The Difference Between a Startup and a Business

Upon hearing the words startup and business for the first time, two very distinct images pop up in the head of the average person. For startups, people tend to imagine some young people or college graduates working in a hip environment, while shifting meetings from the boardroom to restaurants and clubs. At the same time, the word business brings an image of someone dedicated and serious towards being successful. These images are quite wrong in reality, and this article is here to help you understand the difference between the two.

Business Models

While both have business models centered around profits, startups tend to focus more on solving an existing problem that people face in a certain niche. This makes them more focused on making their impact in the market first, and then moving on to making more profits. A business on the other hand, would always be centered around profits and giving their customers a good experience. This is done by targeting the largest audience and using marketing to get new customers. This may sound confusing at first, so let’s look at an example. If people wish to buy clothes; a business would open and sell clothes to them with targeted marketing. On the other hand, a startup would make a website for them to buy clothes online with ease.

Funding

Startups and businesses have very different funding tactics. For startups, their money mostly comes from venture capitalists or angel investors. On the other hand, businesses open with loans and grants from the bank/Government. This makes startups give up some of the control of their company to their investors.

Growth Approach

Startups differ from many businesses in the way that they are designed to approach growth at a much faster rate. This is because they aim to sell something to a very large audience. On the other hand, businesses don’t always need to target growth at such a fast rate. Instead, they focus on remaining in the market with a narrow approach. This is the reason many of the startups are focused on tech and the internet since this can offer a much more massive growth than a small business.

Exit Approach

An exit strategy of a business matter just as much as their growth strategy. If you wish to operate your business your way without letting someone’s exit interfere with operations and profits, it is a good idea to work on a good exit strategy. Moreover, for startups, it is nearly impossible to get VC investors without offering them a good exit strategy since they do plan to maximize their ROI.

To conclude, you may say that the two are quite different from each other in the way their business models are formed and growth/exit are approached. This gives each its own benefits as well as disadvantages, and you can choose the best option for you by weighing both scales.