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Business

Small Business vs. Startup: What to Know

Perhaps you have heard the word startup and wondered how it differs from a small business. Startups differ from traditional small businesses because they are designed to grow quickly. The word has quickly become integral in our society, and anyone who works in the tech industry understands the meaning of this type of company. In some cases, people use the terms interchangeably, but you do have a difference between them.

Growth a Key Difference

The intent as a startup will be to grow and serve a large market. Many small businesses will only serve a small portion of a market, but the other type of company will have the intention to grow as fast as possible. They will often disrupt the current market with revolutionary ideas. Many will begin in the tech sector or online because of how easily they can reach their market and grow. These companies will grow and scale easily.

On the other hand, small businesses were built by an independent owner and operator. They aren’t nationally dominant in their field, and they serve a small portion of the market. They learn business leadership lessons for difficult times but going through them. Startups were built for fast growth, but a small business has different intentions. While they would like to grow, they may not do it all at once.

Getting Started

This type of company will cost between $3,000 to $5,000 for a home-based setting, but small businesses can cost anywhere from $100 to $100,000. You might seek to do this by lowering your monthly expenses to free up capital. For example, you could cut back on how often you eat at restaurants or refinance a student loan. In some cases, you can get a better interest rate because your credit score improved. A student loan refinance makes sense when you can either save money or lower your monthly payments. At the same time, it frees up your cash flow to further invest and improve as a company.

Beginning with a Great Concept

Getting started begins with awesome ideas, and in some cases, they begin with revolutionary ideas. You want to make a business plan and conduct market research ahead of time before you begin. Doing market research ensures that a true demand exists, and people will want to buy your product or your services. Once you have it ready, you will begin building your customer base.

Objectives of a Startup

This company has the goal to grow as quickly as possible while crushing the competition. A startup will sometimes disrupt the market with its innovative ideas. Most depend on angel investors or venture capital firms to bring in the funding to open their businesses. Many begin in the tech industry, but a small business has different goals. They may not have a mission to disrupt an industry with better services. Instead, they will be the local coffee shops, auto repair shops, bakeries, restaurants and hair salons. Most small businesses will serve a local market. Small companies are often more willing to take risks because of how they don’t have to worry about protecting the status quo.

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