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?