Among the myriad factors contributing to success, achieving a substantial profit, excelling as a public speaker or entrepreneur, and venturing into the realm of startups were deemed remarkably trendy.
The allure of starting one’s startup surpassed conventional business ownership, as startups embodied innovation and progressiveness.
A startup can be perceived as a distinct breed of business characterized by uniqueness and the pursuit of novel products or even technologies. Notably, it may necessitate significant investments, but it offers substantial profitability potential concurrently.
Many people equates the concepts of business and startup. However, this approach is not entirely accurate. Actually, startup, what it is? This is a young company offering an innovative product or service.
The term “startup,” what it means itself emerged in the latter half of the 1970s in the United States, been featured in the publications like Forbes (1976) and Newsweek (1977). Initially, referred to companies with a relatively brief operation history. However, it wasn’t until the 1990s, during the dot-com boom, this concept gained significant popularity.
Typically startups are essentially young projects in search of viable business models and often require investments to fuel their growth. But the disparity between conventional businesses extends beyond their operational history. In fact, this is not the primary distinguishing factor nor the defining characteristic of the startup.
To understand what is a startup, how it works, let’s consider the key difference between it and, for example, a traditional business.
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Startup |
Small business |
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A business model is essential for enticing users and prompting them to pay for the product or service. |
Uses a proven model to promote a product and generate revenue. |
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Larger ambitions (such as creating a global product) and rapid growth. |
Transitioning into a large-scale business is a more challenging path to pursue. Furthermore, it is relatively rare for a small business to achieve global success. This endeavor typically requires a substantial financial investment. |
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There are instances where the founder invests their own capital in the startup’s development, but this is typically feasible when they possess significant wealth. In most cases, startup funding stems from investments made by venture capital funds or private entrepreneurs, commonly called business angels. Furthermore, investors in such scenarios do not anticipate immediate returns, but rather envision future growth and potential profitability. |
Business encounters specific challenges in this regard. Firstly, launching a business entails expenses, often involving the need for loans. Additionally, if an entrepreneur manages to secure an investor, the business owner must strive to generate profits and showcase viability right from the outset. |
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Startups experience significantly shorter life cycles due to the various risks involved. As per the findings of the Startup Genome Project, approximately 90% of startups shut down within the initial years of operation. |
Businesses, particularly small-scale entrepreneurs, represent a more stable concept with fewer risks. It enjoys a substantially longer life cycle. According to the Small Business Administration (SBA), approximately 20% close within the first few years. |
Indeed, the distinction between these two concepts is quite significant. However, many people mistakenly consider them as identical. It’s worth expressing a heartfelt “thank you” to those entrepreneurs who proudly label their business as a “startup,” as it ultimately creates confusion among people.
Naturally, we have a tendency to oversimplify things and rely on certain stereotypical beliefs. For instance, when we come across a recently developed innovative project we have invested in, we often conclude that it must be a startup.
The practice shows that it does not imply that it is universally true in all circumstances.
It’s worth noting that not all companies can be classified as startups. If a company has limited potential for profit growth, expanding its customer base, or advancing its product, it would be more accurately categorized as an enterprise rather than a startup.
“A startup is an amazing opportunity to do something new and make a difference in the world” — Mark Zuckerberg, founder of Facebook.
It doesn’t have t be exclusively a commercial project. For instance, there are numerous startups IT, as well as scientific and social projects. The key characteristic they share is their potential for future growth and success.
Although a startup is a project that develops rapidly (or is quickly closed), it has its own stages of development.
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Pre-Seed |
Everything begins with an idea. At this early stage, we don’t have a clear picture of how the project will be implemented, but we envision our target audience and their actual needs. |
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Seed |
Now, we have a fully developed idea, a seed, and it’s time to sow those seeds. At this stage, we are actively searching, so to speak, for the fertile soil where they can sprout and grow. Therefore, we are seeking like-minded individuals, potential investors, and business angels who can provide the necessary support. Together, we are shaping the very foundation of the idea. |
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Model |
The stage of creating a prototype and a startup model. In other words, we have a model that would function under ideal conditions. |
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Alpha version |
Now the finished product is being tested by a small group of individuals. |
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Closed beta version |
The project is now up and running. We have started acquiring our first clients, users, and individuals interested in financing the project. |
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Open beta version |
Stage of large-scale project promotion, actively selling products, and securing contact agreements. |
Many startuppers themselves jest that a successful startup is simply one that has managed to survive. And it’s hard to disagree with that notion. However, apart from staying afloat and achieving success, other essential components are needed:
This also includes a strong brand and competent marketing to promote it.
One more stereotype about startups is the belief that you need to be a genius with a commercial streak and the ability to generate creative ideas.
Nonetheless, these skills can be developed over time. Moreover, you can use various sources for the startup idea.
The law of supply and demand is one of the reliable and universal for finding startup ideas. For instance, you can identify problems that affect you and others without an existing solution and offer to solve this problem, which can bring a particular benefit for some companies or enhance productivity.
Look for existing services or systems that frustrate users and use digital technologies to offer better solutions. Innovating based on what already exists can be more cost-effective than starting from scratch.
Another opinion is to create a niche business that operates at the intersection of multiple specialized and in-demand industries, such as it startup IT, science, medicine, trade, stock markets, and more. For instance, narrow-focused startups can thrive in the following areas.
So, a startup it is, in simple words, a young and promising company that introduces innovative solutions to the market using technology. It doesn’t necessarily have to be something entirely new; many startups are built upon existing solutions with added improvements.
Creating a successful startup doesn’t require being a “commerce genius” or inventing something completely groundbreaking. It simply takes a desire and an idea that can improve someone’s life. And sure, you have to understand the concept of a startup, what it is, and how to properly conduct it.
