What kind of business do you want to be? (Startup vs Small Business)

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This week’s article came about as I was thinking about the types of people that I want to work with, and how to describe them. If you decide to start your own business, are you a startup, a small business or something else entirely? Does the guy who opens a takeaway restaurant down the street call himself an “entrepreneur”? Is a contractor a “freelancer” or a “small business”? What you call yourself and how you relate to terms like these is an important part of the approach you take in building and growing an online platform or mobile app.

The word “startup” gets thrown around a lot in mainstream and social media, but it’s a term that can be misunderstood and create the wrong expectations. In this article, I’d like to highlight some of the differences between these two terms, and why you should think about what you want your business to be.


According to Startup Muster, an organisation researching the Australian startup ecosystem, a startup is "an early stage business that has a large addressable market that utilises technology to capture that market quickly".  Startups tend to have lofty ambitions that lean towards world domination, which mean they have some distinctive characteristics:

  1. High-growth with large, long-term revenue and profit potential that requires large upfront investment
  2. Potentially disruptive where existing problems are solved or business models are created, which are totally different and innovative (or they are copying those that have done this recently)
  3. Seek funding from external parties such as angel investors and venture capitalists
  4. Have an exit strategy whereby they sell their business and probably move onto a new one

Small businesses

On the other hand, small businesses lean towards some different goals and different ways to get there:

  1. Slower growth with short-term revenue and profit goals; where they want to make money as soon as possible
  2. Platforms and apps that are not necessarily new or disruptive, but have a sufficient market to generate revenue
  3. Initially seek funding from family and friends, loans and grants
  4. Don’t have an exit strategy; rather the business should generate the income that they’re looking for

Why I’ve been avoiding the word “startup”

I’ve tried to avoid using “startup” in relation to the people that I want to advise because I feel there are tons of resources and options out there to help those that want to go down that route.

Instead, I really want to help those wanting to create small businesses from their platform or app.  There are loads of you out there!  You might be looking to grow revenue in an existing businesses or looking for a change from your corporate role. The people that I can help the most may not identify as entrepreneurs or even a small business owners (yet!) All of these people are looking to generate immediate revenue with the aim of replacing or growing their current income.

What does this mean for you?

If you’re an existing business looking to build a platform or app to grow your business, then this might be a prompt to rethink your overall strategy for what you want to be and where you want to go. How much are you willing to invest in your platform or app? Being big requires a much larger upfront investment. Do you have the resources to do this?

If you’re thinking about going out on your own, then this really applies to you. Do you want to be a startup or a small business? The approach you take to develop your platform or app will be completely different based on the choice that you make. Think about your reasons for going out on your own and building your product. Which of the above definitions aligns most with your reasons?      

Regardless of whether you want to be a startup or a small business, having clarity about your goals will improve your chances of success. So, decide who you want to be, and go about making that dream a reality!

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