What is the difference between a small business and a startup?

Laura Criscione

There are many articles stating the fact that the millennial generation, also known as Generation Y, has a very strong entrepreneurial mindset. They want to start their own businesses, be successful and have an impact on the world. Despite this grandiose mentality of theirs, millennials unfortunately do not possess the funds and means to start their own businesses at such a young age.

Entrepreneurs can be divided into two sectors: those who start their own business, such as running their own restaurant or daycare, or those who can run a startup. Many people get confused distinguishing the two since the phrases are quite similar. As a Forbes article explains, “First off, the biggest difference between these two company types is in their top objectives. Small businesses are driven by profitability and stable long-term value, while startups are focused on top-end revenue and growth potential.”[1] Startup businesses involve much more risk and the unknown as many of these new ideas have never been done before and have a large chance of failing. On the other hand, starting your own business involves stability, running a business to maintain your lifestyle and having much less risk. Cofounder and co-CEO of Warby Parker, Neil Blumenthal, stated “a startup is a company working to solve a problem where the solution is not obvious and success is not guaranteed.”[2] Opening your own pizzeria is starting your own business, running a startup, like Mark Zuckerberg did with Facebook, is a much riskier business.

Both of these types of businesses derived from the entrepreneurial mindset that many young people have. However, startups are much more appealing to Generation Y, as they are more exciting and want to make an impact in the world, not just run a business for monetary stability but make large monetary gains the future. However, both of these businesses require money to start; startups require much funding to truly get off the ground; which here lies the problem. Why are millennials entrepreneurially “built” but not few become successful entrepreneurs? They don’t have the money to back up their dreams.

Millennials have always been the fast-pace generation. They need instant gratification from growing up with social media always at their fingertips. They don’t want to climb the corporate ladder as their parents’ generation did. Why would sit in a cubicle for 40 years if you don’t have to? They want to start their own business, be their own boss and make their own schedule[3] EIG co-founder John Lettieri stated, "Millennials are on track to be the least entrepreneurial generation in history." They admire startup founders and revere self-employment, but are wary of starting businesses in an unforgiving economic environment.[4] A huge 42% of respondents cited insufficient financial means as the largest obstacle to starting a business. According to the EY/EIG survey, millennials make less money and have higher levels of debt than previous generations. 53% of respondents have student loan debt or are expecting to take on student loan debt in the future.[5] A university survey of millennials found that ⅔ of respondents have a desire to start their own business, more than ⅓ would like to work for themselves and ¼ would like to own their own company.[6] Despite these large numbers, “as of 2013, only 3.6% of all businesses were owned by someone under the age of 30. Considering that the youth unemployment rate hovers at 10%, it is no wonder that millennials are delaying starting businesses.[7]

As much as the younger generation would like to have their own businesses and bring their creative inventions to life, it is very difficult to do this without funds to start them. Even if they could have a startup, it is very risky. Unfortunately, it is incredibly difficult to make money if you don't have any. As the old saying goes, money truly does make the world go round.

By: Laura Criscione 
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SOURCES:
[1] Young Entrepreneur Council. "Are You Building A Small Business - Or A Startup?" Forbes. N.p., 2012. Web. 
[2] Robehmed, Natalie. "What Is A Startup?" Forbes. N.p., 16 Dec. 2013. Web. 
[3] Haber, Jason. "Why Millennials May Just Be the Best Entrepreneurial Generation Ever." Entrepreneur. N.p., 16 June 2016. Web. 09 Dec. 2016. 
[4] "Millennials Want To Be Entrepreneurs, But A Tough Economy Stands In Their Way." NPR. NPR, 26 Sept. 2016. Web. 09 Dec. 2016. 
[5] "Millennials Want To Be Entrepreneurs, But A Tough Economy Stands In Their Way." 
[6] Meyer, Jared. "Millennials Want To Be Entrepreneurs, So Why Aren't They Starting Businesses? Part 1." Forbes. N.p., 20 July 2015. Web. 

[7] Meyer, Jared. "Millennials Want To Be Entrepreneurs, So Why Aren't They Starting Businesses? Part 1."