startup or small business

Startup or Small Business: Which One Are You?

By Meredith Wood

Startup. Small business. Small startup. As the world goes more and more digital, the lines between traditionally Silicon Valley-based startups and local small businesses continue to blur. Yet despite the terms becoming seemingly interchangeable, there are still some tried and true differences to separate the two.

To help you decide if your entrepreneurial venture would be considered a startup or small business, we’ve devised the below questionnaire. Check yes or no for each statement based on whether or not it applies to you and your company.

Does this statement apply to you?YESNO
1. I am in the tech industry.
2. Customers come to my brick and mortar location.
3. I do most of my marketing online or in mobile apps.
4. My company sells a product in a retail store.
5. My company sells an online service.
6. I work at my company full-time.
7. I want to grow my business to the likes of Apple, Google, or Amazon.
8. My primary funding is from family and/or bank loans.
9. I intend to disrupt the market or create a new one.
10. I want to be my own boss and keep control of the company.
11. I am doing this part-time until it takes off.
12. I’m not trying to change the world or how people do things.
13. Customers can download my app or visit our website to use my service.
14. My marketing is primarily local (mailers, newspaper, local magazines).
15. I don’t have a storefront.
16. I have at least one competitor in town.
17. I think I’ve got the next big idea.
18. It would be nice to make this work until I retire and/or pass off to my family.
19. I want to sell the company once it gets big.
20. I think I can do what my competition does better and/or for cheaper.
21. There really isn’t anyone out there doing what we’re trying to do.
22. You can’t receive or use my product/service online.
23. I am looking for angel investors or venture capitalists.
24. Success for me might involve opening up a second location.

Key: If you answered yes to mostly odd questions, you might be a startup. You might be a small business if you answered yes to mostly even questions.

If You Answered Yes to Mostly ODD Questions…

Sounds like you might be a startup! Essentially, startups are tech-oriented ideas trying to prove a business model that could disrupt the current digital industry, and eventually be sold for a big profit to a corporation or even potentially IPO.

Perhaps you are deep in the research phase right now, trying to prove an idea that would completely flip the current market or even create a new one. You’re most likely trying to offer a service that can be accessed globally, whether online or via mobile app rather than a local storefront.

You are probably a thinker or dreamer who is always trying to come up with the next big idea that has legs to grow on… and fast. Your aspirations are likely to develop what could become the next Google, Apple, or Amazon, but long-term viability isn’t necessarily top of mind.

If you’re developing a startup, odds are you will give equity to anyone who helps you finance, and you are open to selling it eventually via IPO. In fact, searching for investors or venture capital to back your idea may perhaps be taking up more time than your full-time job, which you have likely kept working to pay the bills. Maybe you’re even considering an start-up incubator such as Y-Combinator.

If You Answered Yes to Mostly EVEN Questions…

Look at you, you’re a small business owner! Yours may be a local business with a brick-and-mortar storefront, owned and operated by a just you, a few friends, or even your whole family! Your goal is likely one of long-term viability—working in the business until you retire, or even passing it along to your kids.

As a small business, your industry is probably already established and your competitors already in business. Your key differentiator is presumably that you can do the same thing but better or cheaper than the competition. If you advertise, you presumably do so through local media such as radio, targeted mailers, newspapers, magazines, or public event sponsorships, along with local social media and blogging.

This business likely takes up all of your time and is the sole method of income for you and your family. You are working more than 40 hours a week, no doubt, and most likely are working on the weekends as well.

The intent when you started your business was to be your own boss, and maybe become successful for the long haul so you can pass it down to your children, ensuring financial security for your family after you retire. A good indicator of success is if you can hire someone you trust to manage the day to day operations so you don’t have to work 7 days a week, and so you can focus on perhaps opening another location.

Bottom Line: It’s All Hard Work

Whether you’re a startup entrepreneur or a small business owner, one thing is certain. You’re an incredibly hard worker. You took a risk to build something for yourself, your family, community, and the world, and you are making big things happen every day. Way to go, you!

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Meredith Wood
Meredith Wood is the Editor-in-Chief at Fundera, an online marketplace for small business loans that matches business owners with the best funding providers for their business. Prior to Fundera, Meredith was the CCO at Funding Gates. Meredith is a resident Finance Advisor on American Express OPEN Forum and an avid business writer. Her advice consistently appears on such sites as Yahoo!, Fox Business, Amex OPEN, AllBusiness, and many more. Meredith is also the Senior Financial and B2B Correspondent for AlleyWire.
  1. Interesting article. I did your questionnaire and my main source of income right now is a quasi-startup small business. I’ll explain.

    I’ve got a small manufacturing-online retail operation.

    Most of the items manufactured for my business can only be purchased at my online store, and there aren’t many people doing what I’m doing.

    Because I deal in tangible goods for a tiny niche market, I don’t see it going big like a tech startup might imagine.

    I’m not looking for investment, because I grow the business with cash from sales of goods.

    Because of the time demands of this business, or lack thereof, I’m able to pursue other business ideas.

    In the end, I’m having a lot of fun and living a much freer life than I did 7 years ago.

    I enjoyed the article, even if I didn’t fit into one of the two boxes neatly.

    Cheers!

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