Are you unsure whether to classify your business as a startup or as a small business? You’re not alone. Recently, in the business word, there has been much debate over the use of these two terms and while some experts believe that they can be used interchangeably, there are others who argue that each one has its own distinguishing traits. So, with so many varying opinions, how do you determine the most appropriate title for your business? In episode #102, Elizabeth Larkin and Gene Marks provide their personal definitions of each term as well as advice on how to categorize your business.

Executive Summary

0:26—Today’s Topic: What is the Difference Between a Startup and a Small Business?

1:19— According to Gene, the two structures are essentially the same and their titles are purely a matter of preference.

1:55—Elizabeth defines small businesses as more permanent fixtures while startups are intended to be sold.

6:20—In certain instances, it might be more appropriate to define your business by its products or its services for the sake of accuracy.

9:09—Gene discusses how small business owners now need to invest money in order to successfully advertise on Facebook due to its new algorithms.


Submit Your Question


Elizabeth: We’re back with another episode of the Small Biz Ahead Podcast. The topic today is gonna be what’s the difference between a startup and a small business? Now, when I’ve sat in on focus groups or talked to small business owners, they all only wanna be called a small business owner. They heavily identify as small business owner. We’re gonna pick Gene’s brain on this. I hate that phrase. Every time I say it, it gets me. After we get a word from our sponsor.

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QUESTION: Startup vs. Small Business

Elizabeth: Gene, what is the difference between a startup and a small business?

Gene: Different people have different definitions.

Elizabeth: Okay.

Gene: So it’s very tough to generically say what’s a startup and what is a small business.

Elizabeth: Well, I’m looking for the Gene Marks’ definition.

Gene: Okay, well, I’m gonna tell you right now. There is no such thing as a startup. Everything is a small business. A startup is just a word that was created by Silicon Valley or Inc. Magazine or whoever to identify people that start small businesses. In the end, if you’re filing a tax return-

Elizabeth: You’re a small business.

Gene: … you’re a small business. You had mentioned earlier about business owners resisting that they’re a startup, and I totally get that as well. I don’t whether people think it’s cool to call yourself a startup or whatever.

Elizabeth: Well, my definition of a startup, and this is not based on anything, this is just my definition, is that I feel like when people build a startup rather than a small business, small businesses are built to last, but startups are built to be sold to someone.

Gene: No, I don’t agree with that. First of all, if you’re going into a business just to sell it to somebody, that’s still a business. Your business might be two years, three years, four years old, and then you decide to sell it, well, that’s the business that you’re in, that’s what you’re doing. Again, listen, if you’re listening to the show, you’re not running a startup. You’re running a business. I don’t care if you just started your business a week ago, you’re not running a startup. You’re running a business. If you started a coffee shop, and that’s the other thing where people mix up the words. If you start a pizza shop, can you imagine if I opened a pizza shop last week, and I called my pizza shop a startup? Do you know what I mean? But, oh, if you’re in Silicon Valley and you raise money from a venture capital and then you’ve got people that you’re developing, then you’re a startup, aren’t you, right? It’s not.

People say, “Well, if you don’t have any revenues, how can you call yourself a business? Aren’t you still just in startup mode?” No, that’s not the case. If you’re signing payroll checks, if you have a general ledger, if you’re filing a tax return, then you’re running a business. If you don’t have any revenues, well, then you’re running a pretty lousy business right now until you actually have revenues. But it’s still a business. It’s still a business.

Elizabeth: I think Twitter just posted a revenue profit for the first time.

Gene: They did, and some people still call Twitter a startup or Uber. If you look around, they’ll refer to Uber as a startup. Isn’t that crazy? It’s just the word that people get caught up in because it sounds kinda cool to say that. It’s silly.

Elizabeth: What’s the difference between a startup founder and mompreneur?

Gene: All of these are just buzzwords that people like to associate themselves with. First of all, mompreneur, God forbid if you’re calling yourself a mompreneur. Stop with the mompreneur.

Elizabeth: There’s a whole group of-

Gene: Stop. Everybody stop with the mompreneurs. Good for you, you’re a business owner. You started up your own little business, so you wanna joke around and say, “Oh, yeah, we’re moms.” I guess dads can call themselves dadpreneurs. Fine, it’s kind a funny, haha, if you wanna call yourself that, but you’re a business owner. I think we’ve had this conversation. It irks me.

Elizabeth: I can tell.

Gene: Oh, I get a bit of a tic when people call themselves an entrepreneur. You ever see people’s-

Elizabeth: Serial entrepreneur.

Gene: Serial entrepreneur, like you’ll see that on their Twitter profile. They’re a serial entrepreneur. I think it goes back to my days, because my dad used to call himself an entrepreneur. Maybe that’s what it is, it’s like a dad issue.

Elizabeth: You even laughed at him for using that?

Gene: Laughed. I don’t what it is about you’re a business owner, good for you. I’m not saying that, I think it’s great, people that are entrepreneurial as it is, but in the end, you’re a business owner. To be a responsible business owner, you better know how to buy something for a buck and sell it for three, so you can provide livelihood for people.

Elizabeth: Two questions then.

Gene: Sure.

Elizabeth: When you go to a speaking event, you speak publicly, you write books, you do this podcast, you’re a columnist for a couple different outlets.

Gene: Oh, and for The Hartford’s Small Biz Ahead.

Elizabeth: And for The Hartford’s Small Biz Ahead, obviously. Have you ever been called an entrepreneur in one of those settings?

Gene: Yeah, people will sometimes refer to me as an entrepreneur. If I get the chance, then I usually reject that.

Elizabeth: You correct them?

Gene: Yeah, I usually reject that.

Elizabeth: Now, okay, second question. Let’s say you’re at one of these conferences or speaking events, and someone shakes your hand and they’re like, “Bob Smith, entrepreneur.” Do you just laugh in their face?

Gene: No, I don’t because that would be rude, but I’m laughing inside. I am laughing inside. I get a lot of that. I do have people coming up and they say that they’re an entrepreneur, they’re very whatever. I’m not gonna sit there and goof on them or whatever, but inside, I’m like, “Just run your business. You’re a business owner, is what you are.”

By the way, and I think we had this conversation way back in the past, we’ve done more than 100 shows now. Most of my clients, and I’m not speaking this alone, they sort of resist calling themselves business owners or small business owner. Okay, if you get asked, you’re going through immigration at Heathrow Airport, “What do you do for a living?” “I’m a business owner.” Okay, fine. Most people refer to what they actually do, like, “I sell paper and film,” or “I’m an architect,” or “I’m an attorney,” or “I run a coffee shop.”

Elizabeth: “I sell CRM systems.”

Gene: Yeah, people do that. They answer, what do I do, is I sell CRM systems. You associate yourself, I hate calling myself, people refer to me all the time as a small business owner. I am, but that’s not who I am. I sell CRMs. I help my clients do things quicker and better with the CRM systems that we sell. I’m not a small business owner.

Elizabeth: I think the moral of the story then is people are just getting caught up in semantics.

Gene: Absolutely, and I think it’s romance. People sometimes start businesses that probably should have no business starting a business because they don’t have certain skill sets, like accounting knowledge or things like that, right?

Elizabeth: Yeah.

Gene: Another conversation, but sometimes they get caught up in these semantics. They get in the romance, they’ll go, “Do you know what? I’m gonna quit my job and be a startup founder. It sounds so cool.”

Elizabeth: When was the first time that you heard the term startup founder? Did it go back to the ’80s?

Gene: It’s gone back a long time. I can’t actually pick the time where, but I can say it’s only in the past, I’ll say, 10 years that it’s really become a cool thing. I think we’ve hit a tipping point with that. I think even if you’re 30 years old and you’re among your friends, and you’re like, “Hey, man, I’m running a startup,” I think even now people are starting to raise their eyebrows and saying, “Really? You’re still using that word?” People gotta come up with a better word than that.

Elizabeth: For our listeners, tell us in the comments, what do you like to be referred to as, because you could be a solopreneur, an entrepreneur, a mompreneur, a dadpreneur, a startup founder, a small business owner, a business owner. Tell us how you like to be referred to. Weigh in, in the comments, in the show notes. We’ll be right back with Gene’s Word of Brilliance.


Elizabeth: Alright, we’re back with Gene’s word of the day. I’ve heard a preview. I think it might actually just be one word today.

Gene: Facebook-

Elizabeth: Oh god.

Gene: … is my word of the day. Listen, we’re in early 2018. If you are listening to me right now and you have a presence on Facebook, you have a Facebook page, like 70 million other small business owners, you get leads from Facebook, or you have a community and you’re engaging, and you wanna build your followers, or you wanna sell products on Facebook, here’s what you need to know. Facebook has changed its algorithms in a big way. This is the bottom line for you. No longer is there such a thing as organic reach on Facebook.

Elizabeth: Define organic reach.

Gene: I will. Organic reach basically means you write a brilliant post or you have a video, and you post it, and it’s so awesome and great that different people start sharing it and it goes viral, or it just reaches a bunch of people on its own, organically.

Elizabeth: Yeah, no money behind it.

Gene: Right, without any money behind it, without no help. Those days are gone, right? That was great for the past few years. Facebook is a publicly held company. It is an advertising platform. It needs to generate more revenues from its advertisers. If you want your post to be seen, if you wanna sell products on Facebook, if you wanna get yourself out there and be noticed, you are going to have to spend money now. If you don’t spend money, nobody is going to see you.

Elizabeth: Do you think it’s worth doing if you’re not gonna spend money?

Gene: Sure, it depends if your audience is out there. The money is not that huge. It can be just a few hundred bucks for a post. Facebook provides fantastic tools. It provides a way to target audiences. You can create a custom audience that you can go after. You can create things called lookalike audiences, which are basically Facebook users that are kinda like a bunch of your customers, that you can upload a spreadsheet. You have all these different choices. You can monitor and analyze how you’re doing. But I’m telling you one thing, you’re gonna have to spend some money and you’re gonna have to spend some time. Somebody’s gonna have to be digging into it, seeing what campaigns work, what campaigns don’t work, adjusting, tweaking, and trying this again and trying it again. This is what Facebook is in 2018. Deal with it.

Elizabeth: This is when Gene likes to say, “Hire a college student part-time.”

Gene: Yeah, I do. You hire a part-time person or hire a social media consultant or somebody from Upwork or Guru or Craigslist for a few hours a week to monitor it for you. We were just talking about getting noticed for different things that we do, like a post or whatever that are out there. Nowadays, you’re just not gonna be found, on Facebook in particular, if you don’t spend your money. You have to have a budget and that’s reality going forward.

Elizabeth: Now I’m gonna give another tip on Facebook in our next episode, which is all about why so many small businesses fail.

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