How many startups make one Business…
Controversial topic right? I’ll share my thoughts, i will value your agreeing or opposing views – Lets learn!
I will provide contextual definitions for a startup and a business to support my case
A Startup is a temporary organization in search of a scalable, repeatable, profitable business model to validate its existence.
A business is any enterprise that makes profits from its activities.
A startup is in search of profitable business model
A business is already operating a profitable business model
This distinguishing factor is the basis of this topic “How many startups make one business”
If a startup cannot be expressly described as a business, then there should exist sufficient relationship between the concept of BUSINESS and START-UP to determine how much of a startup is a business and vice versa
Is winning an idea Pitch competition the beginning of a startup? or there’s more to it.
A Startup usually begins with an idea.
However the success of the startup depends heavily on the execution, team, timeliness, and loftiness of the idea.
In 2019, an ambitious young man approached me that he had an idea to set up a small business
A small trading business is not a start-up!
If you set up your trading business, and do your calculations using the useful life of the initial capital investment and it does not turn a profit.
You should by recommendation not set up the business
There is very limited ability to grow and growth is capital intensive due to the marginal nature of the profit. The cost to profit ratio is very high and new influx of capital will take considerably long time to break even. Hence, right from the small size, a profit will ensure continuity and eventual growth, possibly continental scale!
I did my due diligence by asking him a few questions about the idea and he answered brilliantly.
I gave him a significant part of the money he needed to start and i believe he started
However, many months down the line, i discovered he didn't set up the business let alone profit from it.
Brilliant ideas are meant to be executed not a means of getting rich quick
Start-ups have a VERY high fail rate while businesses have a high fail rate –
However, the story of Israel is a testament the many failures could mean that one has a thriving community of that very thing one has failed extensively at.
“Israelis seem to be on the other side of the spectrum. They don’t care about the social price of failure and they develop their projects regardless of the economic or political situation”Start-up Nation -The story of Israel’s economic miracle
In Conclusion, a startup is in the process of becoming a profitable business and should be nurtured as such.
Garrett Camp and Travis Kalanick’s idea of UBER became a multi billion dollar business after some years.
In 2003, Amazon turned a profit which was nine years after being founded and seven years after going public.
Today, Amazon has a trillion dollar valuation!
Bill and Scott Rasmussen, teamed up with Aetna insurance agent Ed Eagan to create an all-sports network in 1978. The sports network was known as ESPN.
After $6 million dollars and more than 6 years later ESPN turned a profit.
ESPN posted a revenue of $11 billion in 2013 and today is a dominating sports network!
The prospects are very high for startups and the fear of failure or the scare of the statistical high fail rate of startups must not be a point of deter for founders and firm believers in the start-up vision!
Founders must not be a scared of challenging the narrative and creating disruptions in the Eco-systems they find themselves
On this note, I’ll edit my definition of a startup
A Startup is a BUSINESS that is in search of a scalable, repeatable, profitable business model!
If you read or scrolled to this point,
Feel free to drop your thoughts- The community will like to learn from you
And your ideas to make us better – We value it the most