What Is a Start-Up Business?
- A start-up business, also known simply as a start-up, is a relatively new business in the initial stages of operation. Not every new business begins as a start-up. For example, some businesses split off from larger businesses where they served as departments or branches of the parent company, and begin to operate autonomously. Others begin when two smaller businesses merge. Start-ups are among the smallest and most basic businesses, which means they represent the greatest potential for growth but also lack resources to promote stability or rapid expansion at first.
- The process of creating a start-up begins with an idea for a business. Owners pool their resources, including money, expertise and business knowledge, to found the business. Most start-ups require investments in the form of personal loans. This is the money a start-up uses to establish itself and begin production of goods or services, which leads to its first revenue. There is no specific point at which a business ceases to be a start-up, but once an industry includes newer, smaller businesses, older and larger ones generally lose the start-up title.
- The specific requirements for a start-up vary based on location, the nature of the idea and the size of the business. Some start-ups begin with wealthy individuals investing in a business that opens with a large workforce and ample resources. Others start out as private individuals who apply for business licenses and operate out of their homes. In each case, the start-up needs a business license from the state where it operates. The license requires owners to determine an ownership structure and draw up papers indicating what roles they will each play in the new business. Other requirements for some start-ups include renting a production space or office, marketing to customers and hiring a staff.
- One of the first things the owners of a start-up need to do is to write an initial business plan. This document will lay out the strategy for the coming months and years. It will also serve as a point of reference as the business grows so that its owners can remain in line with their original goals. An initial business plan should name the owners and the company, as well as documenting where they do business and what sort of business the start-up is engaged in. It should include a mission statement that reflects the owners' goals and a discussion of how the start-up plans to succeed against established competitors or in an entirely new market.
