Business or Startup?
While they can overlap and there are elements of business that stay the same, there are differences between ‘starting a business’ and a ‘startup'.
Startup: A new company in the early stage of operations generally founded by one or more entrepreneur who aim to develop a unique product or service. Startups might focus on product development that exists in uncertain or new markets.
Starting a Business: A broader term for any new venture, like a small business, service or franchise, which may not necessarily aim for fast growth. These businesses may not focus as strongly on innovation or growth, rather focusing on sustainable and stable business.
Entrepreneur: refers to an individual who takes initiative to create new things. They often have a higher tolerance for risk and an eye for innovation. This is why the term is often associated with startups as these individuals often have the idea for an innovative product or service, and make it happen.
You can think about it like this: while all startups are businesses, not all businesses are startups. Startups focus on scalability and innovation, while starting a business can include a wide range of models and growth strategies.
The differences between a startup and a business
If you are unsure if your idea or business is a startup, consider these areas and where you might fit.
Growth Potential:
- Startups generally aim for high growth and market disruption. They often seek funding from venture capitalists or angel investors to grow quickly.
- Starting a Business may prioritise steady, sustainable growth and profitability over rapid expansion. Many small businesses are designed to provide stable income and retain ownership of the business, rather than seek outside investment.
Funding:
- Startups often rely on external funding, whether through venture capital, crowdfunding, or accelerators to establish and grow their business. This sometimes means giving away shares or ownership of the company.
- Starting a Business is frequently self-funded or supported through small business loans and may rely on personal savings and retains complete ownership of the business.
Business Model:
- Startups usually have a scalable business model, which allows for rapid expansion and significant returns on investment. They are often structured as companies which gives flexibility to take on funding and additional ownership.
- Starting a Business might have a more traditional or localised business model, focusing on community needs rather than scalability. They can be family-owned partnerships, trusts or companies.
Innovation:
- Startups often centre around innovative ideas, technology, or disruptive business models and focus on making those ideas a reality.
- Starting a Business can be based on established practices or local needs, and may not require innovation to make a business a reality.
Develop your idea
Here are some steps to take to move towards making your idea a reality.
Can you define:
- what it is,
- who it is for,
- what problem it solves
Even if only in a few sentences. This will help you stay focused and build out your idea.
Identify your target audience:
- who might buy your product
- where do they live
- how will your product help them
Analyse competitors and market trends:
- who else has a product in your market
- is the market new or existing
- has the market grown recently
Validate the demand for your idea:
- test your assumptions through market research
- reach out to friends, family or contacts and ask for feedback
If you are confident there is an audience and market for your idea, start to develop what your business might look like.
Outline your business model, goals, and strategies.
Include financial projections and marketing options.
You can seek advice and help through online resources or mentors to ensure you have a considered approach.
As a starting point, explore this guide in how to write a business plan from Xero:
Create a minimum viable product (MVP) to test your idea and concept.
Focus on the core features that address the specific problem you are trying to solve. It does not have to be perfect. Make sure it demonstrates what it can do when fully developed.
Share your MVP with potential users and gather feedback.
Iterate and improve your MVP based on user insights.
Reach out to family, friends and contacts you have in the sector to test your product.
Identify co-founders or team members with complementary skills.
Think about who you will need in your team to make your idea and business a reality. Can you build a diverse team to cover different aspects of the business.
If you are confident your MVP will work, figuring out how you can make this a reality is the next step.
It’s time to consider:
How you will fund your business
There are a few ways you could fund your business. Do you research on each option to consider what is right for you.
Here are some starting points from Xero:
14 Ways to Finance Your Business: Which is Right For You?
Your Business Structure
Usually, startups are structured as companies to give flexibility to take on funding.
Here is a starting point:
Developing your product is only the beginning. Ensuring you can sell your product is vital to your success.
Having a marketing plan is a great place to start to keep you focused and honest about your business:
- Create a plan to reach your target audience.
- Think about how you can utilise social media, content marketing, and networking
Although you haven’t started, knowing your exit strategy will help inform your funding and business structure.
Your exit strategy may change as you develop your startup, but thinking about how, why and when from the beginning can be very useful in planning for your success.