START UP BUSINESS: How it defined?
The definition of “startup” business is quite broad which covers a business with single founders with no team, to some of the biggest tech companies in the world. This makes the definition to be a bit unclear. Some huge businesses such as Uber, Gojek, Facebook, and so on; they’re all still referred to as startups.
So, what is a startup business?
Ries (2011) defines startup as “… a human institution designed to create a new product or service under conditions of extreme uncertainty.”
While startup definision according to Grant (2021) is “a company in the first stages of operations. Startups are founded by one or more entrepreneurs who want to develop a product or service for which they believe there is demand. These companies generally start with high costs and limited revenue, which is why they look for capital from a variety of sources such as venture capitalists.”
Another definition is “A startup is a company launched to evolve an idea with the potential for significant business opportunity and impact. Sometimes the idea is a flash of insight, but more often it begins with the development of an idea or solution to a meaningful problem that has an identifiable market.“ (Figueiredo, 2022).
Based on these definitions, it mentions some elements of startup as:
- business in the first stages of operations
- create a new product or service that they believe there is demand
- evolve an idea with the potential for significant business opportunity and impact
- solution to a meaningful problem that has an identifiable market
- under conditions of extreme uncertainty
Startup usually started by 1-3 founders who focus on capitalizing upon a perceived market demand, in order to develop a viable product, service, or platform. During the early stages of its launching, startups are usually self-funded by founder(s), family or friends, even though, sometimes it can be funded by an investor or bank loan.
All startups, by their nature, are small businesses, but not all small businesses are startups. The difference is that startups goal to grow at some point in the future. On the other hand, many small business owners are happy enough for their small businesses to remain small businesses, but has going concern.
A startup business is a modern version of an inventor. The founder might experience a problem and then tries to solve it. A successful startup aims to solve a problem and not just an idea of business. This may differentiate it to other business model.
Furthermore, at the beginning, a startup business does not know how it will operate at scale, both to its customers and its employees. It focuses on business model experiment which continuously testing, iterating, and learning. Then, market research helps determine the demand for a product or service, while a comprehensive business plan outlines the company’s mission, vision, and goals, as well as management and marketing strategies.
That’s the definition of startup business that I can share with you. Hope it helps to open our understanding of startup business.
References:
- Figueiredo, Julia. 2022. What are the three stages of a startup? https://www.svb.com/startup-insights/startup-growth/what-are-the-three-stages-of-a-startup.
- Grant, Mitchell. 2021. Startup. https://www.investopedia.com/terms/s/startup.asp.
- Ries, Eric. 2011. The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses. E-book.
Picture: yahoo images
