Any newly created business is technically in the startup phase, but the term usually refers to new businesses designed to grow quickly and meet a market need in an innovative way. You will not hear Read more
Any newly created business is technically in the startup phase, but the term usually refers to new businesses designed to grow quickly and meet a market need in an innovative way. You will not hear many service-industry sole traders referring to their business as a startup. Startup businesses often require the founders to establish the concept and create some interest before they seek investor funding and capital to push the business into operation.
What is the difference between a small business and a startup?
The key difference is scalability and growth expectation. While there is a huge amount of variation business to business, small businesses typically aim at a sustainable, long term offering with slow growth. Most small business owners want their ventures to be profitable very soon after they are established, and often they are the owner’s sole income.
In contrast, a startup can take years to become profitable or to create any income at all. They are typically funded with a larger investment from the founder(s) at the outset, and then they continue to scale with capital from investors. It took Facebook five years to make a profit, by which point it was already a massive website with millions of users.
The other main difference is the business strategy employed. A startup is typically centred around an innovation. The reason for this is that unless you are doing something nobody has done before, or you are doing something in a very different way, it’s unlikely your business will capture a significant segment of the market in a short period of time. Small businesses, on the other hand, compete on service offering, on price, on value-adds, on quality, on reliability and on convenience. They typically carry significantly lower R&D costs and don’t require the experts that a successful startup needs to be successful.
What are some examples of successful startups?
Examples are all around, and you have probably interacted with many on a daily basis. While they are now established businesses, the most well known and valuable startups include: