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Small Business vs. Startup: Insights from 15 CEOs and Leaders

9 Mins read

Deciding between launching a small business or a startup can be pivotal, and to shed light on this crucial choice, we’ve gathered insights from fifteen CEOs and Founders. From the control that a small business offers to the unconventional global problem-solving of startups, our experts delve into the reasons for choosing one path over the other based on their wealth of experience.

Small Businesses Offer More Control

Being a small-business owner gives you a greater level of control over your enterprise. In contrast, startups often have outside investors who demand that the company grows at a rapid pace. This doesn’t give the owners the time to mold the company according to their personal values, vision, and priorities. 

You can be more hands-on with your small business, work on creating a deeper connection with your local community, and build a workforce that will sustain your business for the long term. Such opportunities are not afforded to you while running a startup.

Farhan Siraj, Chief Executive Officer, OSHA Outreach Courses

Small Businesses Excel in Niche Markets

Stallion Express is home to a growing number of established small businesses and exciting startups looking to simplify their online shipping operations. While both approaches have advantages, the small-business approach has a lot to offer businesses looking for long-term stability and a track record of success.

I’ve found that small businesses tend to specialize in a particular niche or niche market. This enables them to build relationships with their customers and offer a level of personalization that larger companies may not be able to provide. For example, we have a client who is a local baker. They thrive because they deliver their cakes hand-delivered to their customers and know them by name. That level of personalization is enormous!

Yes, startups promise rapid growth and innovation. However, for startups, the safety and security of a defined market can change the game.

Jen Seran, Director of Operations, Stallion Express

Choose Based on Innovation or Implementation

It really depends on what you are trying to build. If the focus is to become a disruptor in your industry by developing an innovative product, creating something that has never been done before, then it’s a startup. 

However, if you’re just implementing a variation of a tried-and-tested idea, like a dry cleaner or an online retail shop, then it would be a small business. I don’t think there is a choice to be made as they’re not really interchangeable. Innovators and entrepreneurs are very different. The only consideration is, which one are you?

Rob Clegg, Senior Content Manager, Exclaimer

Small Businesses Foster Community Connections

When considering whether to start a small business or a startup, one compelling reason to choose a small business, based on my experience as the founder of a sustainable children’s clothing brand, is the ability to establish strong community connections. 

In a small business setting, you have the opportunity to build personal relationships with your customers, suppliers, and other local businesses. These connections can lead to loyal customers who appreciate your brand’s values and are more likely to support your business in the long run.

By focusing on creating a tight-knit community around your small business, you can foster a sense of belonging and trust that is often harder to achieve in a fast-paced startup environment. This can result in valuable word-of-mouth marketing and repeat business, ultimately contributing to the sustainability and growth of your brand. 

My advice is to prioritize building genuine relationships with your community from the outset. Engage with your customers, participate in local events, and collaborate with other small businesses to create a network of support that will benefit your brand in the long term.

Nikhil Soni, Founder, The Tribe Kids

Startups Offer Innovative Problem-Solving

As a startup founder, one big reason to choose the startup path instead of a small business is the chance to shake things up with new ideas. Startups are all about thinking outside the box and solving problems in fresh ways. This focus on being different helps startups catch the eye of investors, hire talented people, and grow fast. 

By being creative and taking smart risks, startups can change entire industries, break old rules, and make a big impact. So, if you’re eager to make a difference, push boundaries, and reshape how things work, jumping into the startup world is an exciting way to go after your dreams.

Kevin Mercier, Founder and Travel Expert, Kevmrc

Small Businesses Provide Stability and Predictability

In my experience, one reason I prefer small businesses over startups is their stability and predictability. Small businesses often have a stable and predictable business model, which can offer a sense of security for both owners and employees. 

A well-established small business can produce consistent revenue and maintain a loyal customer base, providing a steady source of income. This stability is particularly valuable during times of economic uncertainty, when larger corporations might be more affected by market fluctuations.

Small businesses provide a variety of benefits that contribute to their stability and success. The predictable business model, devoted customer base, adaptability, and a strong sense of ownership and community all play essential roles in fostering a flourishing small business. 

While there are challenges involved in owning and operating a small business, the benefits can significantly outweigh the risks for those who are passionate about entrepreneurship and committed to their vision.

Amir Elaguizy, CEO and Co-Founder, Cratejoy, Inc

Startup Growth Ambitions vs. Small Business Stability

I’ve run both a small business (an affiliate-marketing company while at university) and have also been running a health tech startup, Second Nature, in London for the past 10 years.

The biggest difference when making the choice of ‘small business or startup?’ is your ambition for growth. The expectation when launching a startup is that you’re aiming for incredibly high growth rates to eventually become a $100 million+ or $1 billion+ revenue company. This is particularly the case if you take on venture capital funding, which relies on your startup hitting a huge growth rate. Think 20% growth month-on-month. Indefinitely.

Whereas with a small business, you won’t have the same high-intensity pressure to grow at all costs. You may want to grow really fast, but, equally, you may not want to. A 20% year-on-year growth might be perfectly acceptable for a small business, but it would be game over for a startup.

Mike Gibbs, Co-Founder and COO, Second Nature

Risk Appetite Dictates Business Model Choice

Choosing between a small business and a startup hinges primarily on your appetite for risk. Opting for a small business model offers stability and a proven business structure, which is ideal if you prioritize security and a steady income stream. 

Conversely, diving into a startup suits those drawn to innovation and exponential growth, tacked on with higher risk. Startups often embrace some amount of uncertainty, fostering environments where creativity and rapid expansion are possible, appealing to entrepreneurs seeking more dynamic challenges and the potential for groundbreaking success, albeit with the risk of exploring the unknown.

Logan Shooster, VP of Strategic Growth, Answering Service Care

Startups Drive Passion and Industry Disruption

There are a number of different reasons why some people may choose a startup over a small business, but at the end of the day, it all depends on the person and their business idea.

I think that the biggest distinction to make is one based on purpose. If you are wanting to expand upon the existing ideas of business or provide something that is already sought after while offering a premium service, you are likely to want to opt for a small business. In contrast, some may prefer the option of a startup because they want to make waves in the field.

For us, the best choice is a startup. Rather than focusing strictly on profits or acting purely out of competition with other businesses, you can instead focus on driving your passions forward and innovating within this space. In fact, it is not just limited to this, as you can use this endeavor to push for a new product or service that customers have yet to desire. It’s a risky move, for sure, but it is incredibly bold and will grow much faster in the early stages if you succeed.

Jan Brandrup, CEO, Neurogan Health

Established Market Presence Favors Small Businesses

As the CEO of Caption Easy, I believe one reason to choose a small business over a startup is the established market presence. Small businesses often have loyal customer bases and stable revenue streams. 

For instance, Caption Easy, with a decade-long presence in the closed-captioning industry, enjoys a solid reputation and trust among clients. This stability provides a strong foundation for growth and allows us to focus on enhancing our services rather than solely chasing investment rounds.

Khurram Suhrwardy, CEO, Caption Easy

Scalability in Startups vs. Small Business Stability

The decision between starting a small business or a startup often hinges on the scalability of the venture. While both options offer opportunities for entrepreneurship, startups typically prioritize rapid growth and innovation, fueled by technology and disruption. 

On the other hand, small businesses often focus on providing consistent, reliable products or services within a niche market, with a greater emphasis on stability and sustainability. The choice ultimately depends on the founder’s goals and vision for the venture. 

Opting for a startup allows for ambitious growth potential and the possibility of disrupting industries, attracting investors seeking high returns. Conversely, starting a small business may be preferable for those seeking independence and a slower, more steady pace of growth, prioritizing local community impact and long-term profitability over rapid scalability.

Andrew Juma, Founder and CEO, The AJ Center

Small Businesses Ensure Stability and Steady Income

In my experience, one compelling reason to choose a small business over a startup is stability. While startups offer innovation and potential rapid growth, small businesses often provide a more stable environment with established clientele and proven business models. 

This stability can be particularly attractive for those seeking a steady income and less uncertainty. As a CPA specializing in financial planning, I’ve witnessed how the solidity of a small business can offer peace of mind to entrepreneurs, allowing them to focus on long-term success.

Jonathan Gerbe, President, RVW Wealth

Small Businesses Offer Security Amidst Competition

I’ve come to appreciate the stability and security that small businesses offer compared to startups, particularly in light of the intense competition and uncertain revenue streams that often characterize the startup landscape. While startups may hold the allure of rapid growth and innovation, the reality is that they operate in highly competitive markets where success is far from guaranteed. The risk of failure is significant, with many startups struggling to gain traction, secure funding, or differentiate themselves from competitors.

In contrast, small businesses often benefit from established customer bases, loyal clientele, and niche markets, providing a level of stability and predictability that can serve as a solid foundation for long-term success.

Also, the uncertain revenue streams inherent in startups can pose significant challenges for both founders and investors. Startups typically face a lengthy period of ramp-up before generating meaningful revenue, during which time they must navigate cash flow constraints, market fluctuations, and evolving customer preferences.

Whereas small businesses often have more predictable revenue streams derived from established products or services, repeat business, and steady demand within their target markets. This stability not only mitigates the financial risks associated with startups but also allows small business owners to focus on optimizing operations, building customer relationships, and fostering sustainable growth over time.

Tom Richards, Director and Founder, Adbetter

Startups Embrace Unconventional Global Problem-Solving

One aspect of choosing a startup over a small business is the opportunity for unconventional problem-solving. In a startup environment, there’s often a greater emphasis on thinking outside the box and finding creative solutions to complex challenges. This can be a stimulating environment for individuals who thrive on innovation and enjoy tackling new and exciting problems.

Another unique aspect of startups is the potential for global impact. Unlike many small businesses that focus on local or regional markets, startups often have the ability to reach a global audience from the outset. This global reach can lead to unique opportunities for partnerships, collaborations, and market expansion that may not be as readily available in a small business setting.

Aqeel Abbas, CEO, WorkStaff360

Small Businesses Impact Local Communities Positively

One reason, in my opinion, to choose a small business over a startup is the local impact and community support. Small businesses often have a strong bond with the local community that extends beyond just selling products and services. These businesses become a key part of the community, helping to enhance its overall vitality and growth in many ways. They offer personalized service and unique products that locals appreciate, and they have the chance to contribute positively to the community.

From what I’ve seen, one way small businesses can support their community is by making charitable donations. Whether it’s aiding local schools, healthcare centers, or nonprofit groups, small businesses can dedicate a part of their earnings to support causes that matter to the community. This helps improve the community’s overall health and tackles specific problems or challenges.

Small businesses also positively influence the community with their employment practices. Many of them focus on hiring people from the local area, which not only promotes local talent but also fosters a sense of pride and ownership among community members. By employing locals, small businesses are better equipped to understand and meet the unique needs and preferences of the community, leading to improved customer service and a deeper connection with their customers.

Erin Hendricks, President and Owner, Sammy’s Milk

Brett Farmiloe is the founder of Featured, a Q&A platform that connects brands with expert insights.

Starting a business stock image by Jacob Lund/Shutterstock

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