In my last post, I talked about how marketing for start-ups is different but most of the points I used contrasted it with marketing at larger companies. By doing that comparison, I didn’t mean to imply that start-ups are the same as small business. That couldn’t be further from the truth and this impacts how you do marketing for each.
Let’s take a quick look at what Wikipedia says about each type of company:
Start-up: A start-up is a company with a limited operating history. These companies, generally newly created, are in a phase of development and research for markets.
Small business: A small business is a business that is privately owned and operated, with a small number of employees and relatively low volume of sales.
In looking at these definitions, some fundamental differences come to mind. First off is that a start-up is more of a stage than an end result. Almost all start-ups, but especially those in the technology space, have aspirations to be large companies and some may even wish to pursue world domination. On the other hand, most small businesses don’t want to grow much bigger than a few locations or a small staff, and tend to target a local area for their customers.
So while both begin as small companies, to grow big a start-up quite often needs funding from venture capitalists or angel investors to take it to the next stage. And, for most that stage is ultimately an IPO or acquisition by a larger company. Small businesses, on the other hand, are privately funded often by the owner or a close circle of friends or maybe a loan from a bank.
Depending on the amounts involved, funding from a VC or other sources gives the start-up the ability and luxury of hiring some dedicated marketing resources and also allocating money to marketing programs. This money also allows the start-up to run more comprehensive marketing programs as they can spend money on many different tactics and media to get the message out there to prospective customers.
While I talked about the limited resources of a start-up in my last post, it can look like a gold mine to a small business. It’s rare for the small business to have a dedicated marketing resource so developing and implementing an integrated marketing plan is much more ad hoc. However, today’s social media tools can be leveraged effectively to grow the business with only an investment of time.
The downside of this influx of money is that the source of it usually has the objective of growing quickly and getting a quick return on that investment so new pressures are put on the start-up to deliver now. For a start-up to grow, they need a lot of customers or larger ones quickly, not that small business do not but the scale is different. This means the marketing programs for a start-up need to target a wider geography and generate hundreds or thousands of sales-ready leads when compared to a small business that may be able to focus locally to get all the customers they need.
If the marketing budget was increased with the funding then running these extensive programs can be easier but if money is still tight then these leads need to be generated in a very cost-effective manner while also building a brand which can be a tall task. The small business on the other hand can target its efforts locally and look for potential customers in their community. This difference in scale has a direct impact on the type of programs either company should run.
I could go on and show how the fact a start-up wants to grow into a large company while a small business likely does not affects marketing but I think it’s clear that these two types of companies are very different which means they need to develop the appropriate marketing plan to reach the objective with the resources available.