A startup is built to grow fast and capture a large market — usually with software economics, recurring revenue, or network effects. A small business is built for steady cash flow with limited scale — typically local, service-based, or owner-operated.
Five dimensions: (1) Scale ambition — startups target $100M+ revenue; small businesses $1M–$10M. (2) Funding — startups raise VC; small businesses use SBA loans. (3) Margin profile — startups target software-like margins (70%+); services run 20–40%. (4) Exit — startups aim for IPO/acquisition; small businesses for steady ownership. (5) Geography — startups global; small businesses local.
Stripe: startup — global, software margin, $50B+ valuation
Local plumbing company: small business — local, service margin
Sometimes — by adding software, recurring subscription, or scalable distribution.
Per founder hour, well-run small businesses often beat early-stage startups.
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