You might have the feeling that if you start a small business, then it is a startup because you’ve just started a new business.
Various factors determine if a business is a startup versus a small business.
In this article, you will find out what qualifies as a startup company.
- Some Definitions of a Startup
- The Concept of Startups Over the Time
- What is a Startup Company?
- Startup and Growth
- The Startup is a Problem-solver
- The Startup is a Temporary Organization
- End Visions
- Innovations
- Scopes
- Profit
- Team and management
- Way of life
- Startups work with technology
- Find a sustainable business model
- Conclusion: What Is It?
Some Definitions of a Startup
- Eric Ries, the creator of the Lean Startup methodology:
“A startup is a human institution designed to create a new product or service under conditions of extreme uncertainty.”
- Wil Schroter, Co-Founder and CEO of Startups.co:
“A startup is the living embodiment of a founder’s dream,” Wil says. “It represents the journey from concept to reality. It is one of the few times when you can take something that is only a dream and make it a reality, not just for yourself, but for the entire world.”
- Neil Blumenthal, Co-Founder, and Co-CEO of Warby Parker:
“A startup is a company working to solve a problem where the solution is not obvious and success is not guaranteed,”
- Marc P. Bernegger, Swiss-based web entrepreneur and Fintech investor:
“A young venture with an innovative service or product, which is growing quickly and has a scalable structure”
The Concept of Startups Over the Time
Maybe you may think that Startups are a current phenomenon but some earlier examples do exist.
In this part, you will learn an overview of how Startups have evolved over time.
1976 – Steve Jobs and Steve Wozniak founded Apple in a garage in California.
The 1990s – Two decades later, the world was in the dotcom boom, when lots of online companies were starting and growing in quick succession.
2018 – Startups events, conferences, and festivals taking place from Finland to Namibia, Montreal to Turin.
It demonstrates that Startups can be found all over the world in a number of sectors.
What is a Startup Company?
The Startup company often starts with an idea and a plan that might resolve an issue or plug a business gap in the market.
Many Startup companies solve a need in society and because of the growth opportunity attract investors.
Most of the startups focus on sustainable scalability and quick, which essentially includes standardization of processes, that were unstructured and can be replicated by the company quickly.
There are no certain parameters on what type of company can be considered as a Startup, but this word most applies to some high-tech companies creating products that leverage technology to perform an existing task or offer something new in a novel way.
Many startup companies do not have a revenue stream and some of them don’t have products for sale.
Startup and Growth
Most people seem to agree on growth as a feature for the definition of a startup. Small businesses may be like to staying small businesses forever, but a startup doesn’t like that.
Paul Graham defines a startup as a “company designed to grow fast”.
The startup is a Problem-solver
A problem identified in a Startup and then try to solve it with ingenuity.
Neil Blumenthal, co-CEO of Warby Parker:
“A startup is a company working to solve a problem where the solution is not obvious and success is not guaranteed,”
Stephanie Caudle, the Founder of Black Girl Group:
“A startup is a company that solves a problem,” Stephanie says. “If your company isn’t solving a problem, your company is simply an idea.”
The Startup is a Temporary Organization
Another definition of a ‘startup’ was defined by Steve Blank who is a serial entrepreneur and professor at business schools such as Stanford, Berkeley and Imperial College.
The definition is: a startup is “a temporary organization designed to look for a business model that is repeatable and scalable.” While a company is “a permanent organization designed to execute a business model that is repeatable and scalable.” Therefore, the difference is that startups seek an attractive business model, while other companies already have such a business model and trying to successfully execute it.
End Visions
The end goal for a small business is to stay in business.
Small business owners want to create long-lasting and self-sustaining small businesses.
Startups, however, want to be temporary. If all things go well, that startup will turn into a massive company.
Innovations
As you know, the most important difference between small businesses and startups in product or service innovation.
The most important things for a startup are Innovations.
Startups intend to create something new or to improve what already exists. For example, it may develop a new class of goods, a new business model like Airbnb or a technology no one knows as of yet like 3D printing.
Scopes
The small business owner puts limitations on the growth of the company and just focuses on the service of a certain circle of their customers.
The owner of a Startup does not put any limitations on its growth and focused on gaining over as much market share as possible.
Profit
A small business trying to getting earnings and a good profit from the very first day.
Maybe a Startup gains first cents after months or even years. The main target for a Startup is to create a product or service, which consumers will like and will take on a market.
Team and management
Manager of Startup needs to develop a leader and managing qualities from the beginning as long as the startup must grow as fast as possible.
Since the company develops, you need to work with an increasing amount of investors, directors, staffs and other concerned parties.
Way of life
If there are investors` funds in a Startup, it will start making a profit earlier. therefore, there is no time to lose. There are people in front of you who wait until you create something new or unbelievable. therefore, a balance between work and your personal life is out of the question. work and work again!
Remember, takes less of a risk and duties in Small business compared to startups. So, it is possible to combine work and your personal life well enough.
Startups work with technology
A Startup is a company working with a goal of bringing technology services or products to market to solve a problem where it’s solution is not obvious and success not be guaranteed.
Find a sustainable business model
Steve Benson, Founder, and CEO of Badger Maps:
“A startup to me is when a person or group of people are trying to figure out an idea and then executing that idea with the goal of becoming a sustainable business model,”.
Conclusion: What Is It?
Remember, there’s no universal definition for Startup, Steve Blank who is known as the father of innovation in Silicon Valley may be defined closest, saying, “It is a temporary organization designed to search for a repeatable and scalable business model.” This definition can also explain why startups are also commonly called ‘growth stage companies’.
Startup starts with an idea and the money of the founder’s own or friends or a bank loan.
Remember, a successful startup receives funding from a venture capitalist, angel investors or IPO.
Anyway, an investor gets a part of the company and becomes a co-owner of the startup.
Startups have little or no revenue coming in from the early stages. They have an idea, and they must develop, test and market it.
How do you define a startup? Let us know in the comments.
