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How To Transition From Startup To Small Business

The biggest difference between evolving from startup to small business today is the ability to foresee a lot of things that might have taken entrepreneurs by surprise in the past.

The biggest difference between evolving from startup to small business today is the ability to foresee a lot of things that might have taken entrepreneurs by surprise in the past.

There’s a certain cache in saying you’ve launched a startup. Ever since digital technologies allowed new entrants to crop up in established industries or create brand-new markets based on a creative idea, the word “startup” has almost come to be shorthand for “innovative firm.”

Unless you’re looking to be acquired by a larger entity, however, or are basing much of your future on being awarded funding of some kind, there is a point in every startup’s life where those running it have to make a decision: are you going to evolve into a small business or not?

Compared to a startup, which some experts define as an organization in search of a scalable and stable business model, small businesses tend to have figured out their business model and are focused on driving long-term profitability. A small business doesn’t have to remain a local shop, but generating a more predictable revenue stream allows them to concentrate on creating more value for the customers they serve rather than “disrupting” a particular industry.

Of course, there’s no magical moment when a startup “graduates” into a small business. The journey will look different depending on a wide variety of factors, particularly the sector in which you operate, its customer needs and the addressable market for your products and services. That said, there are a number of ways that entrepreneurs can track their progress and determine whether they’re on track to making the transition, or if they have more work to do in the way they run their firm.

If you haven’t already, look at some of the markers outlined below and, if you’re intention is to become a true small business, grade yourself on how far along you really are.

1. Selling Becomes Less About Pitching And More About Partnerships

The very nature of launching a startup means you don’t have a track record to impress potential customers. That means, at least in the earliest days, almost everyone is a prospect. In some situations, startups don’t even generate revenue during the early days. Instead, they may offer a free service of some kind in order to build up a critical mass of users. There may be ways to monetize an audience down the road, or the startup may have to include a paid version of its existing offerings.

Small businesses have largely transcended the need for “loss leaders” or other approaches to getting their foot in the door. Using a CRM such as Sales Cloud, for example, they have managed to learn enough about their prospects to convert a portion of them into paying customers. More importantly, they continue to nurture those relationships to a point where they can grow the volume of business they get from their best customers. The relevance and value they bring to those customers means they’re not having to pitch over and over again. Instead, they become a partner for their customers, responding to and even anticipating their needs.

2. Adding Resources (Including Human Resources) Increases Value

Startups talk about “scaling” a lot, which means they want to grow without necessarily adding a lot of overhead. This includes headcount, office space and other things that seem like the luxuries of a large business. Books like The Lean Startup have become highly influential by advocating a tightly-run ship, where the founders try to accomplish a lot with a small staff.

Small businesses won’t hire or spend needlessly, of course, but they have established themselves to a point where growth in the number of people involved or other investments only help to serve their customers. They most likely have fine-tuned the way they support them through tools like Service Cloud, for instance, which means they can open new locations or hire talent to tackle higher-order challenges. This means they get taken more seriously by their customers, prospects and the wider industry.

3. Customers Connect To A Brand, Rather Than An Idea

Startups often get attention by offering something special that can be summed up in no more than a few sentences. It could be a new technology that solves a common pain point, or a novel way to do something that was formerly manual and time-consuming. They may also have a mission statement, but more attention is likely paid to their elevator pitch and speculation about what their growth potential could be.

As small businesses mature, the way they are recognized, remembered and appreciated by customers begins to look more like what you’d associate with your favorite clothing, restaurant or home electronics equipment company. In other words, they have built a true brand which has made an emotional connection to customers with sophisticated messaging that moves though all the appropriate channels. Marketing automation like Marketing Cloud makes this transformation much smoother, but regardless of how it happens, small business brands can be as powerful as those of the Fortune 500. That’s because they become organizations that customers trust.

Conclusion: Getting A Head Start On The Transition

The biggest difference between evolving from startup to small business today is the ability to foresee a lot of things that might have taken entrepreneurs by surprise in the past. This is because so much of our world is driven by data, which can now be captured, analyzed and offered up through artificial intelligence (AI) tools such as Salesforce Einstein.

As the use of AI becomes more commonplace, we might soon see a new breed of entrepreneur — one who creates a concrete roadmap in their business plan that charts the course of their firm through the major stages of growth.

“Startup” might be how they plot out their first moves and entry into an industry. “Small business” might be the plateau they reach after hitting a number of specific milestones. In some cases they may have even bigger ambitions.

No matter the path they chose, though, taking a data-driven approach from the very beginning is probably the best way to ensure they get where they want to go.

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