Some of the most commonly used terms are often the most misunderstood and least agreed upon. One example of this is the difference between a startup and a business. Now I’m no expert (having run neither of them), but I do read a lot and I pay $8 a month for hosting, so I can pretend to be! Here are my definitions for startup and business (again lifted from a Hacker News comment I made):
Startup: This is when your revenues can’t support the company and its employees at a standard they would expect. This could mean a lot of things, for instance
- You’re self funding but doing the ramen/living on a friend’s couch/wifi-freeloading super cheapo route. Maybe you’re making a profit but you don’t want to live like this forever.
- You’re living off of investment money unrelated to what your startup is producing: angel/VC money, cash from a prior successful exit, student loans, day job money, etc.
The key thing is that your idea and execution are currently unproven. You should be getting noticeably better each day as you improve your technology, your product, your marketing, your brand, your sales cycle, etc, (all these things create wealth but not necessarily money), trying to find the right combination of those things that lead to market acceptance and self-sustaining revenues. Or your goal might not be self-sustaining revenues but to create a product or technology or business that will be bought by another, larger company.
Business: A business is funded by its customers and revenues, and it has found a successful niche in the market. Once you get to this point, some of the pressure is off, although your niche and success is a moving target and you need to continue working and executing in order to get knocked out of it. There are completely different skills and personalities needed to nurture and grow a successful business/product as opposed to developing a new one and finding a market for it.