Kevin Johansen: There’s a difference between a Company (Root word: ‘Companion’) and a Business (Root word: ‘Busy’). In simple terms, I see people in a Company as fellow travelers and people in a business as production figures and payroll costs. From this perspective a decision that’s good for business is not always good for the Company. Does this distinction seem a bit thin to you? If so, you’ve likely never built a successful business.

Generating and managing the numbers necessary to run a business is generally the easiest part of building one. Market demographics, production costs, payroll & accounting are all pretty linear, and they all come with formulas that we can shape them with. That’s why we like them. They’re tangible. They do what they’re told. Work with the numbers for a while until they tell the story you think you need to tell, add some buzzwords & some pretty graphics and Voila! You have a business plan!

People, however, are not linear, are rarely logical and at the end of the day can be quantified statistically (damned lies and statistically!) at best. This makes recruiting, managing and motivating people harder than developing clean and efficient source code, navigating your new cure for cancer through a cell wall or figuring out how to feed your nanobots.

Having said that, I think there are at least three questions entrepreneurial hopefuls should ask themselves if they’re hoping to build a successful business. They are:

1. Am I competent to do this? (Hint: The answer to this question is always ‘No’.) If you get the answer to this one right you’ll find that building a business is an unparalleled adventure in learning.

(I think this is a good place to quote Kit Carson: “The cowards never started and the weaklings died along the way.” Good entrepreneurs are tough and they never panic. Know any people like this? Have them call me.)

2. Am I fully grown? If the answer is ‘Yes’, and if you’re willing to learn, you, too, may someday be the successful CEO of a technology company! If not, come to terms with that now, before anyone wastes their time or money with you. If the answer is ‘No’, that’s OK. We all have to start somewhere, and this is generally where.

(It’s 2004. We know that it’s a quantum universe and that everything’s relative. From there we can deduce that life is simply a phase transition between order and chaos and that the eternal ‘now’ is nothing more than a standing wave connecting the past with the future. Personally, I take this to mean that life is too short for BS. In business terms, if you persist in the illusion that you’re the next Bill Gates for too long without hard evidence you’ll wake up one morning to discover that those nice people you bought your BMW from just drove it away without asking.

3. Am I networked enough? (Hint: Like #1, the answer to this one is always ‘No’.) An investment in networking should be easy for engineers to rationalize because its value can be supported with formulas. One of my favorites is N(N−1), or N²−N, which is also called Metcalfe’s Law. Cool, huh? This means that the value of a communication system grows as approximately the square of the number of users of the system (N²). Or, if you prefer, you can use the formula for Reed’s Law, which is 2^N-N-1, where N is the number of participants in the network. Good networking can mean the difference between arithmetic, geometric and exponential growth, so it’s worth checking out.

If you’re willing to learn, have a fair appreciation of your abilities and can manage your end of an exchange of favors in a networked environment, you’ve a shot at being a successful entrepreneur. If you can figure out the difference between a Company decision and a business decision, you’ve a shot at being a happy and successful entrepreneur as you’re not only making money, you’re taking care of the people that are taking care of you. And that’s success.

Kevin Johansen is the Entrepreneur in Residence at the Davinci Institute, an entrepreneurial think tank in Louisville, CO. He is also a serial entrepreneur, a recognized innovator, author and has served as a business development consultant and interim CEO to a number of early stage high tech companies. Visit with him in person as he hosts the Startup Junkie Underground, or connect with him via email at ‘[email protected]’.