On October 16 the New Jersey Economic Development Authority’s CoVest Fund announced its first investment: it will provide up to $250,000 in funding to Reflik, a Somerset-based executive recruiting firm. The EDA-sponsored CoVest fund is the latest in a series of initiatives that combine venture capital and economic development incentives, aimed at boosting the state’s tech industry.
On its website the NJEDA declares the CoVest fund is for “supporting New Jersey’s entrepreneurial ecosystem.” Elsewhere, in press releases and announcements, the EDA uses the term “startup” to describe the targets of its investments and incentives.
Words like “startup” and “entrepreneur” may be somewhat overused, but they have come to have very specific meanings in the business world.
Some small business experts say that for business owners, the distinction between a “small business” and a “startup” is worth thinking about.
According to the U.S. Small Business Administration, the simple and abbreviated definition of a small business is an entity with 500 employees or fewer. Any business in its infancy can be considered a startup. Entrepreneurs often use the terms “small business” and “startup” alternately — a valid designation to some and a bone of contention for others.
“It’s acceptable to use the terms interchangeably,” said John Harmon, president and CEO of the African American Chamber of Commerce of New Jersey (AACCNJ) in Trenton. “Any business in its infancy stages can be considered a start-up.” Harmon added that the specific phraseology of a startup and a small business can also be determined by the initial size of the business and future business and revenue goals. While he said it is acceptable to use startup and small businesses synonymously — at least from a nomenclature standpoint, he takes the issue a step further and added that a business owner is different from someone being self-employed. “A business owner has employees that are working on the owners behalf, and a self-employed person is working for himself,” he said.
Beth Filla, a training and technical assistance officer at the United Countries Economic Development Corporation (UCEDC) — a nonprofit economic development corporation based in Trenton, said the distinction between startup and small business is ambiguous. “The terms ‘start-up’ and ‘entrepreneur’ are used more with businesses that will likely grow quickly — often with the intention of selling or going public,” she said.
Filla added that there are thousands of people running their own micro-businesses — such as teaching private yoga, meditation and art classes; child care; or selling items on Craig’s List or eBay. “All of these are small businesses, and the nuances of language are there to help us get quicker understanding,” she said.
However, some entrepreneurs readily dismiss the notion of anyone calling their business a startup. Startups in the IT industry tend to be plentiful, frenzied, and generally are not established for the long term, said Avis Yates Rivers, CEO and owner of Technology Group Concept International (TCGI), based in Somerset.
Rivers’ multimillion dollar cloud-based asset recovery and software asset management company is one of only a handful of minority and women-owned business enterprises in New Jersey that also specialize in equipment leasing and financing. Her client list includes Bank of America, Cisco Systems, Merrill Lynch and Verizon. “I liken a start-up to a lot of activity in the tech sector,” she said. “Startups are not necessarily intended for long-term growth and development, rather acquisition.”
Rivers said small businesses generally cover the gamut of different types and structures of firms with fewer than 100 employees and revenues less than $25 million. Rivers said establishing long-term goals and specific objectives should be a priority for any entrepreneur of a startup or small business. “Think about where you want your business to be in five years,” she said.
Rivers said many small business are owned by women and people of color, veterans, and people with disabilities. “This business sector should be encouraged, developed, and utilized to the fullest as startups or small businesses,” she said.
Lastly, while the debate of whether it’s acceptable to use start-up or small business will likely linger on for years, the key to being a successful business owner — startup or otherwise — is simple: think and act entrepreneurially.