Why Startups Should Act More Like Small Businesses.

How operating with real risk can improve business.

Startups and small businesses are very similar, the goal of every business is to be self-sustaining, offer a great product or service and be profitable. Every successful business has to go through phases of bootstrapping, growth, and sustainability, but startups and small businesses are inherently different in their goals and how they operate.

How A Small Business Operates

Typically a small business is locally focused and follows a traditional good and services business model. When it comes to short-term goals a small business is looking for profitability as soon as possible, because they typically source funding from loans and with a brick and mortar business there are tons of upfront costs for staff, inventory, rent, equipment, insurance, etc.


What Startups Can Learn From Small Businesses

Changing the world doesn’t happen all at once

It’s a slow and gradual climb to the top of the mountain and you need to have the endurance and the right equipment. Small businesses start by focusing on a small niche customer base. Theirs is typically location based with a specific interest in their good or service. What you can take from this is narrowing on a small segment of users and truly solve the problem for one hyper-specific person — your ideal customer. If you can solve this user’s problem then it will resonate to other user segments, slowly growing and eventually leading to the billions of users who need your product.

No Better Proof Than Cash

We hear all the incredible — and ridiculous — stories of some startup getting valued at $20 billion and getting funded hundreds of millions of dollars. Wow, wouldn’t that be great? Not to say you can’t get there, but it’s rarer than the media lets on. It’d serve most startups better to follow the lead of small businesses on this one. When you don’t have a ton of floating capital to “make it rain” you need to come up with a plan monetize what you have fast. A traditional monetization plan may not be right for your business, but you can learn a ton from asking people if they’ll pay for your service and you’ll learn even more from how to get scrappy and operate a business on a budget. Most startups do their most creative work when having to innovate with little capital.

The Commitment

When you start a business, you have to have your whole heart in it — and not only that but you need to be prepared to sacrifice a lot of money and time to make it work. With a startup, especially a tech startup, the costs can be pretty low with friends working for sweat equity. This is the great thing about starting a tech business, but you need to have that commitment from a small business owner whose entire life savings and future is in it. They have the understanding that this HAS to work because if it doesn’t then they lose a lot.

Not saying you have to sink your life savings into your business, but the commitment you have when this business means your livelihood, you learn how to make things work. You hustle as hard as you can to make your business a success. Imagine if you had — not just the drive to do what you love or change the world but also the fear that if this doesn’t work you could lose everything. You would probably work a lot harder to make your business successful.

“Without hustle, talent will only carry you so far.”
— Gary Vaynerchuck

This post first appeared on Weird Street Blog. Weird Street provides local businesses a private channel to discuss local issues with their immediate community.