One of the most important things in any startup is stable growth at a pace that keeps the momentum going. When you’re focused on the work it’s easy to lose track of where you’re up to though, so it’s important for startup entrepreneurs to recognise when their business is growing.
That way, you’ll have a clearer understanding of how to recognise when your startup is showing positive signs of scaling, including:
- Number of clients, customers and/or employees
- Less investment and increased profitability
- Brand recognition
- A diversified or developed offering
What is a startup business?
As the name suggests, a startup business refers to a new business that has recently been launched. However, it’s not only the age of the operation that can define a business as a startup – they’re also characterised by innovative ideas or disruptive concepts that seek to make a big impact on the market.
Startups generally aim to provide unique solutions to fill gaps or solve problems in existing products or services, or even plan to create entirely new categories.
At what point does a startup stop being a startup?
Pinpointing the precise moment when a startup stops being a startup is very rarely clear-cut because so much can vary based on things like economic climate, industry and personal perspectives.
There is no prescriptive or legal point at which a startup stops being a startup. There’s also no one-size-fits-all trajectory that can or should be followed – every business is on its own unique growth journey, following its own business and financial strategy.
Some lending or grant funding bodies define a start-up by age – usually 2 years from the launch date.
Sometimes, it’s such a gradual process that even the business owner themselves doesn’t notice the shift happening until they do some proactive performance analysis.
Some companies, even when they’ve moved through the initial startup phase, will maintain a startup culture, prioritising innovation and market disruption as they continue to scale.
That said, there are some common indicators to watch out for that suggest a startup is transitioning away from its original form into something else – something bigger than it was before.
The most natural progression for a business after it transcends startup status is typically to become an SME (small-to-medium-sized enterprise).
How you can tell that a startup is growing
Explore the signs and symptoms of startup growth in more detail below so you know what positive indicators to look out for.
Size: number of clients or customers
A clear signal that your startup is growing is that you’re gathering an increasing number of clients or customers.
More custom results in the expansion of so many other elements, including increased profit, wider brand recognition and the possible requirement for a bigger workforce. It also shows that you are achieving product-market fit – if people are buying what you’re selling, you’re doing something right.
The bigger your customer base becomes, the more your business will expand in various areas.
Size: number of employees
As well as an increase in the number of clients, you should also recognise when your workforce calls for expansion. You may need to recruit new employees or outsource work if, for example, you:
- Simply need more hands on-deck
- Need specialists with particular expertise
- Want to expand your business into additional geographical locations
- Want to evolve your offering
If your workforce is growing, it’s a good sign that your startup is scaling too although some businesses recruit staff even when they aren’t growing in an attempt to boost performance.
Align recruitment efforts with your performance goals and objectives so you can ensure expanding your workforce is a true sign of growth.
Profit and revenue
If your takings and profits are on an upward trajectory, this is a positive sign that your startup is growing. Moving away from a phase of heavy investment and minimal revenue to sustained profitability demonstrates a shift from startup status. When a business makes money – and has profits leftover to invest – there’s more to spend on continued growth, development, and expansion, so it’s a cyclical growth process.
Less need for external funding
As the business becomes more profitable, there should be less need for the same level of external funding and investment that is often required during the startup phase.
If you notice movement towards greater self-sustainability, that’s a positive sign your business is growing.
Development of products or services
Startups generally launch into the market with a minimum viable product (MVP) and then refine it based on feedback and performance.
So, if you’ve reached a point where your product or service is having to evolve out of its original state and beyond the initial developmental phases, it’s another positive indication that your startup is growing.
More complex structures and processes
When a business is in its infancy, the workforce is typically very small, which means processes and structures can be less complicated. A growing business will require more sophisticated systems and procedures.
If you’ve had to put any of the following in place, it’s almost certainly a marker that your startup is indeed growing:
- An internal communication channel (e.g. Slack)
- A project management platform (e.g. Monday.com, Asana, etc.)
- A dedicated accounts team to liaise directly with customers
- A dedicated marketing and communications team
This is just a handful of examples – audit the tools and processes your business is currently using to better understand the scale of its growth.
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