For most – if not all – of my career, I’ve focused on small businesses and startups. The challenges that need to be solved are the best, and while they always go through the same growing pains, they always tend to find new ways of solving them.

It’s half the definition of insanity – so does that make me half crazy?

In all these companies, I’ve really learned to tell the difference between a startup and a small business. Sometimes they masquerade as each other, other times, they just get confused. So, here’s my take on the difference.

What is a Small Business

Some things that distinguish a small business. Keep in mind that a small business may not have all of these traits, but will have most.

• Owned and operated by the same people who fund it
• Not out to disrupt the market, but to make some money
• The owner/operator is in it for control/independence, not the product
• They make “toilet paper;” there is nothing “special” about the product – i.e., no Intellectual Property, nothing another company would want to buy.
• Uses a cookie cutter model that is proven to work in that market
• Hires people to do a job, regardless of talent

What is a Startup

Here are some things that distinguish a startup. Again, keep in mind that a startup may not have all of these traits, but will have most.

• Outside investors, board meetings: the founders have some control, but they report to the investors
• There is/are founder(s)
• Out to disrupt the market and make tons of money
• Scalable
• Searching for a model, executing, then standing on its own to be a real company
• The product is more important than control (to the founders)
• Multiple funding rounds
• Spends other people’s money until it figures out how to make money
• Hires people for their talents, to do a job

Um, OK

So, all that stuff up there, gives a lot to think about….