What's the difference between a startup and a small business?

4 points by bakhlawa 14 years ago | 3 comments

What makes a startup a startup? Does it have to be technology-related? If I start a small business selling widgets or a service, are the same elements not involved: some capital injection (from savings or family loans), one/two owners acting as CEO, CFO, CIO, Sales, Marketing, HR, Ops, etc., juggling many things and struggling with the same questions?

I am truly curious - what constitutes a startup and how is this different from the thousands of non-tech businesses that are started every day?

pg 14 years ago |

A startup is designed to grow rapidly. To do that it has to be a product company rather than a service company.

http://paulgraham.com/startupfunding.html (search for "physical")

AQR 14 years ago |

My view: scale/size of market

A small business is going to be mainly local/regional. A car dealership is a small business - might make the owner(s) millions, but still a "small" business.

Car manufacturers like the new Tesla Motors are start ups.

There's plenty of start-ups that aren't tech based, but tech firms probably lend themselves to scaling thus the majority of them being start-ups.

Non tech example: Stonyfield Farm = start-up Farms an hour from me = small/medium businesses

malandrew 14 years ago |

Small businesses are typically based on an established business model. Restaurants, bars, retail outlets, etc., count as small businesses.

Startups in contrast are an organization in search of a business model. Once it finds one it doubles down on the product search with a viable business model and develops it to profitability.