A Startup vs. A Business

Why are some companies called startups while others are called businesses? Is there a difference? And if yes, how do I know whether I am running a startup or should I call it a business?

These are some questions which I have also asked myself often. Initially I thought that a small business is called a startup and when it becomes bigger, it is called a business. But then I saw that often bigger companies like Google, Amazon, Flipkart etc. are still referred to as startups in most journals and publications.

On thinking further, I arrived at a theory which differentiates a startup from a business.

‘When the growth motive of a company outweighs it’s profit motive, it is called a Startup. When the latte starts gaining more importance than the former, the company becomes a Business.’

A typical growth vs. profit curve of a new company is shown below.

In the early days, the entire focus is on scaling and ensuring high growth rates. Over time, the venture gets more inclined towards attaining profitability and sustainability.

When you hear the word startup, you automatically think of scale and growth. On the other hand, the very definition of business is to exchange goods and services for money to earn a profit.