Growth and maturity are one of the many great joys of entrepreneurship. When your business begins to flex comfortably among its competitors, and begins to get wide recognition, it is a very fulfilling experience for the founder.
Often, startups attempt to sell a new product or service to customers, meaning the company has to build its customer base from the ground up.
It also means that as the business owner, you will want to know whether you can deliver the product/service consistently and to a high standard, keep profit margins, scale, and so on. Thus, graduating from startup to enterprise can be a long and tedious process.
So, how do you tell you are not a startup anymore?
Product-Market fit
Many startups fail within the first two years that they began because their product/service was not a market fit.
As a startup, you might get hype due to the uniqueness or attractiveness of what you offer. However, once you have gone from the original hype and beyond beta or prototypes, and people are actually buying your product, then you are no longer a startup.
Scale
The other sign is scaling. If your business begins to employ a high number of employees, sees higher valuation and higher revenue than losses, then it is no longer a startup.
In Tech, this is called the 50-100-500 rule. If your business has the following, it is no longer a startup;
- $50 million in revenue run rate for 12 months
- 100 or more employees
- Worth over $500 million, either on paper or in assets.
Profitability
Startups will often take out more than they bring in since there is so much happening behind the scenes to stabilize the business. Thus, you will unlikely make profits from a startup.
However, once you begin to earn profits even after other expenses have been taken care of, then your company is no longer a startup.
There are ways like this that you can calculate your company’s finances to determine its profitability.
Standardization
And finally, we have standardization, which is when there is bureaucracy in the company. Often, in a startup, everyone does everything to try and steady the business. Communication can also be informal since there is a limited workforce.
However, if you begin to give members specific roles in the business, open up various departments in the company and begin to adopt more formal communication channels, you may no longer be a startup. You could now be an SME (Small-to-medium enterprise).
Ultimately, though, you could still refer to your company as a startup if you feel it is yet to warrant the name enterprise.
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