Once you make the decision to start a business, you have willingly entered the “business lifecycle.” This lifecycle will span from birth or ideation to the myriad of maturity phases your business will encounter along the way. When creating a business, or identifying what phase your business is in, it is critical not to conflate all growth with a startup mentality. While there is a time and a place to call yourself a startup, you surely will not be a startup with simply an idea nor will you still be a startup when you begin acquiring other startups.
It seems like everyone has used the term “startup” at one point or another. With people throwing the term around to explain nearly every exciting and innovative company (think: Uber and Facebook), it is important to define what it actually means to be a startup. In order to put the “everything is a startup” myth to rest, let’s first define the term.
What Is A Startup?
These days, “startup” appears to mean growth. Growth seems to be the key differentiator for many people when trying to define a startup. As Paul Graham, the founder of Y Combinator, has pointed out, “a startup is a company designed to grow fast.”
What Graham is highlighting here is the fast pace at which many successful startups move. While there are countless new businesses being formed each year, not all will qualify as startups. This is due to the ways in which startups scale. What it really comes down to is that in the business world, startups are far more than a company just getting off the ground. Startups are new businesses that are, typically (not always), technology-enabled and have high growth potential. But once a startup surpasses that early growth potential, they will no longer be a “startup,” and will enter into the next stage of the business life cycle.
Are You A Startup?
So, is your business a startup? Businesses have different needs as they are born, develop, grow, mature, and decline. The startup mentality is ultra-hyped and can be misleading. Does spending money wisely, continuing to grow, and/or pivoting your business keep you up at night? Do you think you have peaked and reached maturity? Then you are a scale-up business, regardless of how you started.
Detail The Journey.
A scale-up or second phase business has a history — how you got to the present does matter when determining the future. Have you taken any time to chart the course that brought you to the present stage of your business? If not, there are lessons that you may still need to learn. These missing lessons could lead to potential business blind spots in the future. But if you meet them head-on, you may be more prepared for them when the time comes. This is an easy remedy if you set aside some time and ask a non-biased party to keep you honest as you map out your journey to now.
Pre-Conditions For Success.
The path forward in the business life cycle is not cut and dry, it is often quite hazy. Having a next step defined is not enough, your business must calculate the means of getting there. How you attempt to achieve the next step will determine your success or failure. Passion with a sprinkle of luck is not going to work for a scale-up or second phase business. What will work is focusing on what must be true, that is not true today, for the next step to be achieved.
Get A Plan.
So are you still a startup or a scale-up? If you are a startup, keep flying. If you are a scale-up, it’s time to get clear on your business plan, systems and processes, key performance indicators and investment in projects so you can scale your business properly and profitably. Regardless, your plan will still go nowhere if you do not find ways to connect the vision, strategy, goals, measures and daily work to one another. As your second-stage business needs to become more predictable, you must begin to recognize opportunities in front of you and take advantage of them proactively.
Growing up can be painful, but also draws us back to fond memories of our past. In business, you cannot be a startup forever, we have to apply new tools and skills to move forward.