Small businesses are the backbone of the United States economy. Defined as businesses employing fewer than 500 workers, 99.7% of all 28.88 million businesses across the United States are considered small businesses. The 56.8 million employees are put to work by these fun-sized entities, collectively making up 48 percent of the United States workforce.
Even though small businesses are inherently American, it seems as if the hottest business-related trend in the United States relates to startups. But what is a startup? Is it the same as a recently-founded small business? What qualifies a business as a startup? Is telling a difference between the two entities easy – or is it even possible?
What isn’t a startup?
Assume a small business was recently created. Can that entity be considered a startup? Technically, according to the world’s go-to dictionary, a startup is defined as “a fledgling business enterprise.”
According to a dictionary, yes, that entity could be considered a startup. However, for all intents and purposes, in the name of practicality, newly-founded small businesses are not startups.
What is, in fact, a startup?
To explain as simply as possible, a startup is a business venture that takes considerably high levels of risk in hopes of earning outstandingly-high, untold-fortunes worth of revenue. It’s important to remember that startups often fail because they take on so much risk. The general ideology that most founders of startups take on in such endeavors is being willing to throw every single idea against a wall and hoping some idea turned into a business venture sticks on the figurative wall of success.
Most startups seek out investments from big-money private investors, institutional investors, crowdfunding entities, and venture capitalists. Their proprietors typically adopt such strategies because financial institutions almost always will never be willing to eat the substantial risk that certifiably, undoubtedly comes along with startups – it’s simply the nature of the beast.
What’s the difference between startups and small businesses?
Small businesses typically seek out regular returns on a weekly or monthly basis. They focus more on their financial future by planning ahead for any bumps in the road, but the end goal is to create a functioning business that will last for years to come. Startups are worried about nothing but growth, growth, and more growth.