Are you a start up, a small business or an entrepreneur? And does it really matter?

Jürg Widmer Probst

Are you a start up, a small business or an entrepreneur? And does it really matter?

Jurg Widmer

Does it really matter how you define yourself and the business you run? In the long run, probably not – ultimately it is the hard reality of balance sheets and sales figures, and the happiness of your customers that will define the success or failure of your business.

But looking at the difference between some of the various ways that businesses and business people talk about themselves can actually be useful process – one that might help you to think in new ways about the kind of business person you are, and the type of operation you are running.

So, it is probably worth starting with some definitions of some of those terms.

What really makes an entrepreneur?

For us, what sets an ‘entrepreneur’ apart from any other business owner is vision. But what do we mean by this? Well, it is the difference between a business owner who looks at the existing sector and works out where they can fit in and make a living. An entrepreneur will take a far more long term, transformative approach – looking at the market and identifying quickly where the biggest opportunities lie.

They are able to see how they can shake up the status quo to their own advantage, whether it is through introducing game changing technology or an innovative service model. They will attempt to achieve big things by taking calculated risks, rather than trying to simply take their slice of the existing market.

Building a small business

In this light, it is interesting to look now at the differences between a small business and a start up as well. In many ways, they mirror the contrasts between your typical business owner and someone who describes themselves as an entrepreneur.

So, a small business will be built on strategic plan that focuses very much on the running successfully from day to day. The business is designed to make money and to be successful, of course, but all within the framework of the existing market. Everything, from the number of employees and the management structure to the sales targets will be roughly equivalent to similar companies in the sector – and it will be set up to succeed on this basis.

The start up approach

A start up, on the other hand, takes a very different approach. As is the case with entrepreneurs, start ups are usually built on a much grander vision. This vision will usually be one that will aim to quickly and radically disrupt the existing market, to the benefit of the start up itself.

In terms of the business model and the financial investment required, this demands a very different approach to your typical small business. The founder of a start up will be looking to grow rapidly and to dominate a market fast, and it takes a lot of initial investment to do this. It is why there are so many start ups in the tech market – it is a sector where, thanks to technology, a business can grow extremely quickly and far beyond the kind of scale you would expect of a company that size.

Does it really matter?

Clearly, finding that money for the initial investment is the biggest challenge, whether you are launching a start up or a small business. And this is where we come again to that big question of whether these terms really matter, when it comes to describing what you and your business are.

We would say that they really do matter, in at least a couple of ways. The first is simply around the importance of defining exactly how you think about what you are trying to do. Thinking about these terms, and how they apply to you, is a useful exercise that can form a starting point for anyone looking to develop their business model. It will help you to decide if you want to carve your own niche in an existing market, or shake that market up and dominate it with a new approach.

But thinking about these terms is also useful for potential investors who are looking for the first time at you and your business. The way that you describe yourself and your company will set their expectations around the return on investment they can expect to see. With a start up, that return may not come for a few years, as the radical new business makes its mark. But for a small business, working on an established framework, they may be able to look forward to enjoying their returns much earlier.

So, even if these terms don’t matter much to you, they certainly will for the people who might be one day funding your dream.

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