Startup or Entrepreneur: What is the Difference?
Last year, I started to write a business model for one of my best startup projects. I had made a hypothesis, conducted tests, and started to code an app. After a few months, I realized that I have a huge lack of knowledge about how to make a successful B2C business. I spent last summer diving into a number of books on marketing and business modeling. You can read the summary here.
Along with books, I also helped myself learn through extensive Google searches and Wikipedia articles. Afterward, there was only one question that remained: Am I an entrepreneur or a startup? I understood everything about how to make a business, how to start, what to be careful about, and how to manage money. But this question stood without an answer.
When summer ended, it clicked in my head. I consumed all the facts I had read and wrote down the next few — but very important — differences:
An entrepreneur has:
- Marketplace
- Customers
- Customer inquiries
- Initial capital
A startup has NO:
- Marketplace
- Customers
- Customer inquiries
- Initial capital
These few facts are mentioned everywhere in the books I read but are not as clear as they should be. I’m an engineer, and I have to admit that reading through all these stories was simply not one of my strengths. And I always missed the point.
If you want to understand all these, consider this example.
Let’s say that you are an entrepreneur and you have decided that you will start a business. You are a good mechanic and have a passion to maintain and repair cars. Almost all people are drivers and have a car. So, you have customers. Cars must be serviced, and there is still a place for your service in the marketplace, even if you have competition right across the street. You have a marketplace and customer inquiries. You have a garage and you keep some money in the bank for necessary equipment. You have initial capital.
Let’s say you are in a startup role. You have an idea to create a flying computer. There is no such thing in the marketplace — but it’s good to have one, because customers have a problem by constantly transferring laptops from one place to another. If they could get a flying computer, they would just run an app and the computer will follow them.
First of all, there is no such product in the marketplace, and people simply don’t know about it. So, as a startup, you have neither customers nor a marketplace. Worst of all, you have no customer inquiries and, of course, no initial capital. You need to innovate a flying computer, create it, and release it. This will cost you a large amount of capital.
I can say that an entrepreneur has a lot more chances to be successful. Their business is much more reliable. In comparison, the startup has to:
- Create a marketplace
- Create customers
- Create customer inquiries
- Get initial capital
In other words, a startup must convince customers to use his totally new product. A startup must have the power to change the world.
All of these points are significant for both an entrepreneur and a startup business to consider. I could say that entrepreneurs mostly offer a service for ordinary life — but startups drive the progress of the world. Ultimately, in their final phase, an entrepreneur creates a service for the initial product or service that was launched into existence by a startup.
Author: Matjaz Marussig
Editor: Caitlin Walsh
References
Love, H. (2016). The Start-Up J Curve: The Six Steps to Entrepreneurial Success. [Kindle version]. Retrieved from Amazon.com
Dr.Jonikas, D. (2017). Startup Evolution Curve From Idea to Profitable and Scalable Business: Startup Marketing Manual. Retrieved from Amazon.com
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