The real meaning of a startup

The term “startup” has been casually used to define new business ventures. For some, it can be loosely used to categorize an up and coming tech company. For others, the term can be used by small businesses that cater to a specific need in the market. But what really makes a startup? These are the qualities industry experts require for a company to be granted the title:

It has to be less than five years old.

The age of a business venture is what probably makes the term “startup” passé. Some companies that have not experienced breakthrough may consider their operations as a startup even if they’ve been in the industry for a decade. In reality, startups are mostly businesses that are less than five years old and have a close-knit staff working to address consumers’ needs.

Image source: investopedia.com

It has the capability to expand and address a pressing market need.

Those who are running a small business only to keep their business within the family or the community cannot be considered a startup. Before 2006, Facebook can be considered a startup because it showed potential to become something that will make the lives of millions easier. When it started monetizing and receiving funding from millionaire investors, it graduated from being one.

It has to have less than 100 employees, worth less than $500 million in revenue, and takes $50 million to sustain operations.

A startup becomes a full-fledged business when one of these three qualities are surpassed whether it’s due to acquisition by a bigger firm or turning into a bankable brand even before its first five years in operation.

Image source: entrepreneur.com

Contrary to what most believe, a non-tech company can also be considered a startup. Niche businesses in food or in retail that operate under the same setup can also fall into the category. In these cases, the businesses don’t primarily rely on the technical aspect but on the support of their consumers that serve as a good consideration for expanding operations.

Over the years, the term served as a chip on the shoulder of many young entrepreneurs. Now that the definition becomes clearer, business ventures can now work toward a set goal in order to succeed and eventually graduate from being a startup.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s