Let’s take a small step back and understand together what a startup really is and how it develops through its main phases. But above all, let’s understand how long a startup should be considered as such.
What is a startup?
A startup is born to solve a problem or a need of a specific segment of people. It therefore means any business that is born with the intent of quickly scaling the market by bringing with it innovative processes and products with high added value.
Like all new businesses, startups go through growth phases that can be defined and evaluated based on effectiveness.
According to the definition of Dan Tyre, HubSpot Executive and expert in the startup world, the phases of a startup are:
Business Ideation and Formation
Proof of concept
Scaling the business
How a startup grows
There can be many different ideas at the base of a business. However, most companies follow a very similar process of scaling that goes through phases and a very specific life cycle.
1. Ideation and formation of a business
The first real step of a startup, in this phase the team is focused on developing the idea and the business plan.
There are about ten essential questions at this stage:
Can you dedicate yourself full time to this business? If not, why?
Do you have specific expertise that can give you an edge in this field?
Why do you want to create this reality? What problem are you trying to solve? Why are you doing this now? Have you thought deeply about the real implications of becoming an entrepreneur?
What kind of company do you expect to build?
What are your goals with this project over the 12-24 month period?
Do you have a co-founder? What is their role?
Do you already have a clear business plan that talks about the structure and growth of your project?
Have you already envied some figures who can help you steadily climb?
How will you know when you have achieved your goals?
Are you able to dedicate yourself full-time to this project?
In this phase, thanks also to the answers you will be able to give to these questions, the purpose of your project and its characteristic advantages will be formed in an increasingly defined way . This is the phase in which you prove that there is a market segment ready to welcome your project.
2. Proof of concept – Testing phase
This is the stage where the startup begins to refine the initial idea of creating a sustainable and scalable business. In this stage there will be a need to make improvements to the product or service and to grow the marketing and sales team. This is also the stage where funding comes in , ideally 1-2 million euros, and this is the moment when, by receiving these funds, the startup demonstrates that it can sustain its business plan and reach its solid customer base.
3. Scale your business
We have reached the final stage of the startup. This is in fact the moment in which the business begins its path of strong growth and loses its definition of startup. At this stage there should be enough information to define an advantage of the business and how to increase it even more to reach a wider audience. This stage usually includes a new round of investments typically managed by business angels or Venture Capital that will help the business in its growth towards a stable and independent entity.
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How long can a startup be called a startup?
This is definitely facing regulatory challenges in the automotive industry one of the most frequent and interesting questions that can come up when discussing this type of business.
Many have tried to answer this trivial question, such as Alex Wilhelm of TechCrunch who proposed the 50-100-500 rule. With this rule Wilhelm asia phone number suggests that your business may no longer be called a startup if:
you have $50 million per year at steady state
you have 100 or more employees
your business is worth more than $500 million
Unlike Wilhelm, other sources, when answering this question, tend to talk about concepts such as market fit, growth, mindset.
Market Fit
It happens when your product no longer needs to make any effort to establish itself in the target market. That is, it has fulfilled the function of solving the problem it had set itself and produces sales on a stable basis.
Growth
When a business has reached its goals for revenue, human resources, investment rounds, and more, it can be considered to be out of the startup phase.
Mindset
Another critical factor is the mindset you have towards your startup. When the idea of growing your business regardless is replaced by wanting to provide sustainable and long-lasting growth, it means that the process is proceeding in a positive way and that the mindset is changing.
A precious hint
Whether you’re starting a business or drafting a formal document with your current business goals, it’s important to clearly define the scope of all aspects of the venture—from the mission, to the target customers, to the finances and beyond.
When you’re just starting out
It can be tempting to think of a business plan as simply the name of your company and a description of your product or service. But in reality, planning a business involves thinking about a lot more detail.
That’s why we’ve decided to offer this business plan template : we’ll walk you through the steps of writing your company and product description, setting your sales and marketing goals and plans, and thinking about legal and financial logistics.
