What is the difference between SME and Start-Up?

When it comes to the types of businesses, SME and Start-Up might sound familiar to you but sometimes you might be confused and do not understand the difference between these two models of businesses. Today, ACU PAY will bring you an answer to the question of the difference between SME and Start-Up, starting from building understanding of these two types of business in the aspect of models, the size of the business, raising funds and asset model.

What are SMEs and Start-Up?

SMEs are small and medium enterprises that run a concrete business which are normally service providers or sell goods that are already on the markets. The SME business will grow by 30% – 50% in annual revenue growth. SMEs play an important role in economic stimulation in employment such as hotel owners, food business owners, or counselors.

Start-Up is the businesses that begin with a concept or a new idea which meet the needs or solve the problems of the target group by using technology as a driving force. It’s a business that focuses on rapidly growing by 1,000% in a matter of months.

What is the difference between SME and Start-Up?

1.  The business size

SMEs are small or medium-sized businesses that have employees depending on their size while Start-Up is a very small business in which the employees may be less than 10 or reach 100 people, but can make a lot of money.

2. The business growth

SMEs are normally stable businesses with steady costs of production. A variation in production costs slows down the growth of business and is hard to reach out to every consumer group. On the other hand, Start-ups have technology as a main driving force which will enable them to grow in a leap forward because innovation has a big impact on people’s lives in a wide range.

3. Raising funds

The SMEs investments are often from the owners such as savings or a bank loan while STart-up investments are from the investors or interested people.Start-ups will sell ideas to get the investment back in exchange for the investors to have profit percentages or partnerships.

4. Assets Model

SMEs are tangible assets while the assets model in the first part of start-up would be an idea or intellectual property.

However, both SMEs and Start-ups have some similarities. Both types of businesses are entrepreneurs that run businesses to meet the needs of people. In addition, these businesses have to keep up with consumer trends and behavior at all times, regardless of the businesses. Entrepreneurial Mindset is a key element of the business to adapt and develop to fit in the current market.

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