Know the difference between startup and a small business
People are confused between startup and small business. They often think both the terms are the same, they surely sound alike, but the two have fundamentally different meanings and cannot be used indistinguishable. They can sound similar because startup are new company while they as tiny, their goals, and intention may end up separating them from actual small business.
What’s a Startup ?
A Startup is a new company that is looking for a quick expansion into a much larger and profitable business. Many times, a startup is looking to grow rapidly within a short span of time. They are in an initial stages figuring out different models and finding what works best for them to grow while shaping their future. They’re finding ways to raise money and enlist investors to help them reach their company to the next level. It’s almost as if they are rushing through the stage of growth, for a small enterprise, with few employees to a large corporation with the matter of a few years
In startup they strongly believe their product or service is in high demand, the conviction comes from analyzing data. They see a lot of potential to disrupt the market. These companies hope that their product is a problem-solving product and going to see rapid success with it. They pitch investors like venture capitalists and often raise money by crowdfunding to invest in the idea and get the company off the ground as soon as possible. They need early plannings like goals, strategy, and mission to adapt quick changes and expansion.
When people think of startups, many think of tech companies and Silicon Valley. While it’s true, many startups emerge from that area of California, any person with an idea can start a company in their home and grow it from there. Some of the biggest and most well-known companies began as startups and are now publicly traded, including Apple, Microsoft and, more recently, Instacart along with Gopuff.
Whereas, the major downside to Startups is the high risk and failure. Some of them crash and burn within a few years starting due to lack of organization, Ineptitude of market correctly and going to Peter out of investment capital. From the start, clearly everything needs to be sorted in the manner of business model to plan goals to strategy. Long-term goals, shares of equity all need to be defined, key employees must be hired, and financial backing must be secured.
What’s a small business?
As the name suggests. They are privately held companies, partnerships or sole proprietorship. Being a small business is based on the Amount of revenue brought in and the number of employees. While the government considers companies up to 1,500 employees to be small business, most of them have fewer than twenty. The Small Business Association (SBA) clearly defines everything needed to qualify as a small business.
It is also worth noting that a recent survey, conducted by Sure Payroll, of over 2000 taxpaying Americans found that a whopping 70% of those polled claimed they would skip a nearby chain and trek an average of eight additional miles to support their favorite local and independent business.
Small business are the company that independently owned and operated, and they would rather not dominate market, most times selling to a local town while trying to maintain a stable income. There’s less amount of risk or failure, making them sustainable for a long run.
A Startup is looking to expand quickly and become a much bigger company, while the small business focuses on creating and maintaining the constant and stable revenue stream. It’s not necessary them to try to scale up the business in any way. A startup can go on to become a publicly traded company, raising money from selling shares and scaling up any way they see fit. However, small business remain privately held with the goal of sustaining while generating profit for as long as possible. Many times small business was passed down from families and remain active for generations.
Final thoughts
Both types of projects start with a person and an idea. Depending on how said individual decides to go about the goal will determine the type of company they are. If they are looking to take their idea, shake up the industry, become a leader and be willing to take a risk? They’re going to be following the startup track. If they want to keep their business small and local, but big enough that it’s a good source of income while staying at the same level? Then a small business is the way to go.
