A business man may sound synonymous with an entrepreneur, but they are way different in their objectives, the way they operate and grow. I come from a family that has been in business for nearly 5 decades. We have a good connect with builders, home owners and architects in Chennai, since we are traders in Timber and plywoods and have multiple branches in the city.
To me, the first word that I associate with Business is PROFIT. That is the reason for the existence of a business. More the profit that a business makes, the more successful it is regarded to be. Several Retail sectors are in this bracket. Interestingly, the first word I associate with an Enterprise or Startup is VALUE. The innovation and the purpose of the organization is to make things faster, cheaper or better to its customer. Thus an entrepreneur’s very purpose and objective of becoming one is different.
We have seen some businesses fail when the economy goes through turbulent times. That is because the businesses have focused too much on making profit, while less in adding value.
Likewise, we have also seen startups shutdown and enterprises being toppled. They might have focused too much on Value and have an oversight of the profit formula. So, it is essential for a company to pay attention in providing value as well as making profit.
Scalability is the key for building an enterprise. A Business man focuses on being the vertical leader in his geography, while an entrepreneur wants every product or service to be built for a large scale. So, setting up systems to run a large business in auto-pilot is essential to transform it into an enterprise. It is also important for a company to scale globally with the use apt technology in place.
Valuation -Vs- Unit Economics is a debate often seen between Entrepreneurs and Business men. The valuation is a concept that is hardly understood by common people and the business community. Some new age companies are valued very high despite their low margins and profits. Welcome to the maze of Valuation 🙂
Though we spoke in Tip 1 about balancing the VALUE and PROFIT in a company, it is essential to know the fundamental concepts to be valued higher. The Valuation depends on several factors like scalability, market reach, potential to succeed, innovation, etc. It is based on this valuation that venture capitalists rely on for making their investments.
Innovation is a key factor in the valuation game. It is about creating the USP (Unique Selling Proposition) for your company. So, Business men need to focus more on innovating in their operations, sales, product or experience.
I would appreciate if you have more tips to add. Let me know your thoughts in the comments below. I’d like to know if you agree or disagree with me as well…