
Ask HN: Experiences running a small business vs. a startup? - siruncledrew
Please forgive my naïveté, I would like to understand the commonalities&#x2F;differences of running a small business vs. a startup. I see that both have to deal with finances (loans, investors), developing a product, marketing, transaction processing, labor (employees, contractors), and taxes&#x2F;accounting. What are the experiences, motivations, and day-day like with respect to small business vs. startups? I&#x27;ve heard others talk about small businesses and startups as distinctly separate types of business, but I&#x27;m still confused why they are so different?
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ccantana
I’ve seen it all, from co-founding a startup that went on to have a $40M+
exit, to working at major tech companies, to, today, running a small business.

In my experience, the biggest difference between a startup and small business
is that a startup feels intense pressure to scale up the business _before_ the
underlying fundamentals are strong. There’s a “land grab” attitude wherein
investors are willing for the business take on massive losses the first few
years as long as the company is building a moat around what they’re doing that
will be difficult for competitors to penetrate later on. The idea is to build
as much of a monopoly as you can early, funded by investment dollars, and
“turn on” the revenue streams later.

A small business, on the other hand, generally scales hiring/marketing/sales
along with their current revenue growth. It’s a bottom-up approach to building
a business, wherein you scale as your company’s fundamentals incrementally
improve. My current company is a newsletter-based business where we’re making
fun of the tech industry ([https://www.techloaf.io](https://www.techloaf.io))
where we’ve kept expenses extremely low, only hiring folks as the business
improves.

Both approaches can make sense, it’s just all about your goals (both as an
employee looking for work at either or as a founder building a company).

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BjoernKW
The main difference is that with a small business you have an established
product or service and a business model that's known to be working whereas a
startup is all about developing a new product or service, finding product-
market fit and a scalable business model that works for that.

So, a startup is a series of experiments with largely unknown outcomes while a
small business - though still allowing for experiments and different
approaches on a smaller scale - deals with more predictable outcomes.

That said, the question of "startup vs. small business" isn't a clear-cut
dichotomy but often a continuum.

A small business offering a service can also experiment with addressing a
particular market niche, for instance. This is a common theme for small /
1-person software consulting businesses.

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matt_the_bass
Can we start with how you define a start up yourself?

