What is a Startup? All you need to know about Startups!
What is a Startup? The term ‘startup’ is talk of the town nowadays, and it is the most popular topic! Many people define the startup as ‘the tech business and with less than 100 employees.’ We cannot say that this definition is not right, but it doesn’t explain the whole philosophy behind the startups.
According to this definition, Uber or Facebook, might not fall under the category of startups, right? Whereas you might be categorizing an app or a game with a single founder under a startup, that is not right! The concept of startups is vast and unclear.
Many people want to become entrepreneurs and open their own businesses. Much needed thing is to explain all about startups to clarify the concept of startups for young and enthusiastic entrepreneurs in the making. This blog is intended to answer the question, “what is a startup?” anyway.
What is a Startup?
One thing that needs to be understood is that there is no hard rule to define a startup. Different professionals define a startup differently.
Let’s start with a summary by the following video, you can find the differences with Small and Medium Business:
Steve Blank, a startup guru, defined it as a temporarily formed organization or business to explore a sustainable and scalable business model. He differentiates a startup from small companies by the fact that small businesses are based on fixed business models. And It is not the case of a startup.
Another famous definition of a startup explains it as a business venture that the founders have started to solve a problem or find a solution to the potential challenges that can create a significant business opportunity and impact.
Finally, a definition made by a famous entrepreneur, Eric Ries, founder of lean startup methodology is,
“A startup is a human institution designed to create a new product or service under conditions of extreme uncertainty.”
From the definitions, we can establish the answer to our question, ‘What is a startup?’
Basic functions of any startup are,
- Finding a solution to any problem by envisioning a product or a service.
- Conceptualizes new business models regarding the customers, distribution, and financial aspects of a business.
- Implement the business models to predict whether they are sustainable or scalable for the customer perspective!
And one most important thing that a company 5 years old can be a startup, and a big startup having more than 200 employees can also be a startup! Facebook was a startup, and Uber was too! The difference is that their business model worked and business scaled. Let’s see at different types of startups!
What are the different types of Startups?
Here are six different types of a startup as:
Small Startups to earn kitchen money!
A startup is not always supposed to be a well-thought idea, or an entrepreneur is not with a business degree! A baker, barber, or a grocery store owner is also an entrepreneur. Their business is a startup that has been started not to be scaled but to feed their family!
Lifestyle Startups to be your own boss!
Many freelancing web developers, or graphic designers, or coders are those who are also entrepreneurs. You will find many such enthusiastic entrepreneurs who have a passion for their work, and they work for themselves and are their own bosses!
Scalable Startups that are formed to become big!
You can find a lot of such startups! Facebook, Google, Uber, and many more are the startups that were formed around revolutionary ideas, and their founders knew it!
Such startups hire the best of the best and brights among the brightest! The entrepreneurs of such startups are on the journey to find the business models that escalate and are sustainable! Once they find it, boom! They will bring venture capital to give a big boost to their businesses! Such startups are the real ones- Personal opinion- might be wrong!
Innovate or Die!
These are big companies startups! A large company can only survive if they continue to innovate! There is a reason large companies are said to have a definite life period! Why? Because if a business is set up for a single idea, after some time, demand shifts, customer preferences change, technology advances and many external pressures are there! How can a business survive? Continuous innovation, or you are no more remembered! Google is an example of such a startup!
Made to be bought!
There is another kind of startups whose founders have no intention to grow it into a scalable business; instead, they sell it once the concept succeed! Many app developers and web solutions are examples of such startups!
Social Startups: Think Broad- Contribute to World!
Many entrepreneurs are more concerned about giving others a better place to live in the world! Such social startups are started by the intention of improving the world and not just to have a scalable business! But, it is obvious, revenues come along!
What is a startup: Characteristics of a Startup!
When you want to know if a business is a startup or not, look at some characteristics of a company! If more of the traits exist in a market, it is a startup! What are the startup’s characteristics? Find them below!
· A startup is a solution to a problem!
You must have heard a famous quote, ‘Necessity is the mother of invention.’ It is the definition of a startup! Surprised?
A Chinese entrepreneur explained startup to his 8 years old son as ‘ a startup is a form of the modern inventor! The entrepreneur faces a problem, and then he ventures to solve it!’ and that is pretty true!
So, if a business starts with an idea to solve some existing problems, it can be a startup!
· A startup is focused on growth!
Next time if the question, ‘what is a startup?’ strikes your mind, recall what is being written in the next few sentences! Small companies might be happy if they stay small forever, but a startup, no matter how small, will always be focused to scale up!
Either it has to invest capital or lend technology, a startup’s primary focus will be to develop a successful business model that sells and grow!
· A startup is Innovatory
The only way to differentiate yourself from the rest of the competitors is your core competency! And for a startup, it is innovation! Every startup that comes into existence is based on some innovative ideas or innovative solutions to a problem.
· A startup is flexible!
The answer to the question ‘What is a startup?’ remains incomplete without this feature of a startup! All startups, or you can say 90% are flexible! And those who are not are either not startups or they fail in first years. The reason of the flexibility is that a startup is experimenting to validate a business model! If they found anything that needs to be fixed, they should immediately adapt to that.
· Finally, A startup has a risk!
No business in the whole universe is risk-free, so, is the startup. Risk is associated with all types of companies, and startups have that risk too. With the innovations, there are high risks of an investment to go in vain! That is why businesses are considered a high-risk venture!
Final Words about What is a startup.
The misconception about the startup often exists that it is a small business or is just a new business! But, this blog was aimed at unfolding the myths and misconceptions about startups! A startup is a new way of doing something that brings value to obsolete methods! We have tried to comprehend all that you need to know when answering the question ‘What is a startup?” We hope it will also be beneficial for those who are looking to venture into any startup!
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