Startup and business may sound similar but they are miles apart from each other and if you are one of those individuals who gets confused between both terms then you should know the difference between startup and business as in today’s world when every other entrepreneur claims that he or she is doing a startup knowing about the differences can go a long way in determining whether the business is a startup or just normal small business. Let’s look at some of the differences between startup and business –
Startup VS Business
Meaning
A startup refers to that business model in which the company aims and strives to develop and sell a product or service which is unique and can even change the age-old perception and tradition of people while a business is simply doing something which is repetitive and is done by many entrepreneurs for earning profits. In simple words, a business brings nothing new to the table rather it is simply an extension of what other businesses are doing for the past many years while the startup is something that brings innovation and freshness to the table and has the scope of achieving something which has not been done by other companies.
Risk Factor
In the case of a startup the risk of a startup being a failure is very high as for every successful startup there are hundreds of failed startups while in the case of business the risks are there but not as much as in a startup. In simple words, if one can talk in financial lingo then a startup is like derivatives just like derivatives are risky and can give 10 times return or your money can even be zero if you trade in derivatives in the same way startups can either be very successful or lead to bankruptcy if it is not successful while business is like stocks just like stocks give constant returns and seldom goes to zero in the same way business will give constant return and risk of business turning into a complete loss is on the lower side.
Area of Focus
In the case of startups, the area of focus of the startup is in the product research, product uniqueness, and the big idea while in the case of the business the area of focus is on the operational side like cost-cutting, timely delivery to customers, customer service and profitability. In simple words, while startups look for acceptance from consumers while businesses look for profitability and margin from their customers.
Capital Requirement
In the case of startup the capital requirement is high because the things like product research, development, marketing of new products all require capital and since the sales, in the beginning, are zero their is no inflow of funds, and hence startup will require huge funds initially but as far as business is concerned the capital requirement is low due to less expense on product research and marketing besides cash inflow is also there due to sales from the beginning. In simple words when it comes to the capital requirement a startup will need more capital as compared to a simple small business.
Scope
In the case of a startup, the scope of doing business is limited as a startup can be done with selected products or technologies only while as far as business is concerned it has wide scope as one can do business right from selling small needles to an airplane. In simple words, while a startup requires an idea, innovation, dedication, and expertise while business is something that requires dedication, hard work, and patience.
Rate of Return
In the case of startups, the rate of return is huge and is in a geometric progression that is startup can grow exponentially while in case of business the rate of return is in arithmetic progression then is business tend to grow steadily and slowly. In simple words when it comes to the rate of return startups are like bullet trains fast and swift while business is like a goods train slow and steady.
As one can see from the above that there are many differences between startup and business and everyone related to business and finance should be aware of these differences so that they not only understand the business model but also the type of business which is done by the company.