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Startups vs. SMBs

The mainstream media seems fascinated with startups – nascent companies that are in their infancy. What separates them from traditional businesses is their capacity to take an idea scrawled on the back of a napkin, into a business that attracts the attention of angel investors and venture capitalists.

Some people define SMBs as having fewer than 200 employees. The Australian Tax Office (ATO) uses a different definition, saying SMBs have revenue below $20M per year. In other words, it’s possible for a startup to be an SMB.

At some stage, every business is a startup. In today’s context, startups are seen as being nimble, well-funded and prepared to push into established markets and disrupt established business models.

Business coach and corporate behaviourist Phil Owens of The Bigger Game explains:

“The market and context in which every business operates is in a continuous state of flux. Customers, consumers and competitors are always evolving. To keep up and to stay relevant – let alone establish a competitive advantage – organisations need to keep a ‘start-up mindset’ – and dedicate time and effort to doing more than just ‘business as usual’ to be successful in the long term.”

And perhaps that’s the key difference between startups and SMBs. Startups are characterised by their nimble and adventurous spirit. They’re prepared to try new ideas and accept that some might not work out, whereas SMBs are considered more conservative and less likely to try new things or move into new niches.

Owens says, “Every business needs to develop strategy over three horizons ­– current, short term and long term ­– and balance out their efforts and investments to drive sustainable performance. A critical part of this requires ‘start-up’ mindsets and actions – to explore new ideas, to pilot them and find ways to develop them into future profit centres.”

When a new business starts, the founder is typically driven, optimistic and prepared to try new initiatives to kickstart things. But as successful strategies take hold, there can be a temptation to stick to what works and not take risks on new ideas.

“Many organisations develop cultures and habits which get them stuck in their status quo,” says Owens. “It is being nimble, applying appropriate resources and encouraging risk taking which allows innovation and continuous performance. This is why all businesses need to keep the ‘start-up’ spirit alive within their cultures – and be prepared to act on it.”

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Author: 
Valens Quinn
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