What is a startup?
To answer this question, it is important that you know that there is another way to survive the market.
We are talking about traditional companies.
This consists of a slow growth that allows to lay the foundations of a business and raise profits gradually.
But those who choose a startup follow a different strategy.
Therefore, it is an enterprise that seeks rapid growth in the market from a technological base and innovative business ideas.
The characteristics of a startup
Not only is rapid growth one of the most striking characteristics of startups, there are five others that complement them.
If you are thinking of launching to mount one, then you should stay to read what we have to tell you next:
- Require an innovative idea
- It bases its operations on the use of technological tools
- Commitment to accelerated growth
- It is a highly adaptable business
- Has a high level of risk
Let's see each one of them.
1. Requires an innovative idea
Without innovation, there is no startup.
Offering new solutions or leveraging technological resources to reinvent an existing offering is an essential feature.
Many times, the startups that generate the most benefits are those that have even been able to generate a need in the market.
We can see examples such as Airbnb or Netflix. Both created a new market niche and managed to position a unique idea as their business idea.
2. It bases its operations on the use of technological tools
Take advantage of information and communication technologies as a tool to respond to the current needs of the market and reach more people.
They allow to gestate, develop and operate a startup.
The reason is clear: they are always in constant change. So businesses must adapt to them.
In addition, startups start from the goal of reaching wide audiences, so mass communication and sales channels are essential.
3. Commitment to accelerated growth
While in traditional businesses large amounts of money are invested to achieve the process of slow and organic growth, startups prefer to take another path.
To demonstrate that your business is profitable to attract investors who bet on it.
This is how they start big and hope to spread quickly through different territories and markets.
4. It is a highly adaptable business
The raw material of a startup is its ideas.
Therefore, this type of projects is generated thanks to experts who are looking for a business alternative to their professional life.
Thus, the ideas with which they work are always under construction and reformulation.
And as they are conditioned to a technological evolution, they are always willing to modify their objectives, their methodology and even their business model throughout their development.
So if you are of traditional ideas... maybe you won’t like this too much.
5. Has a high risk level
Everywhere, starting a company carries financial risk.
Ideas may seem good on paper, but then we realize in real life that they don't work.
This usually happens with startups for two reasons:
- They don't have a very well-defined target.
- Their innovative character does not allow them to test their ideas in the real market.
Unlike traditional businesses, which have a success rate of 30%, only 1 in 10 startups manage to gain a foothold in the market.
What are the differences between a startup and an SME?
At this point, you may be wondering what are the most remarkable differences between a startup and an SME.
The objectives
Unlike a startup, an SME seeks to strengthen its presence in the market in an organic way.
Although you may aspire to become a large company, it is not always your primary goal.
Many small and medium-sized companies only seek to influence socially without having in mind the proposal of a new business model.
While in the startup it is always the ultimate goal to grow rapidly and capitalize on its ideas with great short-term gains.
The market
SMEs emerge as a response to a generally local problem and often have a highly delimited audience.
Either because of their age, the territory in which they develop or whether or not they belong to a community.
Meanwhile, a startup aims to reach a much wider audience.
To achieve this, they create a commercial need of massive interest or bring a service to a large number of consumers.
Financing
As SMEs are born out of a commercial need of entrepreneurs, they are usually created from the use of their own resources or through the acquisition of credits.
When they don't have too much capital, these small and medium-sized enterprises are compromised and have slower growth.
On the other hand, startup creators don't necessarily have the challenges they need to bring their solutions to market.
Therefore, many times the investment required does not depend on them, but on other investors or financial assistance that bets on the success of the idea.
And, of course, without enough capital, these ideas don't take off.
The size of the company
As you can imagine from their name, SMEs are micro, small and medium enterprises.
By their number of employees and income level, they represent smaller business units in the business world.
And, as a general rule, their financial and organizational size places them within this category.
Meanwhile, in startups there is no correlation between one element and another.
They can have a very small number of staff and yet make millions in profits.
Your startup in Andorra
If after reading this article you consider that creating a startup in Andorra is your future, we can make the process much easier.
You can send us a message and we will respond as soon as possible with all the information you need about it.