Startup, a new business path that anyone can start
If talking about the business industry today, it is inevitable to talk about the startup business. We can see that it has developed exponentially in the present day and has made it a huge watch in the business industry. With the massive rise of technology and social media, startups are set to become recognized as businesses that could change the world.
So when it comes to this point many of you guys may wondered what is the StartUp business, how it works, and what factors are making it a rising star at this moment. Today we have compiled the interest in this kind of business and present it to everyone to understand more easily.
What is a startup?
A startup is the start of a new business from a few people. Building a business with ideas to solve problems in daily life, a startup business often starts with seeing a channel or opportunity that others have not yet seen. Startup businesses typically exhibit exponential growth and can generate large amounts of income. Most of them are businesses in the IT field. For example, applications by well-known IT companies like Facebook and Google also started as startups.
“A startup is an organization formed to search for a repeatable and scalable business model”Steve Blank, A startup’s father
Steve Blank emphasizes that “startups” are looking for repeatable and scalable business models that business model is constantly profitable. Keep adding repeatable users and can quickly grow in a fraction of the time and become a scalable company.
How is a startup different from an SME?
The difference between the two models is that startups are businesses that do not need to invest by oneself. Their find funds by presenting their idea to investor. But for SMEs, they use their funds or more likely to do a bank loan.
Another thing that differentiates both businesses is that Startup is a rapidly growing business with teams, business structures, and a marketing plan. While the SME business will grow 30% – 50% per year because it is a business with growth constraints. For example, the restaurant business is an SME because there are limitations such as location and service area. Even if the store is popular, it will not grow as quickly as a startup that focuses on ideas. For example, Facebook has an innovative idea and it’s growing exponentially.
Startups have been around for a long time.
Such as British East India, which could be called The pre-startup, but when it comes to the start-up today, it is often linked to Silicon Valley in California. It is the centerpiece of today’s tech companies. Examples of early startups such as International Business Machines, better known as IBM, were founded in 1911.
But if talking about new startups our familiarity today took place in the late 1990s in the so-called dot.com boom, where people believed technology and the Internet could change the world. Companies that emerged at the time, such as Amazon, Netscape, or Google, which were founded in 1998. At the beginning were just experiments but eventually grew to become one of the most influential companies in the world. Which is an example that all startups dream of reaching.
Pros of startup
- Since startups are businesses that have a relatively clear growth model or have clear business directions. Makes it easier for fundraising from investors than general businesses
- Most startups are service businesses and do not need a lot of fixed assets. For example, Some businesses do not need a company vehicle to arrange merchandise because they can use their partner’s vehicle to run their business. Or some transportation businesses also have a car rental contract for the company to rent cars. These are useful for showing the financial reports or financial statements of the company to make it easier to manage the financial numbers within the company.
- Startup is often fostered between companies, making it easier to grow and exit strategy. The commercial cooperation between the two companies strengthens their businesses. Because the products, services, and databases, including some business models, are tools that can use to benefit or solve problems for another business. So it is normal for one company to invest or buy another start-up company. Such as acquisition and mergers, Instagram and WhatsApp of Facebook, etc.
- Have daily income and monthly term credit expenditures. As startups are service businesses that people use all the time while companies have monthly expenditures, which can be an expense to business partners. This gap in timing is very useful for businesses in managing their cash flow.
Case study of a successful startup company
Dropbox is a famous file sync service. Instead of dabbling in a server, building a working prototype, and seeing how people use it. the Dropbox team decided to do something different. They made a video explaining Dropbox and sharing it on the Internet to see the reaction of the viewers. Dropbox’s 3-minute video shows the benefit of how to file syncing can solve people’s problems.
As a result, many people were waiting to sign up overnight from 5,000 to 75,000 even though they didn’t have the product yet. Using Dropbox video It’s a smart way to test the market before the founders get the money from investors to develop them into real products that we use today. The people who watched this video and agreed to sign up became target customers, seeing that it solves their problems.
Cons of startup
- Financial risk – As a new business building awareness across channels, increasing the number of users, and changing user behavior before starting to generate and earn a profit is difficult. Therefore, “freemium” is very popular for expanding its user base. Which The freemium model sometimes is spending money on generating and adding users. The struggle of the user base between each other has caused the company to suffer a heavy impact, that is, the loss itself.
- Businesses have a very high chance of failure with internal and external risks – Because it’s not that an idea or The concept of designing all products and services will be able to meet the needs of users as expected. Including businesses still unable to find channels to generate income for the business resulting in accumulated losses. Moreover, because there are competitors in the market, it is difficult to raise capital. Thus running out of capital and leading to suffering losses.
- No fixed assets – In the case of general business with fixed assets When a business is unsuccessful, the company’s assets can still be auctioned off to pay for its liabilities. But while most startups do not have permanent assets to be able to do so, only intangible assets such as trademark value, business rights or leasehold rights, etc. Thus when a business cannot go on, its market value or price doesn’t really exist.
Case study of a unsuccessful startup company
Jitta is a securities analytics platform company. The company failed because the customer did not understand the model what is the real point of the product. They said that building a trial or Prototype is important because leading a Product to a group of people to try it. It is easier to do and meets the needs of the user.
“We encounter new problems every day and if they make a mistake, we must not repeat it. Jitta developed a Zero to One product, too much believing in oneself, we missed it because there were too many features that users didn’t understand why to use them.”
Many startups have developed Zero One products or new services that meet the needs of current users. Therefore, not studying the market and thinking that the product itself is good is not always the right thing. And the easiest way to know if your product is good or not is to bring it to other users to experiment and make it better.
In the future…
Startups are becoming more and more important roles in the business world and are likely to expand more in the future as the newest generation want to be their own bosses. A startup is one of the things that young people are most dreaming of and want to achieve in this path the most. And to reach the dream or be successful In addition to ideas and efforts. Starting to figure out what the market is looking for is another way to help our project meet the needs of investors and reach their goals as well.
Therefore, before starting a start-up business, business owners should plan and foresee in order to see opportunities and pass their ideas to society in a comprehensive and up-to-date manner. Not all startups are successful as startups are still new to us. Many companies are failing and making huge losses. so if you are thinking of starting a startup, you should study carefully and make a plan first.