How do we begin to describe a startup? Well, it can be defined as one of many things, but, for the sake of this argument, we’ll stick to the dictionary’s definition which is “a newly established business,” pretty simple right? Well, if that’s the case, how are startups different from small businesses?
The main difference lies not only with their vision for the future, but, the type of effort put into what they do every day to achieve their end goals. Startups aren’t confined by barriers of the mental or physical kind, relentless in their pursuit and embody the ideal of thinking on a global scale while implementing locally. Their competition isn’t limited or focused mainly on other businesses around them geographically; it includes those operating worldwide.
Startups are designed to grow at a rapid rate, introducing a product or service with a demand from a large group, while having the means, methods, and resources to provide for their potential customers. Additionally, it is based on the desire and capability to obtain rapid growth in the market, or better yet, like the CEO of HomeJoy, Adora Chueng likes to refer to it as a “state of mind.”
Each startup goes through several phases as it grows and eventually blossoms into a full-blown business entity. These can be summarized into three different stages that measure their journey and expansion from being an idea all the way to becoming an end-product. Here’s what we’re talking about:
- Early Venture (Birth and early childhood).
This can be likened to the formulation stage of a business, and similar to a child, it’s aching to come out of the womb and discover the world around it. This stage is full of questions about the makings of a company, the type of end-product it would like to produce, its boundaries, limitations, and scalability are all issues to be dealt with and understood at this crucial time. You can think of it as a person going through the phases of childhood, acquiring the knowledge they need, evaluating the world around them, or in this case, the market and coming up with an action plan.
- Series A (Teenage angst and a millennial quarter-life crisis).
This is a vital transition stage in a startup’s life, as now they have to translate their vast potential from theory to execution. This round occurs after potential investors have pinpointed the opportunity for the business to scale and grow in the market and have decided to invest in it for it to do so. It can be referred to as when the organization has created an identity of its own and is at the point of putting their words where their mouths are at – basically, implementation.
- Growth (The peak of your life, so far).
During this phase, a startup’s activities are expanding, and their company is on an upward spiral, having found its identity and place in the world. During this stage, the once small-scale startup is expanding at a fast rate, in areas of market share and return on investment and has come to build a rapport with customers and a comprehensive repertoire in their respective industry.
So, Does it ever stop being a startup? Asking if its still considered a startup after it has already received investment and funding is like asking if a child is still yours now that they’re financially independent. While on the opposite side of the spectrum, to more prominent corporations, startups may be known as the new guy or the youngest member in a group of friends, without much emphasis on their lifespan or how fast they have managed to develop, as it’s the sentiment that is usually in the forefront.
The primary indicator and point of differentiation between a small business (a saloon or family restaurant for instance) and startups such as Amazon, Uber or Google, lies in the incorporation of technology to extend the level of an organization’s operation.
To conclude, there might always be an ongoing debate about the definition of what a startup is, and whether or not after it had scaled up if it would still be considered that. However, it should be noted that the way the business is run, the company culture it embraces and ability to adhere to unique challenges innovatively, regardless of how old it is, may be the determining factor.
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