Startups – A Brief Introduction
Starting business ground up can be very hard. Apart from the risk factors involved, it can be emotionally and mentally challenging. If you are pondering about setting out on a new business venture and are confused about the basics of startups, you’re at the right place because here, you’ll be enlightened about what a startup is and be introduced to the concept of startups.
What Is A Startup?
To put forth it plainly, a startup is a newly established business. A company that is built from scratch but designed to scale with an unnaturally high pace. To quote Paul Graham – an essayist, computer programmer and what not – a startup is a “company designed to grow fast”. With many people attempting to define a startup, I suggest that instead of searching for a well framed definition, it would do good to you if you understand what a startup is – and by that I don’t mean understanding the definition; but inhaling the essence of the idea.
Difference Between A Startup & A Small Business
Is startup = small business?
This is a question asked by many. And the answer is NO. A startup and a small business are on the opposite sides of a bridge. There are many factors that can differentiate the two but we’ll be discussing a handful of them here.
Growth. The integral term that pushes a startup and a small business on two sides. Startups are focussed on growth that is unconstrained by geography, time zone, sleep-wake cycles etc. This means that business continues whether it’s day or night, whether you are asleep or awake, whether you are on a different continent – nothing can hinder the growth of startups.
But in small businesses, time, location etc play a vital role in their functioning. If a small textile shop is opened in your locality, it stays open as long as there is someone to run the business. The customers are limited to more or less that neighbourhood and the shop shuts down when the one who runs the business rests for the night. The growth is gradual unlike startups, which grow at a large rate within the initial weeks of establishment.
Startups depend on investors or venture capital firms that take a BIG risk and invest in these new companies that show the potential of growth while small businesses are financed by loan or grant from banks. This is in fact an advantage that a startup has over a small business: since the investors have taken a greater risk in funding the startups, they keep a regular check on them to see the progress and offer them ideas for further growth. On the other hand, the people who began the small business need to submit the reports on their progress to the banks only once in a blue moon and don’t get help from them to improve their business strategies.
Startups financed by venture capital firms require an exit strategy right from when they set up their company. This is because the money invested should be returned to the investor in an increased amount via Return On Investment (ROI) policy. So once the startup fares well, the shares are sold and the profit is gained.
But small businesses thrive on future plans where they carry on the business without getting ready for an exit. Hence they won’t have an exit strategy in the initial years of setting up the business.
Starting a startup is not a piece of cake. It is quite challenging. Who am I kidding? It’s extremely challenging. Being prepared for the challenges thrown at you will help you evade a hit. After all, you are familiar with the saying ” Hope for the best, prepare for the worst!” A few arenas that can affect you while starting and running a startup are the following:
The corporate world is fierce. Very very fierce. Competition between the corporate world giants is constant. Amidst this, you need to survive. Errors must be minimised. Correction. Errors must bee nullified. There is no room for errors because you are in a war field. Darwin’s theory of “The survival of the fittest” applies here without doubt. The startups need to play aggressively inorder to survive and gain the much needed recognition amongst the expanding businesses.
Expectations Above Limit
All startups set out with a vision. They are driven towards diverse goals. Having expectations on where the startup will reach in the following five years is natural. It’s called ‘having a vision’. But when expectations becomes incompatible with reality, you need to strike them off from your bucket list. Inorder to cope up with and succeed in the competitive business world, startups need to high yet controlled expectations.
There is no shortage of qualified and trained professionals to hire from in the world. But the people who are designed for YOUR company is limited. They will be hidden amongst pool of candidates that apply for a job in you startup and you are burdened with the task of hiring the right people to build your team. If your team, apart from being strong and powerful, is totally moulded for your startup, then your company can be driven towards success hassle-free without doubt.
Managing your finance is crucial. There is high tendency to run out of money due to unnecessary expenses. Hence money should be dealt with care.
Winning Trust Of Customers
Prove yourself that you are worth the customer’s trust. The clients are found to be tentative in trusting startups as compared to the companies already in market because these young companies have yet to prove their standard, quality and efficiency in yielding what the world demands. Setting up a company is not much work; but driving it towards success is where the real task lies
Startup, Smart Up!
Being a newborn in the business worlds, startups will have external as well as internal pressure to do well. This drives all the energy of the team to the company such that they end up being drained of spontaneity and lose their lustre. This must not happen. Don’t work hard, work smart. With minimal exertion, gain maximum output. Find your own ways of doing this. After all, the health of the startup is directly proportional to the health of the team. You must also keep this in mind when you set out to build a startup – do what you love and love what you do!