Monthly Archives: November 2014

How To Define a Small Business Vs. a High-Growth Startup

How To Define a Small Business Vs. a High-Growth Startup from The Startup Garage

How To Define a Small Business Vs. a High-Growth Startup

    Difference between a Small Business and a High-Growth Startup

A startup business differs from a small business in one primary aspect: Growth.

A startup company, also referred to as a high-growth startup, is a company with a business model that is designed to be repeatable and scalable. This is directly opposed to a small business which is typically more of a lifestyle business that is not primarily concerned with scalability, but aims to sustain a particular level of income to enjoy a particular lifestyle.

    What is Scalability

To better illustrate the difference between a small business and a high growth startup let’s define the term scalability.

According to, scalability is defined as, “A characteristic of a system, model, or function that describes its capability to cope and perform under an increased or expanding workload. A system that scales well will be able to maintain or even increase its level of performance or efficiency when tested by larger operational demands.”

    Examples of Scalability

An example of a small business – i.e. a business that does not easily reach scale – is an auto repair shop.

Any particular auto repair shop can only reach a certain capacity of workflow given the size of the location and the number of employees. In order to continue growing, the company will need to expand to a second location, purchase duplicate equipment, hire new staff and new managers, and market the business. While this growth is achievable, it is not an operation that is easily scaled.

An example of a high-growth company – i.e. a business with high scalability – is a consumer electronics company. It may be a costly endeavor to create a prototype for a consumer electronic device, obtain intellectual property, and secure manufacturing and distribution.

However, once these obstacles are in
place, the company can quickly and easily grow without very many obstacles other than operating capital. In fact, as the company continues to scale, the operation is streamlined with economies of scale, such as the cost per unit reducing as the unit production size increases.

Another key difference between small businesses and high-growth startups is how the two think about funding, as they typically have different sources of capital available to them.

High-growth startups typically rely on several sources of capital at different stages of the startup process. Early on, the
startup relies on friends and family funding followed by angel investors and venture capital firms.

However, small businesses typically don’t have access to the angels and VCs and therefore rely on friends and family money, bank loans, and grants.

The primary reason that angels and VCs don’t get involved with small businesses has to do with the issues of scalability, outlined above, as well as a lack of
a potential return on their investment.

    Return on Investment

For the most part, small businesses do not make good investment opportunities for angels and VCs for two reasons:

1) their lack of scalability limit the potential for a significant return, and

2) most owners of small businesses are seeking a lifestyle business and not necessarily one that they plan to sell in the
short to medium future. In order for angels or VCs to partner with a company, the business must have an exit strategy that creates a liquefiable event in which the investor gets their capital returned to them along with a return on that investment.

    Should I Launch a Small Business or a High-Growth Startup

Some questions to ask yourself when determining if a small business or a high-growth startup is right for you include:

1) Why are you starting this business? Are you looking to work hard, grow a business, and sell it? Or do you want to start a business that supports a certain lifestyle?

2) Does your product or service have a huge market?

3) Will the success of your business require outside expertise or guidance, or do you have the knowledge and experience to make this business a success?

4) Is your product thoroughly differentiated from other products on the market?

5) How much money do I need to get started?

6) Is this business scalable?

Overall, there’s no right or wrong answer. Sure, high-growth technology companies are certainly the trend now, but starting a small business will always hold it’s appeal.

The Startup Garage applauds the Entrepreneurial spirit in all of you!

Whether you have a question about your Startup or you’d like to discuss our business plan writing services, feel free to contact us for a free consultation!

Startup Weekend San Diego Powered By Google for Entrepreneurs Kicks Off

Startup Weekend San Diego from The Startup Garage

Startup Weekend San Diego Powered By Google for Entrepreneurs Kicks Off

Google, which began in a garage nearly two decades ago, celebrates the entrepreneur in all of us in community events throughout the world.

The objective of these events is to encourage entrepreneurs to learn, connect, and create companies that will change the world.

Today, Friday November 14 2014- Sunday Nov 17th is time for participants of Startup Weekend San Diego to turn innovative ideas into reality. Over a mere 54-hour period teams of individuals will turn cutting edge ideas into newly launched companies that will be pitched to a panel of judges on Sunday evening. Participates will also be part of the Global Startup Battle, a virtual competition, where founder teams go toe to toe against nearly 200 cities. A feat, which will require various talent pools, excellent communication skills, and the ability to move at startup speed.

This year’s event MEGA event will blend Web, Mobile, and Maker innovation. Tackling both hardware and software into makeable products. The first Startup Weekend San Diego ever to include hardware prototyping. Physical product or inventions will have the opportunity to gain hands on experience in using 3D printers, a laser cutter, electronics prototyping equipment, along with expert coaching

There perhaps has never been an environment more appropriate to do so.
This year #SWSD will be held in the new downtown San Diego library.
A $185 million dollar modern construction, designed by esteemed architect Rob Quigley. Toped with an iconic steel and mesh dome, the structure promises to be the ultimate thinking cap for creative discovery.

With Forbes Magazine naming San Diego the best place to launch a Startup in 2014, there has never been a better time in history, to immerse yourself and your business within the local Startup community. The Startup Garage is passionate about entrepreneurship and dedicated supporting the San Diego and Global Startup Community. We are proud to be sponsor, and coach at the event.
Please stop by our booth and introduce yourself.

Cheers to a Successful and Empowering Startup Weekend San Diego Powered By Google for Entrepreneurs.

Whether you have a question about your Startup or you’d like to discuss our business plan writing services, feel free to contact us for a free consultation!

How To “Winterize” Your Startup For Success

How To “Winterize” Your Startup For Success

4 Tips To Get Your Startup Ready For Winter

Startups businesses, just like automobiles, require winterization in order to keep running smooth and stealth during the cold months ahead.

In this article, I’ll highlight the key components found in winterizing an automobile to help aid in Startup triumph.

    The Engine | The Motor of a Startup Machine

Behind every Startup business is the revving motor of an innovative product idea. A product or service, which solves problems and inefficiencies, while streamlining consumer inconveniences. It’s fair to say that outside “temperatures” like the stock market, banking institutions, and technology, influence the internal temperature of a Startups engine.

Is the motor of your Startup adjusting to the current and future market temperatures, or is your product sluggishly cruising down memory lane?

For automobiles driven in freezing temperatures, a thinner less viscous oil is recommended. What if the same holds true for Startups? In times of the “freezing” temperatures (whether in funding, manufacturing, or building a team) a thinner/leaner approach is taken.

The Lean Startup
movement pioneered by Eric Reis, a Silicon Valley entrepreneur, favors the #MVP or Minimum Viable Product. A product development approach, that places consumer interest first, in effort to eliminate risk and increase return on investment.

Make winter a time to flush out Startup ideas into form, inviting and encouraging direct feedback from prospective customers.

    The Battery | The Energy Supplier of a Startup

Don’t get left out in the cold. A thriving business’s greatest power source is the startup team, which supplies invaluable knowledge and resources. It’s true, teams like car batteries; need to be reliable, dependable, and have the ability to start and deliver regardless season or circumstances.

Winter is the prefect opportunity to check in with team members to review how energy/time are being “spent,” to ensure each team members input and output are firing in alignment for the common good of the Startup business.

The fate of your Startup Company depends a large part on your team. Evaluate and examine what inspires, motivates, and increases the voltage for your team members.
Perhaps it’s a monthly happy hour? A weekly creative brainstorming session? Working remotely once per week?

Hit on the power switch, and get your team is wired for success.

    The Tires |Startup Traction

The road to success for your Startup business is full of twists, turns, and various terrains. When a business is moving at Startup speed, proper traction is required.
Snow tires like Market Traction grip the startup roadside to increase performance and eliminate the risks and uncertainty involved in slippery startup slopes.

Market traction is a safeguard for both founders and potential investor, in communicating evidence of market demand and the future momentum of the company.

Winterize your Startup by researching, documenting, and analyzing the following:
• Profitability
• Revenue
• Active Customers
• Registered users
• Engagement
• Partnerships/clients
• Traffic

    Emergency Kit | Tools for Startup Survival

No one enjoys getting stranded in the cold, but when you have a well-equipped emergency kit, the situation becomes more bearable.

A Startup business survival kit should include the following 3 items:

• An air-tight business plan
• An Investor pitch deck
• A strong Entrepreneurial network

Cheers to your continued success regardless of the season!


Whether you have a question about your Startup or you’d like to discuss our business plan writing services, feel free to contact us for a free consultation!