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Welcome to the Big Leagues: At What Point Are You No Longer a Startup?
Table of Contents
At a certain point, a startup becomes a full-fledged enterprise. Staff roles are defined, an established product or service is regularly purchased and the lines of communication are clear. However, there is no set benchmark for when this occurs. There are many steps and changes a startup has to go through to operate and function as a successful business, and it takes some organizations longer than others. Here are some signs you’ve moved beyond the startup stage – and indicators you need to up your game.
Signs your business is no longer a startup
A startup is typically defined as a fledgling business. However, some companies describe themselves as such regardless of their longevity and success. But technically speaking, there are some clear signs when your organization no longer fits into the startup category.
You’re acquiring other startups.
One of the strongest signs your business is no longer a startup is you are acquiring, or looking to acquire, other companies. This could be for a number of reasons. Recruiting talent is incredibly competitive, so instead of trying to poach top-tier candidates from other companies, it may be more beneficial – and sometimes more cost-effective – to acquire a company with the talent you desire. Another reason to acquire other businesses is to control more verticals, giving your company more of a competitive edge in the industry. When a business is in a position to purchase another company, they have the capital and workforce to be a competitive business.
You’re making products fit for the current market.
At their inception, startups are often researching the market by evaluating their products or services compared to successful companies. Once a business has achieved its desired product or service and is actively selling it, it has adjusted to the market. Having a complete product that is sold, while also developing updates or new products, is a sign a company has moved beyond its startup phase.
You’ve become more bureaucratic.
Startups usually have an informal chain of command and a loose management style in the beginning. Since the initial team is at most a few people, there’s an opportunity to be avant-garde. As the team grows and more people are handling responsibilities, the business becomes more bureaucratic. Leaders and executives are now using more official and formal channels of communication, and there is a standardized operating procedure. This type of structure is implemented for the sake of clarity and consistency among the staff. When processes become less flexible and more formal, a startup has begun transitioning to an established business.
The management theory of Max Weber lays out six traits of bureaucracies.
Signs your business is still a startup
Some leaders are eager to portray their companies as established, but reality suggests otherwise. Companies should still consider themselves to be in startup territory if they meet the below characteristics.
You’re still testing markets.
You’re still in the startup phase if your company is currently testing business ideas and taking them to market. It could take years to identify your target audience and finalize its concept, and after you do, you still need to determine how to stand out in the marketplace. Once your company is out of the brainstorming phase and your prototypes become final products with a clear sales plan, then your business has grown beyond the startup phase. [Related article: How to Create a Marketing Plan for Your Startup]
You’re still working on your branding details.
Initially, startups are usually so focused on developing their product that they don’t have a clear brand. A solidified brand makes your business identifiable to consumers, but that comes once you’ve established your product line, company mission and culture. It could take time to create a name, logo, visual style and written tone that represents your organization. And those things may change as your company develops new products or modifies its goals. If your business is still developing its brand, then you may not be ready to graduate to the big leagues.
Even major corporations change their branding over time. For a startup, however, a consistent logo and color scheme are essential to start being recognizable to consumers and peers. Learn how to build brand intimacy and emotionally connect with customers.
You’re still hiring integral employees.
A startup is often still in the process of hiring its most essential employees. In the beginning, the founder typically assumes all or most of the company’s responsibilities and, as the business grows, they begin to hire staff to fill the most critical roles. These roles include a chief executive officer (CEO) and a chief operations officer (COO) to ensure the organization is running smoothly, a product manager to oversee the development and release of your products, and an accountant to manage the company’s finances. If these roles remain vacant, your business is likely still a startup.
If you’re still acquiring the proper technology to operate your business, such as CRM software to manage your client relationships and sales, that’s another indicator your enterprise is still in its early stages.
The benefits of moving beyond the startup stage
While startups are often portrayed as hip and cutting-edge, there are distinct advantages to taking your business to the next level.
You’ll attract and retain more qualified employees.
Many startups face challenges finding candidates with strong communication skills. This is often because startups usually don’t have an established employer brand and a clear message that they can pitch to candidates. To attract the right people for your company, establish an identity that sets you apart from other workplaces. It takes time to build that identity, but by fostering an organization with a clear personality, culture and reputation, you’re more likely to appeal to top-tier job seekers. Plus, once you’ve moved past the startup stage, candidates are less likely to see working for your business as a risky proposition.
You’ll increase your budget.
Larger companies and corporations have bigger budgets than startups, in part because of the profits they’re generating and investments they’re receiving from funders who want to get in while the business is soaring. As your company grows, you’ll be able to increase your budget, allowing more flexibility to scale and hire new employees. While a small business always needs to keep budget planning in mind, having more dollars to work with can be a game changer.
You’ll cultivate brand awareness.
Becoming a bigger company often means you’ve achieved greater brand awareness within your industry. As your enterprise grows and your staff increases, more people become aware of who you are and what you do. Growing your business out of the startup phase accelerates your brand awareness and gives you access to a larger audience. But garnering attention, of course, doesn’t happen overnight. To get started, consider using conferences to generate PR for your startup.
