Businesses vs. Start ups

It’s no secret that start-ups are the new big thing. So many people dream of becoming the next Mark Zuckerberg and inventing a hugely successful platform or product. But there are actually huge differences between a start-up and a small business, so before you decide to become your own boss, it’s important to be clear of the distinctions.

Are you inventing, or updating?

Small businesses tend to be built on already existing frameworks. Maybe you’d like to use your ShopFactory store to sell t-shirts, or other products. You can easily make this happen by finding an existing product (t-shirts), updating a little (putting on new designs), and making your store live.

Start-ups work a little differently: rather than taking an existing product and updating or upgrading it, they identify a gap in the market and create an entirely new product to fill it. This could be a new, unique product, an app, a service (like Uber, or Airbnb) or an entirely new technology – I recently attended an entrepreneurial session in which someone pitched an app that would allow homeowners to see through their walls before they nailed into them. Technology isn’t just a tool that start-ups utilize, it’s often something that lives at the very core of them.

If you’re not the most tech savvy, and you simply want to create a business that earns you money and pleases customers, small business is the way to go. But if you have a burning idea that you could scale up easily and which you believe could radically impact the world: start-up.

Do you want to earn, or invest (for now)?

Because small businesses work on existing models, they’re fairly easy to monetize. You can have your products manufactured, shipped, and sold and earn money from the get-go.

Because start-ups are innovation based, they’re more of an investment: you need to pour funds in to get your idea off the ground, invented, tested and pushed out to market. As a result you could work for years without a cent of profit. If you’re lucky, the investment can pay off big time, but it’s always a gamble.

Do you want to work for the love of it, or to support yourself?

No matter which model you choose, becoming your own boss will be a lot of work. Once you’re in charge you won’t ever really be able to clock off, and you’ll be the one that employees and customers turn to for help.

In small business there’s a little more routine, but you’ll still be faced with challenges and problems regularly employed people would never encounter.

This problem is magnified in the start-up world: as you won’t be earning money for the first few years, you’ll be dependent on investments. You’ll then feel the pressure to pay those investors back, while potentially finding more, while trying to grow in a much larger way than a small business would.

So if you want to work because you love the thrill of a project, start ups can be absolutely exhilarating. But if you’re working because you want the (relative) freedom of being your own boss, the small business model might be the right one for you.

Do you want enough customers, or as many as you can get?

Small businesses tend to have set goals. Their owners want to earn x amount of money, serve x amount of customers, and will have a clear definition and understanding of what they see as success. They’ll only sell so many products or appointments, and they do this intentionally: they simply need to reach a target.

Start-ups are often in the mindset of growing enormous, sprawling userbases. It’s not about connecting with customers, it’s about getting your product seen and used by as many people as possible.

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No matter which method appeals to you, ShopFactory can help - whether you simply update existing products or create entirely new ones, our mobile optimized sites can help you start selling.

Lena Klein