Is Your Business A Startup?

Your brilliant idea doesn't let you sleep at night. You are passionate about it. You've decided – and now you are really going to create a new business and doing everything to make it happen.

Of course, if you've studied a topic, you've also heard a lot about different startup contests and competitions, special resources and other thematic stuff. How to define is your business a startup or something else, for example, just a small business?

So, let's begin with the difference between a startup and a small business. It is very important to define this difference well, because your success depends on the right marketing placement of your business and right ways to promote (or sell) it.

Startup and small business are both young companies which are just starting their development. Both are also small as usual, sometimes may contain only one or two persons (but this is, as well, not for a long time – if your business was really made to grow up). There are special differences which may help you.

Startup

• product/service/process of unique type which doesn't exist in the market or has been created and realized in completely different and innovative style;
• company developed to grow rapidly in a fast way;
• company developed to open/relaunch a new marketing niche or a completely new way in the same kinds of products or services;
• business made to be sold as much as possible at the start or later;
• business looking for investors to buy it all or to give money to its development.

One of the most significant markers of a startup is that you create this business not as an independent one if you look forward in 5 years. If you develop this company or individual business to be independent, to earn money by itself from the first years, it is not a startup. But it may be at some first months before you sell it, find investors or decide what to do with your new product's perspective.

Small business

• existing product/service/idea, or non-existing but with no plans to own the world or be sold for huge money;
• self-sustainable company or individual project;
• company with defined plans of development for 5+ years (as usual, if it is not a seasonable or short project);
• product or service first made to earn money as soon as possible and as stabile as it is achievable.

Small business is an organization which was created to make revenues with its own resources as much as possible fast from its beginning. Usually small business is not so risky as a startup, doesn't require such big amounts of money to make it noticeable and to find an investor, because you and your business partners invest in your own company, individual project, product or service. Small business is sustained by its owners, startup usually waits for money incomes from outside.

Example

You've started a small bakery with some secret recipes. When you launch it – it may be a startup. The business is new and fresh, no one makes the same bread or croissants, it has a potential to be the most famous bakery in the world. But now it is just on its start.

If you are going to grow it rapidly, immediately and noticeable, to sell it for a big money, to earn your income and go to another business development, if you don't see it as a small bakery in five years, this may be a startup. But you have to plan a strategy how to develop it this way. Every startup has undefined future as an independent project, and while it is in doubt, it will stay a startup.

And if you are glad to have this daily working bakery now, you develop it and doesn't plan to sell, you dream how it can grow into a big restaurant network which all your city (or even country) will know and love, you can turn it into a huge supplier of fresh pastries for all the country restaurants or supermarkets, it is not a startup – it is a developing small business which can turn into a middle-size or even a big one. In a year or two you see that your business is stabile and gives you a constant income. Most of your clients are sure that it will exist this way for a long time. People love your secret recipes and recommend your bakery. You've got a working independent business, not a startup any more and never be a startup again.

To be or not to be?

Of course, those definitions are not 100%, because sometimes the line is too thin and you have to make your own decision how to define and develop your business. 

Some experts say that startup is less guaranteed to be successful as a small business. In average, about 5% of startups achieve their goals or even get more. Your own business with a business plan, budget and product is more guaranteed and has more chances to make income – as usual, less than the startup, but more predictable and stabile. This doesn’t mean that you shouldn't launch startups, no! You should decide what amount of risks you are ready to take, and what do you want to win in the end. Let your decision be right for you!

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