I have gone on record as having discovered the three types of business (trade, industrial and clientric). My careful readers noticed that I am dealing with a separate subject when I talk about the rare ‘entrepreneurial modern company’. What is this all about?
Let us start with the fact that the rare entrepreneurial modern company can be any of the three types of business. It is unlikely to take the ‘trade’ form because the trade form of business is only determined to sell enough to continue in business. It can be gigantic like Mitsubishi Trading Company but the goal is always ‘just to make the next sale’. Margins are tiny and good credit deals are very important.
It is unlikely to be ‘clientric’ where the goal is to maintain the client relationship for life. The operational goal is to be current in the industry, offer highly appropriate service to the client and provide the service for a lifetime. There are national law firms and banks, there are international accounting firms and ad agencies that are (or should be) clientric. But they are exceptions.
It looks like most entrepreneurial modern companies are ‘industrial’ types of business with the goal of reducing costs.
The only distinction between an ordinary company and an ‘entrepreneurial modern’ company is that the entrepreneurial ones are changing the status quo over a large area. As opposed to being local.
Everywhere there are people with money, there will be a cluster of businesses, effectively a shopping center, to service those people’s needs and desires. The entrepreneurial modern business is one that introduces a new product or service to this market and usually to multiple markets. The multiple markets can be all small towns close to American farmers, like the original Walmarts.
It can be the unique cosmetics with a ‘natural orientation’ like the first Body Shop that opened in Berkeley, a home to many ‘organic’ ‘natural’ businesses. It was local in Berkeley and became local next in San Francisco and in a third Bay Area location. It sold the name and designs to a global ‘industrial scale’ company that took it international. It was an ‘entrepreneurial modern company’ when it innovated locally, and again when it opened in new locations around the world. But then it became part of the status quo. A local shopping mall store serving local needs and desires everywhere.
There is nothing novel in this concept. What distinguishes my observation from the trite political saying that ‘we need to support small business because it generates the majority of new jobs’? Which is BS.
The distinction is that the entrepreneurial modern companies begin with a new or novel product or service; and then grow and create new markets that in turn create new jobs. Helping every small new startup is a separate and fairly unrelated issue. Most innovative new startups fail. As they should.
Only a few startups create new markets and still fewer have the managerial talent to grow or sell out to a business that will grow.