Definition: A start up company, also known as a startup, is basically an innovative venture in its earliest stages of commercial operations usually aimed at solving a real life problem with an innovative solution. These ventures are usually very small in size, new, and self-funded by either a group of angel investors or founding entrepreneur. In some cases, the start up company is backed by venture capital firms acting as general partners. In other instances, start up companies are backed by multiple sources of capital from a number of different sources such as angel networks, wealthy individual entrepreneurs, the government, and a variety of other sources of funding. The ultimate aim of these start up companies is to help solve problems that require new solutions in areas where technology and innovation are needed.
What is a Start Up Company? A startup company is not required to file any form with the state, nor does it have to have any particular corporate formation structure (unless it is a “Sole Proprietorship”). A start up company may, however, be required to file an “mittal to state” which demonstrates its status as a” duly registered business.” This means that the start up company has filed all of the necessary forms with the state and is awaiting state approval to go ahead and begin trading. If approved, the business can then begin trading as a public company.
What is the Purpose of a Start Up Company? Many startup companies are created for one reason only: to make money. There is nothing wrong with that, of course, as many start up businesses have done well and become very profitable. However, some start up businesses are created as “sole proprietorships” and later transform into companies that seek to solve problems in areas where another business has already been successful. In this case, the start up company seeks to solve problems in areas in which the successful company has not tread.
How do I File for a Form? In most cases, entrepreneurs must file a “statement of authority” with their state’s secretary of commerce. This is needed because the state needs to know in what capacity the business is operating. Also, the filing must include a copy of the company’s annual financial performance report, which breaks down cash flow and profit and loss figures over the past three years. The form should also include copies of letters from bankers and other creditors that support the enterprise’s business model and indicate that the venture has a reasonable chance of succeeding. This letter will increase the likelihood that the venture will be accepted for licensing by the state if it is licensed based on the support that it provides to its local economy.
How Do I Write a Business Plan? After filing the statement of authority, an entrepreneur should then write a business plan, which details the nature of the enterprise and the goals that it hopes to meet over the course of the next five years. A well-written business plan will also provide management advice and a forecast of sales. Because it describes the business as well as the key benefits to the public, a business plan is often considered one of the most important aspects of a venture.
How Do I Obtain Funding? If funding is required, typically startup businesses obtain seed money or small business loans from family and friends, or seek other forms of funding from a bank, venture capital firm, or other private funding sources. If startup costs exceed the revenue anticipated, the business may have to seek to raise more capital through one or more of these sources.