What Is The Difference Between A Start-Up And An SME?

The word ‘start-up’ has gained immense popularity in the past few years. Many times, other words like an entrepreneur, small business, small enterprise, etc. are loosely used by people in general when talking about start-up businesses without having a grasp over the key differences between a start-up and an SME, i.e., small and medium enterprises.

When an individual with a unique idea transforms his or her ideas into a business opportunity, it is called a start-up. The aim of a start-up is to establish a hold over the market with its never-heard-before concepts and drive in huge revenues within a short span of time. A start-up requires conviction and focus to maintain its unique aspect. No matter how unique the idea behind your start-up is, if you do not have a great business model to develop it on, the idea alone cannot hold the fort down and a rival with a better business plan and longevity might take ‘inspiration’ from your idea.

In any business, be it a start-up or an SME, customer relationship management is one of the key factors in determining whether or not the business can survive in the long run. Though CRM is a common key to success in both business models, there are a few key points of difference between the two:

Pace of growth: 

Start-ups are essentially launched with the intent to create a disruption in the market by bringing in a wave of new and unique products/services. They are looking to create a large impact in a small time frame and grow rapidly. An SME, on the other hand, is a small scale business operation looking for stability and profits. Such enterprises are launched for regular income rather than promoting a unique product/service.

As stated in the previous point, the basic foundation of launching a start-up is to build a rapidly growing enterprise and their target market is global. On the flip side, small and medium enterprises target the local market as their plan is to cater to the needs of the people at a smaller scale, for example, departmental stores, basic convenience stores, hair salons, etc.

Risk involved:

With start-ups, the level of risk is higher as the business model is new and never tested before. It might become successful or backfire. SMEs are comparatively at a lower risk level in terms of their business failing.

With the above-discussed points, one can clearly see for themselves the distinction between the two terms that are quite commonly used and misunderstood as one and the same. It is through the understanding of these basic differences that future entrepreneurs can create suitable business models for better customer relationship management and achieve success in the long run, be it with a start-up or an SME.

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