Is there a difference between a startup and small business?
I hear the terms often and not sure if there is a different. I am also not sure it matters, but when looking for resources and business support, I am wondering if it might be an important distinction.
In the tech sphere there seems to be several existing distinctions. A great book to read if you haven't already is The Lean Startup. Eric describes a startup any new business venture operating under conditions of extreme uncertainty. In contrast differing opinions suggest a startup from an investment perspective is one that exhibits highly scalable characteristics like Uber which is currently a trending example. In the traditional sense Ray's answer below is also an acceptable definition. I hope this helps :)
Startups are an interesting thought and something fully different from a small business. Once you think about a startup, you think of a bunch of tech individuals hunched together in a garage or a basement working on the next big thing. A small business you think of a business that started and is trying to make sales and grow. Check out: https://merchcash.com/resources/post/survey-reveals-small-business-owners-optimistic-of-holiday-sales/
Hello Samatha, that is a good question and you are right for needing to know the distinction, because starting a new business and determining how to go about this without spinning your wheels and losing precious time, I would recommend to get associated with local SCORE, and SBA in your area you will be amaze that support and free resource that are available and you would qualify for a lot depending on type of business, status etc. Yes there is a big difference!
It is an important distinction I think Samantha. Some people plan to create a small business as a lifestyle business and do not plan to grow the enterprise. Some businesses plan and invest for rapid growth. So, a small business is not necessarily a startup and a startup may be a comparatively large enterprise. The two terms are not synonymous. In my own experience, I have run my own small business for many years, but am currently involved in a startup which has a strategy to grow into a larger business within the first two years. Hope this helps.
Many good answers here. I just want add this "In normal case, a startup subset of a small business". A startup needs not to be a small business if the initial setup involve huge capital ...example setup a new power plant.
1. Startup is not a proven business yet.
2. It grows to be a small business after it's business model concept starts getting business/traction/revenues
It is a journey versus distinction per say.
A startup is usually a business that is just launching and getting its footing, if you will. A Small business has more to do with size and personnel. A small business can remain small for the life of the business but a Startup loses the title after several years of existence.
ME-Creative Agency, LLC
There is a huge difference between startups and small business. A startup cannot only be small business. It can be a big venture that has just started their business.
A startup business is an enterprise which is in starting stage of business and a small business is not always a startup.
Small - Medium Business (SMB) is mostly based on employee size (revenue or cash flow is another common measure referenced - but is not the key determining factor).
A simple summary for SMALL BUSINESS;
0-5 employees = Micro - SMALL Business (Including sole / owner operators)
6-20 employess = Traditional SMALL BUSINESS (SMB)
20-50 employees = Fleet - SMALL - MEDIUM BUSINESS (SMB)
50-199 employees Emerging SMB
200+ employees = Large / Corporate
Start Up normally refers to the first 2-3years any business begins from an idea and including the first phases of tangible products/services being sold to customers. This also includes the pre launch/planning time frame.
Cash flow is often limited and inconsistently comes in. Expenses are significant as the business is growing from a naked basis of nothing.
Most startup businesses will run at a loss year on year (YoY) until Year 2 -> 4 being in operation (serving or selling to the public/distributors).
Franchises/existing business purchase. etc are not recognized as start ups as they have operated before or are based off a proven plan from A - Z
I hope this helps simplify.
Startup is business is different completely to a small stable business. A small business may be very profitable and may not be resource challenged. Startup will be an evolving business which will change everyday. It is a challenge to attract people and funds in a startup as its very existence is conjectural and matter of speculation. The rewards may be high but risks are cetainly high as well. You need a specail kind of risk taking mindset and attitude to work in a startup.
A small business may be stable and comformtable because they ndon't have to deal with scale. Some people keep the business small by choice.
Start-up is the inception / infancy stage of a project. It could be a stage for a small or medium or a large business.
The size of business is normally designated by the projected or the achieved turn over therefore two terms Start up and small business are entirely two different aspects of any business.
Startup defines the action to develop a new business, while small business would be an existing entity..hope this helps what type of support are you looking for?
The distinction you draw is important to clarifying the resources and support you need. An easy way to differentiate is with your Vision statement and where you want to be in future. A start-up may not have any business and typically not be profitable. A small business has customers and should be executing a plan to optimize performance towards their goals which may be to profitably own a small niche market.
I was a start-up 20 years ago. My sole-prop micro-business employs just me, and I'll celebrate my 20 year anniversary later this week.
I think my esteemed friends have made the Distinction pretty well It is a business at a different phase of its life in many ways. Some Small Businesses can start out being small and then go to the next phase of growth. A lot of it is based on the Plan and what it is. You can start out with the intent of being Large but market realities may take over.
Start-up is a phase of a venture. It can be an entrepreneur, corporate or organization enterprise. It can be of varied size in term of team, capital, etc.
Start up defines that a business is at the first stage of its journey.
Small Business defines size of a business in reference to turnover or team size or capital as per the Country Standards & Economy. Businesses are categorized as MICRO / SMALL / MEDIUM / LARGE.
As you are starting your second venture, you might need a STARTUP Consultant or a coach.
Simple example are:
Small Business is a tradesman starting their own business.
This should be profitable from day 1.
Start ups are generally concepts that need to be researched and proven up.
The profitablity of these in many cases cannot be clearly determined at "Start Up", generally if think of the word "specious" (It sounds right but is wrong) you get the idea.
Well, every business at its beginning stage is a small business also people tend to call it as startups. But in this case there can be another distinction, small business can be like your local shops where they only cater to the need of a particular community in which they operates an example for this can be you local grocery shop, where they look to satisfy the need of the local community.
Not really. Call yourself a startup and you look like a loser. Same thing with calling yourself an Entrepreneur.
You are starting a business and are a business owner.
Unless you have a team of developers or a new invention stop looking for resources and business support. Focus on learning your product and your market and start selling.
And I don't know what you are planning to do online but it would be interesting to hear more. For sure-- retail at the local level is dead. But online retail is dead too- unless you hand make them yourself.
There is very much a distinction. A start-up is a new born enterprise small or big and as such can be very demanding and have special needs and require lot of attention and careful handling. Its future depends on every decision you may take now. A small business if it is not a start up, may already be established and the major decision there may be how big you want it to grow and the mode of expansion.