Small Business Start-ups

Small Business Start-ups

If you have ever worked in technology or are familiar with it, you most likely know entrepreneurs who incessantly launch new start-ups. Have you ever asked yourself what a start-up actually is? Is it just a vogue word for a fast developing company? Or maybe there is a real difference between what a start-up is and how small business is identified.

Innovational start-up and small business are like a child and a midget. They both are small and meet the definition of small and medium-sized businesses. This is where their similarity ends.

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Some of the major differences between a start-up and a small business are as follows:

1. Innovations

One of the most important differences between start-ups and small business is product or service innovation.

Small Business does not make any claims as to uniqueness. Your business is one out of many businesses alike (for example, hairdressing salon, restaurant, law office, blog/video etc.). Starting a business, you may easily follow out-of-the-box solutions.

Innovations are the most important things for a start-up. They are meant to create something new and to improve what already exists. For instance, one may develop a new class of goods (wearable device), a new business model or a technology no one knows as of yet (3D printing).

2. Scope

To what scopes your business will come up to?

Small business makes progress within limits established by a businessperson oneself. In other words, you put limitations on the growth of the company and focus on service of a certain circle of customers.

A start-up, as a rule, does not put any limitations on its growth and focus on winning over as much market share as possible. You are ready to increase your influence until you become a leader in the industry.

3. Rate of Growth

How fast will your business grow?

Small usiness should grow fast but a high priority task is to make a profit. When a business opens benefits, its growth happens as and when necessary.

Start-up should always grow and within the shortest possible time creating a reproducible business model. You should be able to reproduce the success of the company worldwide.

4. Profit

How soon business will be paid off and how much it is possible to earn?

Small business is focused on getting earnings and, if possible, a profit from the very first day. A closing gain of the company depends on the owner’s appetites let alone plans for business expansion.

It might take months or even years for a start-up to gain funds. A top target is to create a product, which consumers will like and will take on a market. If this aim will be achieved, profit of the company will be millions. (For instance, present evaluation of Uber company is about 50 billion dollars).

5. Finance

How much are you to invest?

In order to start one’s own small business, as a rule, private savings investments on the part of one`s family, friends, banking credits and/or investor funds will do. However, your goal is to be self-sufficient, which is why you need to be attentive when it comes to contracting debts as long as all this money are to be returned someday with interest.

Many projects are run by private means or with the help of family members and close ones. However, crowd funding is becoming popular. Financial borrowings from business angels, venture capitals, and investors remain the most common version. A start-up should reach out the stage of development, which is why it requires additional capital before the company begins making profits. It is useful to remember that investors wait for an extra financial return, which creates additional pressure on the company.

6. Technologies

Are there any technologies used running a business?

There are no special technologies required for small business. There are many out-of-box technological solutions, which are to be applied to achieve main business goals.Technologies are often the main product of start-up. But even if it is not so, it cannot help but using new technologies to achieve fast growth and scale up.

7. Life Cycle

For how long will your business run?

Research shows that 32% of enterprises are shut down in the first three years, which is not bad comparing to start-up.

Similar studies have shown that 92% of start-ups are shut down during the first three years.

8. Team and Management

How many workers are to hire?

For a small business as many workers are usually hired, as needed so a company operate within the established limitations of growth.

Start-up manager should develop a leader and managing qualities from the very beginning as long as the start-up should grow as fast as possible. As the company develops, you are to work with increasing amount of staff, investors, directors, and other concerned parties.

9. Way of Life

How your work and private life will be combined?

Small business takes less of a risk and duties, which makes it to where it is possible to combine work and personal life well enough. At the same time, the life of a businessperson is full of calls unknown for those who work 9 am to 6 pm. Thus, in a very elementary stage, any business will require high efforts. But in time work and personal life ratio has to be balanced.

If there are investors` funds, a start-up will start making profit earlier. Considering it, there is no time to lose. There are people next to you who wait until you create something unbelievable. So, a balance between work and personal life is out of question.

10. Exit Strategy 

An exit strategy means what your business will end up with?

In case of a small business, there can be two versions – make it a family business or sell it.

A start-up usually moves towards next stage via a large deal on sale or via an Initial Public Offering (IPO).

Is it possible for a small business to become a start-up or vice versa? Yes, probably but everything depends on the chief`s decision. Sometimes, it depends on the founder’s intentions (meaning whether a company is wished to be seen in another role) and sometimes it is conditioned by external factors (a product demand changed, market conditions).

Either way, it is very important to understand the differences between start-ups and small businesses and to realize what fits one’s requirement. This ability will allow you to correlate one`s possibilities and expectations to choose the best plan for achieving desired goals.