Startups VS small businesses

If you’re looking into going into starting your own business, chances are, you already know whether you want this business to be a startup or a business. However, you may now know whether to call your business a startup or a small business. Although on the surface, these two entities feel very similar, the underlying goals are worlds apart.

Startups

For years, startups have baffled investors and the public alike. If you live in or near the bay area, NYC or a few other hot spots, you likely know someone who is either working for a startup, so looking to start one themselves. And if you are one of the lucky individuals who are close to someone involved in a startup, odds are they’re talked your ear off about the great things their startup is doing. These passionate monologues about work are exactly what differentiates startups from a small business. The goal of all startups is to scale into a force to be reckoned with. According to Steve Banks, a well seasoned startup founder, a founder believes that they have “come across the next “big idea,” that will shake up the industry, take customers from existing companies, or even create a new market.” To founders, their company’s primary goal is not profit, although that tends to come with success, the goal is to change the world. For such a grandiose, founders are willing to forgo profits for long stretches, opting to reinvest in the company. If you think that it is optimistic for founders of startups to believe that they can change the world, you would’t be wrong. According to Startup Genome Report Extra on Premature Scaling — a project coauthored by Berkeley & Stanford faculty members with Steve Blank, 93% of startups fail. However, when we see the wild successes like Facebook and Amazon, it’s hard to not dream.

Small Businesses

A small business, as defined by the U.S. Small Business Administration, is independently owned and not dominate in its field on a national basis. In other words, a small business is a small scale operation that is owned by a very small number of people. Think mom and pop shop. The goal of a small business isn’t to change the world, it is to carve out a niche for yourself in your community. A small business has the benefit of being more people-centric. Staying small means that you have more resources to focus on the people who really matter: your employees and your core customer base, allowing you to form lasting and meaningful relationships. Another benefit of a small business is that it is a much safer venture than a small business. But as with all things in life, it does come with risk Around 50% of small businesses fail within their first years of operations.

Small businesses and startups differ vastly in goals and the comforts they offer. Before starting any business, decide what you want out of it and don’t worry too much about labels. No business is cemented into anyone structure and quite frankly, the most successful business are those that are able to adapt to their environment. So be brave and fear not of change.

Image:Rana Tarakji

Sources: Quora, General Assembly, Forbes