Short answer
A startup is built to grow fast and scale rapidly, often chasing a large, unproven market with outside investment, while a small business is typically built for steady, sustainable, local or niche growth.
Both are new companies, but their goals and growth models are usually very different.
Startups
- Aim for rapid, large-scale growth, often nationally or globally
- Frequently funded by venture capital or angel investors in exchange for equity
- Built around a repeatable, scalable business model, often involving new technology
- Accept higher risk of failure in exchange for the potential of very large returns
Small businesses
- Aim for steady, sustainable profit rather than rapid scale
- Usually funded by the owner's savings, loans, or reinvested profit
- Common examples: restaurants, local shops, consulting practices, service businesses
A startup can eventually mature into a large company, while many small businesses intentionally stay small — both are valid, just built around different goals.