Everything has an initial starting from some point. A startup is a business idea which should not be misunderstood with small business. It is a dream of a large company with different ideas from the existing ones with all the desires to take the market. An individual or few persons start a company on a small scale, is basically known as a startup. In this, one cannot ensure a 100% success rate.
A startup is a young company which presents something unique to the market and creates their own place. Financing and funding help with the investments during testing, developing and marketing stages. It is done with the help of banks, government organizations or non-profit business organizations. A brand new company can be considered as a startup as well as a five-year company too. Incubators, family, and friends can provide investments and suggestions which help in the direction of growth.
The startup gives an idea of a young pass-out with a dream of entrepreneurship having unique ideas from the present one with a goal of fast growth and large company. Its definition goes like if the revenue generated by the company is less than $20 million, employees less 80 and is determined in control of the same company which was started, that is, it has not gone through major changes, then it is considered as a startup, until 5 years. According to American Heritage Dictionary, a startup is- “a business or undertaking that has recently begun operation“. Any startup company which shows a potential growth in its business is able to attract the funds which further help in its growth.
A new idea can be a tech startup or a non-tech startup. Today, where technology takes the charge everywhere, any startup linked with technology has higher chances of growth rather than any non-tech. Any new idea, if present in the cell phone in the form of application, is able to reach more people in less time. It not only helps in the growth but also gives an easy approach to reach the public and get the reviews. The suggestions and ratings help in the modification process.
Following are the key points which give an idea about how the founders think about growth for their startups:
Startup Business Different from Traditional Business:
They targets of a large market in a short period of time. Most startups are tech startups as it helps them to reach the public to a large extent and from any place. The business will run no matter the owner is present or not, no matter its a daytime or night. But in the case of traditional business, there is a requirement of a market where you can reach the people within your range and it grows at a constant rate.
There is a big challenge for the startup business as to get high investments. It has to show high growth rate. Investors show interest only if they see better returns in future.
Finance and Fund relation:
Angel Investors or Venture Capital Firms invest in startup business whereas a small business can depend on loans or grants. In the case of Venture Capital, they provide help to the company as well so that it can gain profits. Whereas, in the case of small business groups, they need not require to report back to their bank about their work. Therefore, backing up by the investors provide help to the startups.
Exit Strategy in a startup:
Before starting a new company, you should be aware of its ending or exit strategies. The investors invest only in the startups having an exit plan. It is a requirement because others are investing in your company and it’s not your liability 100%. Your ending plans should be in the form of a steady revenue stream which helps you to pay back the investors, funds or loans.
In the case of traditional business, an exit strategy is not that important because it is total your responsibility. The future of the company, it’s profits or losses are yours and no one is dependent on them.
Funding rounds/ Investing rounds:
- The seed round is the first round of the very early phase. Angel Investors participate in the seed round.
- Next round is called Series A. In this, Venture Capital Firms participate along with the Angel Investors.
- Further 3 rounds include Series B, C, and D. Initial Public Offerings (IPO) takes part where the investments are increased.
Following are the key points one should look in himself to start a startup business:
Hard worker and no stopping:
If you can work hard continuously 5 years for your dream without getting tired or disappointed, then go ahead. It’s definitely your type of business plan. But if can’t have that much patience then think before to put your foot in this.
Unique idea to hit the market:
If you believe your idea is totally unique from any other product or service present in the market and it can have the ability to reach the maximum public then you are going in right direction. In other words, you need to think big, and cover a larger portion of the market, which includes millions of users, in a short span of time. Therefore, tech startups are more successful as they can reach maximum users in less time.
Ready to take guidance from an expert:
Incubators and accelerators are present to guide and advice about the business strategies, where to focus on, how to work for rapid growth and most specifically, where to start at.
Be an innovator:
If you can be an idea of an innovation, the world will follow you. With the change in technologies every new day, the world welcomes any innovative idea with a chance to have a rapid growth too. Many companies, instead of trying new innovations internally, prefer investing in a startup. Therefore, it is necessary to launch a startup with an exit strategy so that you can attract investors.
A startup is not mere a word, but it can change the world if you are ready to invest your time and hard work with confidence and determination. With the help of technology, the startups are growing and taking the market at a very large rate. Explore yourself and think if you have any such idea which can be new to the world. If there is any loophole in any business plan and you have the ability to cover it, then try it.
Think your idea and decide your business type. Live your dreams because this is the time.
I’d like to hear from you about your dream plans. Give your valuable comments and suggestions.