A startup and growth mindset, means an energetic creative, problem solving approach. We see it at our local Dorset Business Angels pitch events. And not just from the presenters, but from the experienced investors too! I see it with marketing clients who want to grow their market. The point is, it does is not only apply strictly to new “startups”. I will clarify what these key startup and growth mindset qualities are. But importantly define some words such as startup, in-revenue and a few others that are used and confused in the small business environment.
Startup and Growth
The term startup was first used by Forbes magazine in 1976: “The OED traces the origins of the term, used in its modern sense, back to a 1976 Forbes article, which uses the word as follows: “The … unfashionable business of investing in startups in the electronic data processing field.” It is now commonly held to be a business which has just been started.
The journey of a business follows a number of discreet stages. These milestones can get confused with one another. Where you are on that journey creates specific challenges. For example, sourcing funds for the business. I realised this most vividly when running my first business and finding we could not fund the capital items from bank (debt finance), as a new business. We needed to get private investors, known as angels to do it. What people might call “Dragons” from watching TV. Once we started making money, like other businesses, we found we could use other sources of funding: asset finance, leasing, invoice factor financing, Venture Capital even as the business grew and some bank loans plus second rounds of angel funding. However, we still described ourselves as a startup for some time.
Startup Frame of Mind
And equally if the term startup was first used in the 1970s, then, it has now stuck with certain companies who remain true to their innovative, disruptive, culture such as Google, Facebook and alike. Despite the fact, they are clearly no longer startups. Steve Blank, Silicon Valley serial entrepreneur, laid out a somewhat similar definition, writing that: “a startup is an organization formed to search for a repeatable and scalable business model.” TechCrunch writer Alex Wilhelm is one of those who made a stab at defining what makes a startup a startup. After proclaiming that “nearly everyone is wrong” about what a startup is, Wilhelm sets out his own 50-100-500 rule. According to his rule, if a company meets or exceeds any of the following criteria, it is not a startup:
- $50 million revenue run rate (forward 12 months)
- 100 or more employees
- Worth more than $500 million
(Two quotes here from entrepreneurship)
Growth and In Revenue
Angel investors and practical business people, frankly don’t care about semantics. Dorset, Bournemouth, and Poole, has gained the reputation as one of the fastest growth areas particularly for digital business. A challenge is to support brand new startups with appropriate help. So here organisations such as Dorset Growth Hub or Silicon South are first rate. Angel investors at Dorset Business Angels want in-revenue growth businesses, and Hixsons business enablers are specialists in this locally. But the latter two encourage a “startup frame of mind”.
Components of the Startup Frame of Mind
- Hard work for the love of it
- Disruptive innovation
- Aligning business and personal objectives – see Nick Hixson video
- Agile thinking – lean concepts such as Minimum Viable Products
- Acceptance of failure and pivoting, work close to the market and customer
A Word of Warning – Addressing Risk
Business is business, and it’s fine and dandy to adopt a startup and growth mindset, however, one should operate with eyes open. Key stakeholders such as bank managers, investors, suppliers, and partners believe in viable businesses. The word startup has connotations of new, untested, and risky which is why people like established ongoing concerns. So, what should those of us who like to demonstrate a startup and growth mindset, also be demonstrating to prove credibility to the marketplace and these key stakeholders? I would suggest, perhaps rather obviously, for which I make no apologies, we need our businesses to demonstrate:
- Excellent growth
- Clear strategies
- Leadership and a balanced team
- A robust process, project, planning and implementation capability
- Sound financials and cash generation
Peter Eales BA Hons Chartered Marketer FCIM FIDM
Founder Director Dorset Business Angels
MD o i solutions limited