Is your company a startup?

In a recent post, we tried to answer the question of when it is appropriate for a startup to hire a CFO. That was a two-part question — in today's post we want to talk about a way to define a startup itself.

Many leaders may consider themselves startups for longer than they need to. Why? Perhaps it’s because the term comes with specific labels or assumptions they want to identify with. From a marketing perspective, lets face it…it’s sexy.

As we strive to form our own definition of what makes a startup, we can start with the agreement that, at a minimum, a startup is a business in its early stages. How early? There are two ways to look at it.

Internal startup signs  

You’re still bootstrapping. You’re everything — the marketer, developer, bookkeeper and head of sales. Or, perhaps you’re working with the same team of early employers that grew with your organization; you haven’t brought in new talent in a while. But as you hit the following milestones, you begin moving out of the startup zone:

• You’ve formed a management team that works together to discuss and accomplish strategic initiatives.
• You begin expanding your team by hiring talent from outside your immediate circle.
• You start taking some financial risks to grow, i.e. assuming some debt, taking on angel investors, and/or signing a long-term facility lease.

External startup signs

We anticipate that the most debate over the “startup” label surrounds the following milestones:

• You are a startup before you have a product that is in demand; before people start paying for your product, before you begin attracting multiple customers, and before these customers come back for more.  
• You are a startup until you move beyond your Friends & Family seed funding and begin raising money from external investors.

Whether you view these bullets as important experiences to have under your belt or actually use them as a checklist to help you self-identify whether you’re still in the startup zone, consider them — as well as the definition of a CFO — as guidelines to help you think about how your company will mature and evolve. 

And remember that we’re here to be your resource — call us anytime if you need help thinking through your challenges.