many?

Many people are visual learners so I find it helpful to draw simple icons for each major idea. For example, a stick man with a question mark can be used for “Who?” “What?” might be a box with a question mark, etc.

Don’ t be afraid to jump around and add ideas where every they fit. Keep it very unstructured in the beginning.

In this example, I used a cafe owner.

Who?

Who buys? – Students doing homework, business people meeting or using the Internet, commuters getting coffee on the way to work. etc.

From here you can start experimenting.

• Students – Does it make sense to create a social venue for concerts, art exhibitions, etc.
• Business people – could this be a shared office space? Maybe they want private offices or conference rooms.
• Commuters – Could you sell a full breakfast? Do you need a drive through window to speed up the sales process? Should you be at a gas station or near a busy intersection because commuters are stopping there anyway?
• Coffee connoisseurs – Should you focus on premium coffees?
• Who delivers? – students, housewives, perhaps you could partner with another deliver service to jointly distribute.
• Who makes it? – Bikini clad servers, coffee experts, vending machines?
• Who is the most profitable segment?
• Who is the least profitable?

What?

As you can see above, what you sell is directly related to who is buying. For all the charts, you can put your main customer segments down the left side (students, business people, connoisseurs, commuters, etc.)

What do you sell? Are you selling coffee or a comfortable place for people to meet?

• Coffee – Could you offer more variety? Higher quality? A variety of roasts? More ethically sourced coffee?
• Meeting Space – Should you have more comfortable chairs? Should you have private meeting rooms? Should the atmosphere be lively or quiet?
• Convenience – Are several small kiosks better than a larger cafe?
• Coffee Culture – Should you market high-end coffee makers and espresso machines.

What complimentary products and services could you offer for each of the segment you identified in the “Who?” section.

• Students – Copy and printing services. Designer T-Shirts,
• Business People – Networking groups, office space, answering service.
• Commuters – dry cleaning drop off service
• Connoisseurs – gourmet beans, high-end espresso machines

What would change in your business if you simplified your product offering?

• For example, only 3 or 4 espresso products with one or two pastries.
• Maybe you could offer better quality products at a lower price.
• Maybe this would make the ordering process more streamlined so customers would get served faster.

What if you greatly expanded your offering?

• 100 different coffee beans.
• Maybe you would attract the aficionados.
• Maybe customers would buy in much larger quantities.

Where?

Again, as you start hashing out these questions you will notice overlap. Where you sell will depend on the segments you discovered in the “Who?” section.

Where do you sell?

• Are you selling premium coffees that people take home?
• Maybe it could be an Internet focused business?
• Maybe you could have a monthly coffee subscription?
• Should you be located in a trendy coffee district or near busy thoroughfares?
• Should you set up near a university?
• Should you be in a high end furniture district?
• Should you deliver coffee directly to offices?
• Should you do catering services for meetings?

Why?

Why would customers choose your company?

• Are you socially conscious?
• Do you have the best coffee?
• Are you the cheapest?
• Do you have the best selection?
• Is the atmosphere of the cafe important?
• Are you active in the community?
• Loyalty programs?
• Innovative marketing?

When?

When do customers buy?

• In the morning?
• Afternoon?
• During working hours?
• On the weekend?
• After school?

How?

How do customers buy?

• Internet?
• Drive through windows?

How is the coffee made?

• Automated vending machines?
• Expert barristas?

How is the coffee sourced?

• Purchased directly from growers.
• Investing in developing countries.

How is the coffee roasted?

• Onsite so that there is always a roasting aroma.
• Does this add to the experience of the cafe?

How much?

• Should you be very expensive to convey exclusivity and high quality?
• What if you doubled your prices? What would you have to change to keep customers? Would you be more profitable?
• Could you offer the coffee for free, in exchange for advertising on cups or the up sell of other products?
• Could free coffee be the loss leader for other products?
• Could the coffee be an inexpensive sampler to get consumers to buy beans?

How many?

• Are you selling one cup of coffee at a time or are you focusing on large conferences and events where you sell hundreds?
• Could you have a buyers club for beans where you can offer discounts if enough people agreed to purchase at the same time?
• How many locations? Should you have kiosks on both sides of a street to make it easy for commuters to quickly stop by?
• How would the business change if you had no staff? (vending machines)
• What if you tripled the staff and increased the quality?
• What if you had ten times the volume in one location? What would you have to do differently?

These questions and answers are just a starting point. A good group of people can come up with many more opportunities in a short time. Don’t dismiss outrageous ideas because that is where the real breakthroughs are discovered.

Other companies have succeeded by asking questions like:

• What if we didn’t use the hub and spoke model for airlines?
• What if we gave our product away for free and made it up with advertising?
• What if we stopped using gasoline powered cars?
• What if we don’t need to physically attend a university to learn?
• What if we didn’t rent an office space any longer?
• What if workers could work any hours they wanted?
• What if our employees were all over the world and never met?

Question your assumptions and you will find new opportunities. It is important to learn from the past, but don’t let the old way of doing things constrain your possibilities.

If you need help discovering new business models, I can help. Email me at (john (at) ideaeconomy (dot) net.

Further Reading

Dan Roam’s book The Back of the Napkin offers some great techniques for both visually representing ideas and questioning assumptions.
Download the Business Model Canvas for a different look at the same types of questions from Business Model Generation.

Related posts:

1. Do you Run a Business or a Company?
2. An Amazing Example of Curated Content: Free as a Business Model
3. Business Model Generation Book

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Big Ideas:

• “The only way to stand out from the crowd is to stand for something special.”
• Look at your business from the perspective of different CEOs to gain insights and make creative breakthroughs.
• Focus on what is right with your business, not just what is wrong.

FastCompany magazine cofounder and author of the book, Practically Radical: Not-So-Crazy Ways to Transform Your Company, Shake Up Your Industry, and Challenge Yourself, offers four simple principles to transform your business in this ChangeThis PDF.

We are living through the age of disruption. You can’t do big things if you’re content with doing things a little better than everyone else or a little differently than how you did them before. In an era of hyper-competition and non-stop dislocation, the only way to stand out from the crowd is to stand for something special. Today, the most successful organizations don’t just out-compete their rivals, they redefine the terms of competition by embracing one-of-a-kind ideas in a world filled with me-too thinking.

There’s nothing quite as exhilarating as watching a young organization reshape its field—a blank-sheet-of-paper startup that transforms an industry, a challenger brand that redefines a market. Alas, there’s nothing quite as common as watching an established organization—a company that reached great heights in one era of technology, markets, and culture—struggle to regain its stature as a force for leadership in a new era. The work of deep-seated, sustainable change remains the hardest work there is.

Here are four of those principles—simple rules for transforming your  company, shaking up your industry, and challenging yourself

1. What you see shapes how you change
We’ve all experienced déjà vu—looking at an unfamiliar situation and feeling like you’ve seen it before. Vuja dé is the flip side of that—looking at a familiar situation (an industry you’ve worked in for decades, products you’ve worked on for years) as if you’ve never seen it before, and, with that fresh perspective, developing a distinctive point of view on the future.
TBWA also uses what it calls the “CEO Hat” exercise to encourage organizations with tunnel vision to develop a new line of sight. Participants search for out-of-the-box answers to big strategic questions by reaching into boxes filled with hats, shirts, and other paraphernalia from breakthrough organizations such as Apple, Virgin, Target, Southwest Airlines—and then adopt the mindset of those free-thinking companies as they think about the questions with their clients. “We define possible strategies for companies through the eyes and values and under the leadership of a different CEO,” explains Laurie Coots, TBWA’s chief marketing officer. “The sheer act of being free to think like somebody else gives you permission to generate ideas that you might not get to otherwise.

2. Where you look shapes what you see
The most creative leaders I’ve met don’t aspire to learn from the “best in class” in their industry—especially when best in class isn’t all that great. Instead, they aspire to learn from innovators far outside their industry as a way to shake things up and leapfrog the competition. Ideas that are routine in one industry can be revolutionary when they migrate to another industry, especially when those ideas challenge the prevailing assumptions that define so many industries

3. There’s nothing wrong with your organization that can’t be fixed by what’s right with your organization.
I’m convinced that one of the big reasons for the failure of so many change programs is that by focusing almost solely on what’s wrong with their organizations, and by importing off-the-shelf strategies devised by outside experts consumed with what’s new, leaders undervalue what’s right with their organizations, and overlook home-grown strategies rooted in the wisdom of the past.

4. Success is not just about thinking differently from the competition
Even the most creative leaders recognize that long-term success is not just about thinking differently from other companies. It is also, and perhaps more importantly, about caring more than other companies—about customers, about colleagues, about how the organization conducts itself in a world with endless temptations to cut corners and compromise on values. For leaders, the pressing question isn’t just what separates you from the competition in the marketplace. It’s also what holds you together in the workplace.

Action Items:

• Use the CEO Hat excercise to look at your business and industry with the perspective of different executives? What would Richard Branson or Steve Jobs do with your business model?
• Look at what is working in other industries and try to bring it to your business? The next time you go to a magazine rack, read something completely unrelated to your business. Find out the most successful companies in that industry and analyze what they are doing right.
• Don’t focus on the negative. What is right about your firm? Can you build on that to really become exemplary?
• The hardest part of business and life is building and maintaining quality relationships. Businesses shouldn’t only be run by numbers. What can you do to care more about your customers and employees?

Links:
Practically Radical PDF
Practically Radical Book on Amazon
Willliam C. Taylor Website
Follow Taylor on Twitter

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1. Do you Run a Business or a Company?

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Big Ideas: A business is about selling something that people want.
A company is focused on the organization first.

Boris from The Next Web Entrepreneur wrote about an interesting quote from a book about Apple Computers called ‘Return to the Little Kingdom.’

“Apple Computer started life as a business, not a company”

Boris goes on to explain the distinction as:

Sometimes someone finds something that other people want. They will start selling it, get more orders, hire an assistant, do some marketing and slowly grow. Thats a business turning into a company.

The other option is someone with a grand idea, who raises some money, writes a plan, finds partners, starts building, grows his company and then his business. That’s a company with a business.

Both are fine. There isn’t just one way to do things. Both have their challenges, risks and advantages. What is important is to know what kind of entrepreneur you are, if you have an opportunity that starts as a business or that needs a company. A lot of Internet start-ups are started as companies. The company motto seems to be ‘Build it and they will come’. And of course as soon as ‘they’ show up you might be able to sell some ads or products, or a membership. There are some exceptions where entrepreneurs start offering something which turns out to be very popular and profitable, right from the start. But those are the exceptions.

The differences between a business and company offer some intriguing insights and might be a worthwhile business planning exercise for entrepreneurs.

The venture capital model is all about the ‘company.’ The management team, advisers and investors are the priority and the idea or business model is expected to change. I would go so far as to say that ‘companies’ are about processes, structures and controls. In many ways, that is not even entrepreneurship in my view.

Starting with the ‘business’ first is about the product or service. It is creating and selling something that people want to buy. I find ‘businesses’ much more entrepreneurial and this concept forms the basis of the popular and romantic idea of the garage start up.

A ‘business’ is about creating value for others. I can’t stop thinking of ‘companies’ as money focused greed machines the likes of Enron and Wall Street Financiers.

What do you think?

Are ‘companies’ still entrepreneurial?
Does the distinction between a ‘business’ and ‘company’ matter?

Related posts:

1. Build a Company in Two Days: Speed in the IdeaEconomy
2. Business Plans are Dead: Unplan Your Business
3. How Web Videos Power Global Innovation – Another Great TED Video

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