If we look around we see businesses that have seen exponential growth in a short period. Popularly termed as startups, these businesses are getting more and more popular as it works centering an idea and leveraging on the success of the efforts encompassing the idea. As the business efforts of startups keep rising, many people liken and often confuse a startup as a traditional business. But that’s not the case as there is a significant difference between a startup and a traditional small business. Let's look at them from the context of Bangladesh.
What is a Startup?
A business model that is designed to rise significantly – that is the easiest way to define a startup. However, the process is much more complicated and there are a lot of underlying factors that determine whether a business is a startup or not.
The most comprehensive way to put forward the idea of a startup would be a business model that focuses on exponential growth in a short period. The model would also have to be repeatable and scalable, that is to say, the business would sustain the initial growth and build on it as time passes. For a startup, there is no limit to the opportunities and as a result, the risk involved with startups are also very high.
In recent years, Bangladesh has seen a surge of startups. Some of them have been successful in making their mark and scale up their operations, but others not so much. The key driving factor remains the same here with priority in operation and execution of the plan.
Pathao is arguably the biggest startup in recent times. the company started its journey in 2015 as a ride-sharing platform. Today Pathao is one of the key players in the transportation sector of Bangladesh with the motto of “Moving Bangladesh”. one of the main characteristics of a startup is its scalability and Pathao is a prime example of how to scale up a startup. Rather than sticking to ride-sharing, the platform now offers food delivery service, parcel as well as grocery delivery service. This range of services means Pathao can effectively capture the market as well as create a disruption in the existing system.
The story is somewhat for other successful startups as well. Bkash, a concern of Brac Bank has revolutionized the mobile transaction system and has been an important milestone in the endeavor to promote digital transactions.
The story of Shohoz and Foodpanda is similar to that of Pathao. These are effectively the same business model specializing in the service front for an increasingly online-centric client base. Other ventures like Sheba.xyz, Daraz, Chaldal has also had a significant contribution to change the overall market processes in their respective business areas. Some of these ventures operate as local startups and some are part of a foreign startup that has ventured into the Bangladeshi market.
Renowned Startups in the Overseas Countries
For foreign startups, the case is similar to Bangladesh as well. The startups that are doing well or are scaling up their business ventures are practically the ones that focus more on the customer end features rather than initial growth. It is to be noted that customers are the key and once there is sufficient engagement within a service it becomes even easier to secure funding.
Startups like air garage that lets you share your garage space operate on a similar business model to the ride-sharing platform. Other successful ventures like Chime, Petal, Verkada, and Dispatch all work on the principle of ensuring end-user satisfaction. This is also a key difference between a startup and a small business as the scalability of the startup depends grossly on the engagement of the clients.
What is a Small Business?
Small business is a form of traditional business approach. Unlike startups, the intention of small businesses is not to disrupt the market or ensure quick growth by introducing a new idea. Rather the focus is to build on an existing system and grow slowly. Small businesses are often associated with entrepreneurs with limited scope and funding. You might have an idea that is not revolutionizing to be a startup, rather an idea that simplifies an existing system and can become a compliment for that market system.
Most of the successful small business eventually ventures out as conglomerates or industries. Though this is a general presumption and this is not the case always. In the context of Bangladesh, all the successful businesses of the present-day started as small businesses. With the availability of the internet and marketplace access in social media platforms, it is now easier than ever to run a small business with virtually no investment.
Difference between Startups and Small Business
We will highlight some key points of difference between startups and small businesses.
The initial growth is the prime focus of startups. The strategy here is to capitalize on the idea to capture the market as fast as possible. This gives them better leverage over the customer and creates links with other services to scale up the business.
However, a small business focuses on building a client base over time and follows the traditional route of business advancements. A small business might never aspire for growth to the level of startups and that is completely acceptable due to the nature of the operation.
The business strategy of a startup is growth-oriented. The main idea here is to generate growth at the fastest pace possible.
This is not the case with small businesses. As a traditional business model, the requirement here is not to break into a completely new market to create disruption, rather find a suitable customer base and cater to their needs.
Final Goal and Risk Involved
The end goal of a startup is to make sure the business can be scaled up multiple times. in the process, the business strategy might shift gears multiple times until the desired model is achieved. As a startup continues to build on the model, it eventually unveils itself as a company or a corporation. Due to changing strategies, the risk involved is also very high with startups.
For a small business, the case is completely different. Here the end goal is neither to scale up nor to become a company. It can be something as simple as passing the business down to an heir or changing ownership. The need for scalability doesn’t concern a small business and as a result, the risk involved with small business is also very minimal.
To sum up things, startups and small business both have their limitations and prospects. Though the growth opportunity of startups may seem lucrative for many, it is not easy to come up with such an idea to be scaled drastically to ensure easy profit. However, small business holds much better prospects if you are willing to put in the effort and see it pan out over a long course of time as the risk involved is minimal.