The difference between startups and SMEs
Startups and SMEs (small and medium sized enterprises) can look very similar to an outsider. Both are small companies that have been built from nothing by an entrepreneur to fill a gap in the market. Both are focused on growth, profitability and survival. So far, so similar, however there are a few small, but important, distinguishable features.
A startup might conjure up images of young, excitable business-minded bright sparks ready to take over the world with their idea, and this isn’t strictly inaccurate. OK, they might not necessarily all look exactly like Mark Zuckerberg, but the idea behind a startup is the determination to grow quickly in a competitive industry using all of the innovation they can muster. Being unique, being different, standing out against other businesses is the key idea behind a startup company and they typically build on experience as they grow – adapting and changing with the way the market goes. One in ten startups might make it, and the rest could fail, so the unpredictability of a startup is another defining feature. The CEO of a successful startup today might have tried and failed a few business ideas in the past, constantly working towards the next one that will succeed.
In contrast to the startup model, an SME is far more structured. Small and medium sized enterprises are designed to be sustainable from the word ‘go’. Their creators will have analysed a market, found a gap, found consumers and pitched to them. SMEs are often paced at a slower growth rate and usually work with a known formula proven to be reliable. While the minds behind a startup are looking to explode onto the scene, SMEs are more likely to stay local, working towards coasting along at a sustained level for a long time.
Superficial and often wrongly reported differences between the two also include a comparison between the way they operate in terms of employees, company benefits, and offices. These differences are mostly generalisations and it is only once you get to the crux of the business you discover where the real defining factors lie.
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