Small Business Ventures and Startups, The Difference Between The Two
Are you confused about what startups and small business ventures are? Let’s see the difference between the two.
In our current day and age, we usually hear the word “startup” from young professionals who aim to make a difference in the market with their “innovative” and “ingenious” products and services. In other words, a group of mid to late-twenties that are investment planning along with venture capitalists. Other people out there use the word “startup” in conjunction with small businesses such as cafeterias, restaurants, or spa centers.
A lot of people believe that “startups” only applies to tech-focused investments. That brings us the question: are there any differences between the two?
One of the main differences between startups and small business ventures is the growth between the two. Sure, all investments aim to hit the top of the shelf as soon as possible. However, startups are generally designed for this kind of pace. On the other hand, most business ventures don’t have the luxury of rapid growth because of market limitations.
In reality, the market plays a significant role in running businesses. By definition, if you aim for a mild market, your business will fall under a small business venture.
This is also the reason why startups usually revolve around tech products. A physical store can cater to the whole neighborhood, while online products and services can reach far across the globe. In short, distance, physical location, and other tangible factors have little to no effect on startups.
If we closely examine two examples, such as your spa center and the early iteration of Google, the main difference you’ll see are in their scale-up potential. Google reached millions across the globe, while spa centers are limited to the service area.
Now that you know the growth potential of these two structures let’s go down to funding. Almost all startups rely on sheer funding coming from venture capital firms. On the other hand, small business ventures favor loans and grants.
However, that’s not the only thing they consider. Venture capital firms usually have a significant influence on the trajectory many startups take. That’s understandable since investors take more risks than the founders themselves. For small business ventures, so long as you pay your loans regularly, you are free to do whatever you like in your business.
The end game of your startup business may be different from people who run small business ventures. We discussed earlier that a startup relies heavily on venture capitalists, and if you are looking to get approval from a firm, you need a solid exit strategy to get things done.
Exit strategies are like extra layers of insurance for venture capital firms. Let’s say you have a 10-year plan for your startup. You’ll have to develop a way to get a steady flow of revenue that could pay off all of the investments your VC firm allowed for your startup.
On the flip side of the coin, small business ventures don’t necessarily need any backup or exit plans, just good investment planning, and that should do the trick.
Startup businesses are perfect for people who like a fast-paced business approach, where products and services draw a considerable crowd regardless of the market.
Now that we discussed the difference between small business ventures and startups, we bet that you can come up with an idea of how to utilize and work on the limitations of your business. You’ll also understand the best approach you can use to improve your money management and overall business skills.