At What Point is it Time to Stop Calling Your Business a Startup?

Posted on June 20, 2013 By

At what point is it time to stop calling your business a startup? First what do we mean by a business start up? A business start up in simple terms is a young fledgling business heading into uncharted waters. Most start ups need capital to begin and these funds are usually provided by the owner’s savings, the banks or, if the business idea has enough growth potential, venture capitalists or investment companies. A start up business by its very definition carries significant risk in its early days of trading.

There are now a plethora of Internet businesses that can be run from a bedroom with no other resources than a good idea, computer, dedicated internet access and a website. This type of business too falls into the category of a start up business.

The short answer to the question “when do you stop referring to your business as a start up” is that there is no set definition on when a business ceases to be a start up. If the business has been successfully running for five years or more, has generated a stable business base and is making a profit, then it might seem churlish to continue to classify it as a start up business.

Another definition when a business is no longer a start up business is when it has established a market base. This is when the business can rely on customers for its services or products. The business has a healthy customer base and plenty of new or returning customers.

The business is in profit and has remained so for at least a calendar year or more. The company is expanding and taking on new employees or premises. The business is clearly thriving and established and forging ahead.
A company that is out of debt and paid off all its “investmentors” should no longer be classified as a start up. If your company is about to, or has floated stock on the stock market, it can stop referring to itself as a start up.
Basically a start up business has high risk attached to it. It is unproven. It has yet to find a repeat customer base and has unproven services or products. The business will be heavily dependent on funding from external sources and a high probability of failure during its first year of business.

At the point the company is beginning to expand, is generating profit, can function if one of its founders leaves the company, then it can cease to call itself a start up business.

Source: health


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