Currently, there is a high number of people who think startup is a way more "cool" to refer to a Small business. However, this association is wrong because these are distinguished both the conceptual level and the organizational level. In this article we will clarify the difference between Startup and Small Businesses.
Once it was explained what is a startupMove to the definition of Small business.
What is a small business?
According to Administration US Small Business (SBA), an Small business is an independently owned and operations, organized for profit and no dominant purpose in your business area. Ie you can be in the form of corporation, partnership or sole ownership. It also has less 100-1500 employees and annual revenue takes a maximum value 750000000000-38500000 dollars, depending on the sector.
This type of company also has most of the existing companies worldwide.
From this definition, we can understand why people consider that a startup is Small business. But once again, this idea is incorrect.
What is the difference between startup and small business?
Then we highlight the key attributes that these two concepts differ.
While small businesses are guided by profitability images and stable value over the long term, startups They are focused on revenue and growth potential of your business idea.
An startup It does not have a fixed business model, that is, explores the possibilities as the opportunities to achieve a repeatable and scalable business model. On the other hand, Small business is a focused enterprise to achieve an effective business model that results from day one.
Another difference lies in innovation. At startups yearn to develop an innovative product that creates impact on the market or improve an existing solution. On the other hand, small businesses They are not concerned with the exclusivity of its products or services, just want to develop them efficiently.
Unlike startups, as small businesses They do not look for high value investments. In need of investment for the beginning of the business, they often seek support in traditional methods, such as family, friends or bank loans. On the other hand, investments in startups They have a key role and is necessary to achieve the business model that results and grow sustainably.
Although the methods used in Small business They are widely used in the beginning, alternative methods (Business angels, venture capitalists) are becoming quite popular today.
Once the startups seek high levels of investment and there is a high risk in this area, usually investors demand a part of the business, having power in the decisions of this. On the other hand, Small business You have complete control of their business.
Although these concepts are easily confused, they represent totally different business models both in terms of objectives, structure or even financing. In conclusion, it is indeed possible to identify difference between startup and small business.