Startup Vs Small Business: What’s The Difference?

Startup Vs Small Business: What’s The Difference?

Nowadays, everyone is talking about startups. They’re the glamorous new thing in the business world and everyone wants to be one. With shows like ShareTank and Silicon Valley, more and more people are quitting their 9­5 to pursuit creating the next big thing.

And we don’t blame them – however, it’s important to remember that startups are not for everyone. And what’s even more troubling is that many entrepreneurs don’t realise the difference between what it means to launch a startup versus develop a small business – which is an incredibly important distinction to make when first starting out.

So, what exactly is the difference – and more importantly – why does it matter? Here are the 6 differences between startups and small business:

1. Innovation

This comes down to, how much will you have to create from scratch?

With a small business, there are plenty of examples of people who’ve done exactly what you’re about to do, whether it’s start a restaurant, a blog, a hair salon, etc. There are plenty of references to help you construct your own business

However at a startup, innovation is a must. At a startup, you’ll be creating something new and/or something better than what currently exists.

2. Growth Rate

Just exactly how fast will your business grow?

Of course with a small business, you’d love to grow as quickly as possible, but your primary concern will be making a profit. Once that happens, then you can expand with caution.

With a startup, the main concern is growing as fast as possible and creating a repeatable business model. You want to be able to replicate your success throughout the world.

3. Financing

In order for a small business to get started, you’ll need to rely on personal funds, contributions from friends and family, bank loans or investor dollars. Your goal as a small business, is to be self­-sustainable, so you carefully monitor how much money you’re financing, and know that you need to repay it back with interest.

However many startups are initially self­-funded, or supported by contributions. From there they pursue raising capital from angels, investors, and venture capitalists. As a startup, you’re hoping to achieve rapid growth and expansion, and other funding from an investor will help you achieve that.

4. Scale

A small business operates within fixed boundaries set by yourself. In other words, you intentionally limit your growth and focus on servicing a certain number of customers.

A startup does not place limits on its growth, and has aspirations of getting as big as possible.

5. Profit

With a small business, you’re set up to generate revenues from Day 1, and if possible, a profit too. How much profit you aspire to make depends on how much money you want to personally pocket, as well as what your expansion plans are.

For a startup, it may take months or years before you make a single dime. You’re primarily focused on building a product people love, which results in tremendous user acquisition.Watch Full Movie Online Streaming Online and Download

6. Exit Strategy

A small business’ aspirations may fall into the categories of passing on your small business to the next generation of family members or selling it to a larger establishment.

But with a startup, you’re typically aiming for a very big outcome – such as a sale or IPO.

Now you may be asking yourself if a startup can turn into a small business, or vice versa. Well yes, it just depends on if you decide to make the shift. Sometimes the shift is triggered by a personal decision, and sometimes it’s triggered by external factors.

Either way, understanding the difference between a startup and a small business, and recognising your personal power to choose the best one for you, is an important skill to have. It’s important to align your actions with your expectations right from the start.

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