When Does a Startup Become a Company?

by Granville Triumph

This is a question often asked by organizations that have advanced far beyond the ribbon-cutting but are still relatively young. Many are hesitant to get rid of the training wheels because people tend to have higher expectations of an established company than a startup. Some startups use that title as an excuse for mistakes and operational deficiencies. Most simply don’t want to abandon the approach that has worked throughout the startup phase, and understandably so.

The problem with this mindset is that companies that cling to the startup phase, both in name and mentality, are doomed to fail. You can’t be a startup forever, nor should you want to be viewed as one forever. The startup phase is an extremely important part of an organization’s growth. This is the time when the business model, vision, culture, goals and processes take shape. However, the startup phase must be temporary.

To be clear, an entrepreneur doesn’t wake up one morning and decide, “As of today, we are no longer a startup.” Transitioning from a startup to a company, whether it happens organically, through conscious effort and planning, or both, typically takes years. It’s a transition that does not have to signify wholesale changes. As a matter of fact, companies should not abandon the values and characteristics that made them successful startups in the first place.

Transitioning from startup to company is more about adjusting priorities than making abrupt changes. A startup needs the flexibility and agility to adapt as it fine-tunes its business model to achieve early goals. The entrepreneur who launched the startup is typically willing to take risks in order to make his or her investments pay off, relying on innovation and creativity.

As a startup transitions to a company, it does need to maintain a certain level of flexibility, agility and creativity. But the emphasis needs to shift toward repeatable, reliable processes that create cost-efficiency and scalability while delivering a consistent customer experience. This is when it’s time to focus more on growing sales and establishing your brand. Entrepreneurs need to think less about creating a buzz and more about managing a stable company.

Entrepreneurs also need to remember that the success of the startup wasn’t the result of one person’s work. No entrepreneur succeeds without the support of a strong team that makes personal and professional sacrifices for the good of the startup. There is no better way to reward the sacrifices and hard work of your startup’s team than by providing them with long-term stability.

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