It can be quite alluring to create a startup as a fresh entrepreneur. You have a dream and you want to make it a reality. You have the tools at your disposal and the next thing you know, you have people jumping aboard to help you. But, when is a company no longer a startup?
A startup isn’t a startup forever, so figuring out when a company is no longer a startup sounds a little tricky, but don’t fret! There are key signs to look out for. Below are some of the factors to make out and distinguish if your company is no longer a startup.
Startups all get their start because they have a product or service they want to serve to the customer masses. When a startup has created something that has that “it” factor and people are lining up to purchase it, then that proves a lot. For one, it shows that you have a business model and a product or service that is making rounds on the market.
A startup needs to have its products and services as completed products that are being purchased by customers. Having prototypes and things in alpha builds doesn’t make you a company just yet.
The scale does not refer to how much something weighs, but instead, to the growth and size of your company. You aren’t a startup if you have a massively successful business.
But, how do you know what the scale is? Well, there are several components to that question and it can depend on what business you have.
- Amount of Revenue
- Number of Employees
Companies can also no longer be a startup just by how long they have been in business. The rule of thumb is that a startup is no longer a startup after 5 years. There is also the 50-100-500 rule by Alex Wilhelm of Techcrunch. Following this rule means that your company is no longer a startup if they have:
- $50 million in revenue
- Over 100 employees
- Worth over $500 million
But again, this all depends on what kind of business you have and in what industry. You can also have less than what is stated above and you would be no longer a startup. Or, if the company is on the public stock exchange, then you definitely are no longer a startup.
When it comes to knowing if your startup is a business or not, then you need to look at the profitability of the company. There is a lot to profit from because you need to ensure that you make money after paying off all of your expenses.
So, how do you know about your profits and whether or not that makes your company not a startup anymore? Investopedia has an article that can give you the answers that you seek!
To figure out if you are a full-fledged business now is to look at the bureaucracy of your company. If it is being processed to have more formal channels and more organized, then that is a telling sign that you are no longer a startup.
Imagine this, if your business has multiple departments to handle all matters of the company and you have the employees to handle these departments, then your operations have made you into a full business.
Regardless of what is stated above, it comes down to what defines a startup. Many businesses retain the startup wording to promote growth and innovation in the business.
That is because when the startup becomes a company, then it can turn into the slow bureaucracy that many of us are familiar with. In order to stave off that idea and from plateauing as a company, the business has to always think like a startup.
Really your business will never stop growing, ideally, that is. So, to keep everyone on their toes, it is good to continue the startup mindset because it allows the continuation of an energetic office, looking to improve their product or service for the company.
If you want to call your startup a startup even after 50 years of success, locations in other countries, and an army of employees under you, then who can stop you?
A startup represents the beginning of something new and exciting. Keeping that excitement for years to come is what will get you onto the path of success.