Thursday, March 03, 2005

Comments R US

I have been remiss in failing to acknowledge a milestone for this blog: our First Comment!
A visitor named Shoestrings comments on our Feb. 10 post, "Why Small Business Rocks".

I was opining that it is small business that is responsible for most innovation in business today – and that big business recognizes that its role is to spot the successful entrepreneurs and buy them out. I suggested this is a good thing, because the entrepreneurs are then free to start more innovative businesses – this time with cash bulging out of their pockets (which isn’t always a positive, but let’s accept it as such for now).

Shoestrings makes a good point about the motives of entrepreneurs who start a business with the intention of selling out to “big-assed corporates.” He questions the long-term success of any business that puts “selling out” ahead of serving the customer.

The point I was trying to make, though, is not that most entrepreneurs start a business as Step One toward selling out. In my experience, people start businesses to fill a market gap and fulfill their own needs. Yes, a small minority are started with the intention of selling out, just as some homebuyers purchase real estate with the goal of flipping it for a quick profit. You see this mostly in the technology businesses that are designed from Day One to attract the interest of venture capitalists; the founders use the term “exit strategy” a lot.

For the most part, however, people build businesses in order to prove a theory or earn a living. Early on, success is just a remote concept, only dimly perceived, a light shining in a distant harbour on a foggy night. To my mind, the best businesses are not those that are founded with the intention of selling out, but those that provide a product or service better than anyone else in the market. All the success they enjoy follows from that.

Thanks for the comment, Shoestrings. Feel free to speak up any time.

1 comment:

Business Entrepreneurs said...

I think it is right to say that some businesses are set-up right from the start to sell out when it achieves the targeted flipping price. However, I know a few friends that would like to hand down their businesses to their kids when they retire.