I want to introduce you to the concept of a startup venture in comparison to a lifestyle business. Ok! Understanding this is critical to using the information on the site and helps you in building and growing your business. Now lots of the information is useful by scenarios but in some scenario’s then information is applied to startup and someone applies to lifestyle business.
So first of all what is a Lifestyle business? This can be any shop. A small business that is basically for the purpose of providing the building a lifestyle or income to the individual, so they can continue carrying on that business as their job or profession that will bring income from it for them. They generally compensate themselves out of profits and pull any profit at the end of the year potentially out of the business you compensate themselves. Funding is generally done from personal assets to get the business started then you move into small business or larger commercial forms and etc. So any way you come up with earning money to fund the business yourself and in general, you don’t look for outside investors, something like that fund the business.
Generally, business is an idea closely held so the organization structure is kept as simple as possible generally a corporation etc.
Now let’s compare that to the startup. The startup is more tend to a project management situation than it is to run a small business. Basically, it is the organization of resources around a new idea or sometimes not but an idea that has the potential to scale and significant growth potential. So the entrepreneur rather than trying to create a lifestyle business for him or herself, she is basically building a project that she can grow as rapidly as possible and they one day potentially exit by selling the business or merging the business with another business.
So again its more tend to project management ideas to simply running or doing daily affairs associated with a small business. Lots of the startup entrepreneurs say that she spends the time working on the business rather than in the business. She can hire or contract someone to run the business or build a team to run the business and she may oversee upon operations.
But generally, she is working on building the business or securing more resource such as funding, assets etc. makes a certain growth plan. The startup entrepreneurs generally not concerned with turning a profit. Their concern is increasing revenue is growing. Generally, the startup would lose money throughout the entire idea of its life. Often till a point of exit. So it goes through the growth plan that is losing money, losing money but it’s growing, growing and it’s able to put more money in there through investment or fund arrangements where basically every dollar adding creates more value or potential value in the form of customer acquisitions or sales etc. So every dollar invested creates more growth than the value of that dollar. So again it’s a prime target for investors. The investors who are willing to put their money in there because after a certain period of time the business will be sell or there will be an exit where they can perceive a return on their investment at the time of sell.
So the investors are not looking for compensation on the business the way you are in a lifestyle business everyone is simply looking to grow the business as quickly as possible to reach certain growth of objectives.
Now like we say the lifestyle business typically you are going to have the fund that could be personal fund, friends, family, small business are aware of starting adventure you may start out early that way but your objective is to reinvest every ounce of profits or refund the business back in the business to continue to grow it.
Or in most cases seek some form of outside investment early on to ensure investors later on to venture catalysts where the money is used to just grow the business than you spill the money as quickly as possible to achieve that growth as quickly as possible. So that’s again is a complete difference in the funding methods of them available between a lifestyle business a startup venture.
Then you have the structure. A startup venture can go through a number of structures to start may be a partnership with to start with limited liability organizations then to a corporate form by the time you get to outside investment or they are going to prefer shares as stock in the business that gives them preferences when the business has certain rise in the business that is different from those say of the entrepreneur new or old owner who may continue to work in the business on a daily affairs or manage the daily affairs.
Anyway, the structure of the business generally becomes far more complicated in a startup venture than the lifestyle business. This is just a brief description of or a brief overview of what the differences between the two are!
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