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Investing in a Small Business vs Launching a High Growth Startup

We are all passionate about something that interests us the most. But not every one of us is lucky enough to pursue it.

As Larry Page, co-founder of Google said “You don’t need to have a 100-person company to develop that idea.”

Each of us has different ideas, imagine if you were able to convert that idea into something meaningful by creating a successful high growth startup company or a small business enterprise. What’s the downside? 70% of businesses fail within 5 years. But don’t lose any sleep on that.

Startup vs. Small Business: The Main Difference

Although the difference between a startup and a small business is subjective, it often comes down to the company’s growth goals and revenue forecast. Startups focus on disrupting markets and driving top-line revenue at a fast pace. Small businesses, on the other hand, often set their goals on long-term, stable growth in an existing market.

It's no wonder that the term "startup" has been too easily absorbed into the daily lingo of the business world with the introduction and rapid success of companies such as Airbnb, Uber, and Snapchat. Whether you work in the tech industry or live in a large tech hub like New York or Silicon Valley, you're probably very familiar with the concept of start-ups and startup culture.

Let’s break down the difference…

Growth Intent

Startup founders are looking to drastically impact and upset the current market with their startup business idea, suggesting they don't always want to retain a small, restricted squad, but they want to expand exponentially.

In contrast to this concept of a startup, the small business has more to do with lifestyle business and is not concerned with dominating in its field rather accumulating enough sales to maintain a certain lifestyle.

Business Goals

In their scalable and impactful business model, the startup entrepreneur aims to dominate the industry, expand as fast as possible, beat out rivals and grow.

For a small business owner, this isn't always the case. To run a small business, you don’t need to disrupt the market or break into a completely new market; instead, you simply need to have the desire to start your own business and find a market that you can reach effectively. As long as you are able to maintain that strategy, your business model can earn money.

Streams of Funding

Initially, it is a daunting task for startups and small businesses to find funding compared to more established businesses.

Startups and small business both operate with limited funding from the entrepreneur’s savings, family and friends investment or even loans from banks. If a start-up is successful, it will gain additional funding from angel investors, venture capitalists, and finally, an initial public offering (IPO).

According to SBA, in 2018, there were 30.2 million small businesses operating in the U.S. out of which only 95% entrepreneurs had at least a bachelor’s degree.

Mentored Startup

An interesting aspect mostly overlooked by startups and small businesses shows that mentored startups grow 3.5x faster and raise 7x more money. Business success can be amplified with the support of the right mentor who, above all, helps the founder focus and invest time wisely.

In the words of Richard Branson “A big business starts small.”

Great ventures often start with small beginnings, and that includes your business.

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