Literally meaning “young company”, the startup is linked to the notion of experimenting with a new activity, on a new market, with a risk that is difficult to evaluate. Steve Blank defines it as “a temporary organization in search of an industrializable, profitable and growth-oriented business model”.

There is a fundamental difference between a company and a startup:

  • The company optimizes a business model and makes the most of it to support its costs and pay its shareholders.
  • The startup experiments its economic model and tests its market.

A startup is not yet a company as one might imagine, with a well-established organization, marketing a product or a service on a perfectly identified market. The innovative nature of its offer and its economic model do not allow it to clearly define all the components of its market and to ensure immediate profitability.

Intermediate stage before becoming a company

At the end of the experimentation phase, the startup

  • becomes a traditional company with an established business model,
  • It is absorbed by a larger company,
  • It disappears for lack of cash.

The ingredients to bring together to make the startup a growth company:

  • The team and the network: a startup is above all a determined, ambitious and complementary team. But it is also a personal network of experts who will be able to bring their support during the key moments of its development.
  • The offer and the business model: the innovative character of the product, service or business model is crucial. It must enable the company to gain a competitive advantage in the long term. In addition, the deployment of the activity must guarantee economies of scale.
  • Market and strategy: the size and trend of the market – whether niche or mass market – must reveal considerable potential in terms of revenue.
  • Scalability: the ability to adapt its business model to a large increase in business volume.
  • A strong attraction: to attract a maximum of users and to make people talk about the company and its activity

The conditions to be a startup

A startup has the ambition to capture all the value of a market and to acquire a dominant position on it. Even if this is not always the intention of the creators at the beginning of the adventure, the startup thinks big, sooner or later.
In short, the startup is looking for a way to make its activity profitable in the long term and especially to grow its revenues exponentially to reach the maturity of a large company.

Whatever its sector of activity (digital, cleantech, biotech, edtech, fintech, collaborative economy, etc.), it is neither age nor size that makes a company a startup, but the following 3 conditions:

  • The prospect of strong growth
  • The use of a new technology
  • The need for significant financing

The conditions for your startup’s success

In the past, the power of large companies was based on their size and financial capacity. Indeed, the biggest ate the smallest. Now it’s the fast ones that absorb the slow ones and this concerns startups.

Here are the conditions for the success of your startup:

  1. Test your market with the Lean Startup method

You will necessarily have to go through a test phase (called Lean startup), and research to understand your environment and your customers. To do this, you must get as close as possible to the expectations of your (new) market, which is both changing and has a new technology.
You will therefore experiment your product with the potential customer target, even if it is not finalized because it is often in beta test, before committing more consequent expenses.

This is a normal iteration process used by startups to improve the product in real time and overcome the uncertainty inherent in any innovative project. This method allows you to :

Gather as much information as possible to improve your product, technology or business model.
Test your hypotheses and iterate until you find the product that works best on the market.

  1. Be ready to evolve your business model

No one knows in advance what will work or not. It happens frequently in the world of startups to start with an initial business model and to eventually find success with a totally different business model. This is called the pivot.

The pivot is an evolution of your business model, technology, product, customer target or distribution mode. The change of one of these variables will have an impact on the initial business model, with all the structural consequences that follow.
You will therefore search, test your product and technology and observe the behavior of your target customers. As a startup, you are constantly looking for ways to optimize the current business model.

  1. Understand the relationship with failure

Even if mentalities have changed a lot in the last few years, in France we say “take a risk” when we create a company. In the Anglo-Saxon culture, we hear “take a chance”.

A startup pivots, evolves, sometimes on a roller coaster… But it has no choice but to innovate! And to find the right innovation, it will face failures that will allow it to be better, to improve its product, to find other talents.

You have the right to make mistakes. However, you will have to anticipate it and plan for it in your business plan. Tell yourself that failure is a step for the growth of your startup. Of course, you can’t always fail. It is up to you to set limits by determining the budget, the deadlines, and the number of tests planned.

  1. Learn from your mistakes

The evolution of your business model will have already given you a lot of indicators on the new directions to take in your business. You learn a lot from your mistakes! Trials and tests allow you to identify grey areas and areas for improvement in your product and/or business model.

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