In the beginning, a startup and an SME (small- and medium-sized enterprise) can appear very similar to those looking in from the outside – at the end of the day, both are based on the initiative of starting a business and making it profitable. However, there are aspects that differentiate them from one another.
Startups are generally found in a technological environment, and they dedicate themselves to specific niches within this. Also, they view risk differently – they are more aware that the project may fail. For their part, SMEs are aimed at existing markets and have the traits of a formal business, where there is a long-term plan and losses can be assimilated for a time. They are very widespread: 99 of every 100 companies are SMEs, and in Europe they employ two out of every three people, according to European Parliament data.
In this article, the entrepreneur David Lloyd shares some advice from what he has learned about turning your startup into an SME: do not try to do everything on your own, know your numbers, be methodical and organised and, finally, look for alliances.
For Lloyd, one of the biggest mistakes that an entrepreneur can make is not delegating. By not delegating, the growth of the business can stall. Generally speaking, his recommendations focus a lot on team work. On the one hand that involves finding partners, and on the other it is about creating a robust business culture that will allow the business to expand more easily.
Overcoming the first stage after getting a startup up and running is one of the greatest psychological barriers that people who decide to be entrepreneurs face. One of the milestones that is reached is known as the break-even point, which involves a company equalling its income with its expenses, no longer making a loss.
At this point, the startup must decide to scale the rock face. In order to grow it is important to seek advice and mentoring in matters such as digital transformation, customer experience and internationalisation. If at this time your employee base has also grown, and you are more sustainable, financially speaking, you will be able to consider the critical phase done and dusted.
If what frightens you in terms of taking the next step is funding, you can use programmes like Horizon 2020, promoted by the European Union. Between 2018 and 2020 this will have a budget of up to €1.6 billion to support those startups that have the potential to aim high.
Evolving from a startup into an SME implies changes, naturally, but if these are handled with a clear mind and keeping things in perspective, then moving from one phase to another will be beneficial for the project, allowing it to become definitively established in the market. It will be a small step for society and a giant leap for the entrepreneur.