Dictionary

Startup

“A young company searching for and proving a business model that can grow quickly and at scale, often funded by outside investors. Unlike a typical small business, it is built to grow far beyond what its founders could serve themselves.”

Why startup matters to a first-time founder

Calling your venture a startup is a choice with consequences. Startup advice assumes you will raise money, hire ahead of revenue and put growth before early profit; small-business advice assumes steady income from the start. Follow the wrong playbook and you either burn cash chasing scale your idea cannot reach, or you hold back an idea that genuinely needs investment and speed to win its market.

Examples of startup

A cafe with a steady lunch crowd is a small business. A team building booking software for independent clinics, before they know whether clinics will pay, is a startup. The software is meant to serve many clinics without the founders sitting on every call.

Common misunderstanding

People call any new company a startup, including a shop, a café or a freelance practice. Newness is not the test. A startup is defined by its aim to grow far beyond what the founders can serve personally, usually through a repeatable product. A profitable local business is not a failed startup, and a five-year-old company still searching for a scalable model can still behave like one.

When to use it

Use the label when you are still searching for a model that can grow fast and your plan depends on that growth, for example when you intend to raise investment. If you are building a steady business that will pay you well without outside capital, describe it as a small business instead. The label shapes how investors, hires and advisers judge you, so choose it deliberately.