A perspective on startup businesses

IN the contemporary world of business, entrepreneurship is commonly connected with the creation and growth of startups. Though entrepreneurship can be applied to all kinds of new or existing enterprise irrespective of whether they are small or large, the study of the subject of entrepreneurship focuses more on startups than any other kind of enterprise.  A startup business, also known simply as a startup, can be defined as a newly created small business that is oriented towards rapid growth through strategic innovation. A startup is a new or young independent innovative small business created from scratch by the entrepreneur. The entrepreneur has a vision to grow the business big and develop the strategy to pursue the vision and build the capability to execute the strategy.

Other terms used in entrepreneurship literature for startups include new ventures, new business ventures, high-growth ventures and entrepreneurial ventures. Startups by their very nature pursue opportunity in the context of high uncertainty, rapid growth, radical change, and limited resources (Roberts et. al., 2007) whereas not all new small businesses are created to operate in all of these conditions.  Indeed, “not every new small business is entrepreneurial or represents entrepreneurship” (Drucker, 2015). The classic expression of entrepreneurship is the raw startup company that develops into a high-growth company (Spinelli & Adams, 2016). “High-growth ventures start small but are intended to grow rapidly, often requiring a team of partners or managers to handle the growth” (Katz & Green, 2018).

Startups differ substantially in their growth potential and orientation. Some are high-growth while others are high-performing and yet there are high-potential startups. Generally, startups are designed to have high receptiveness to the concept of entrepreneurship and, hence, high responsiveness to the fast-changing dynamics of the environments of modern business. Startups are opportunity-focused, growth-oriented and innovation-driven. To put it explicitly, a startup pursues strategic growth by exploiting many kinds of opportunity for continual innovation. The most critical feature that defines a startup is high growth through strategic innovation. Innovation is a top priority for startups. Thus, new small business that does not innovate is not a startup (Silva et. al., 2021;  Herte, 2017). New small businesses that have limited growth potential are not startups.  What is more, startups have the capacity to access novel sources of financing for growth. A startup is a work in progress to becoming an entrepreneurial business. A startup is a business venture in search of a workable business model. The entrepreneurial business has a proven business model.

Ultimately, the successful startup businesses grow and mature to become well-established large companies which can as well be managed as entrepreneurial businesses. However, a great many startups never grow up at all. Some remain small forever while, unfortunately, most fail outright. Characteristically, startups are highly prone to failure.  In contrast to startup businesses, there are typical small businesses. These typical “small businesses are usually intended to remain small, generally a size that the owner is comfortable controlling personally” (Katz & Green, 2018). Unlike startups, typical small businesses are conventional in nature. They are the ubiquitous businesses most people start and run everyday all over the place.

• Akinola, MNSE, is a social entrepreneur and Executive Chairman, Firstmost Education & Training Ltd.

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