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.