What are the Differences between Startup and SME

Small and medium-sized enterprises, denoted as SMEs, often get confused as same as start-ups. Start-ups are temporary organizations that are in search of a repeatable and scalable business model, while SMEs are owned independently and operated organizations, aimed towards the selling of recognized products in the local market.

The small and medium enterprises are engaged in both manufacturing and service. The organizations that have not crossed 7 years of business in the industry are defined as start-ups. This parameter is given by the Ministry of Commerce and Industry, Government of India. Here we can take a look at the differences between these two types of organizations.

Differences between start-ups and SME

One should understand the flowing differences between a start-up and SME it will be easy for you to decide if the company is a startup or an SME.

  • The Business objective: Start-ups are small in size, but these are launched with a big vision. The owners of start-ups have the aim to grow their business fast and expand well. Well, SMEs are more structured, and SMEs aim to sell products and services locally. Small and medium-sized businesses are planned to remain sustainable. SME first analyze the market to detect the gap and potential customers before they pitch.
  • Risk factor: This makes a massive difference between these two types of organizations. SME’s are not risk-takers. The owners here enjoy the profit they earn locally. Being unique, and different, Startups need to stand out against other established businesses, and that is the major idea behind the launching of a startup company. When one tries to be unique in the competitive business world, the level of risk involved remains high. So, startups are in a higher risk zone than SMEs.
  • Technology: SME aims to operate locally, and hence it, in general, does not need to depend on cutting-edge technology. Such businesses can use conventional technology to satisfy customers. But start-ups are launched with a big vision. Hence the owners should keep an eye on the upgraded technologies available in the market to develop their business. The logistics management of a start-up should implement more advanced know-how.

Hence from the above discussion, you will understand that there are significant differences between start-ups and SMEs. Apart from those, one can also notice lots of differences in employee benefits, terms of operation, etc. between an SME and a Startup.

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