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What is a Business Start-up and How is it defined

Oliver April 2020 6 min

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Starting a business is a life-long goal for many people. Being your own boss, working the hours you want and earning a comfortable living at the same time.

But the old saying, the grass is always greener on the other side of the fence, is particularly apt for a start up business. You’ve seen friends, maybe family succeed and want to do the same.

Before you can get to the nirvana of a smooth-running start up business, generating a profit, there is a lot to do.

An important consideration is the business finances, and opening a Penta Business Account at the beginning can help.

What is a Start-up?

A business is defined as a start-up while it is in the early stages of development. But what are those stages? There are many variations, but most rely on five, six, or seven stages.

Concept and research

Before committing to anything, you first need to define what your business will do, the market for it, and your customers. With this in mind, research is the key to a successful start-up. This is the stage where you get your ideas on paper and create an initial business plan.

Using Dyson vacuums as an example, the idea came about from James Dyson’s frustration with his vacuum cleaners performance. It kept clogging up and reducing performance. He took the machine apart and discovered that the dust collecting bag was causing the problem. Five years on and over 5,000 prototypes later, and the Dyson bagless vacuum cleaner was born. Your concept stage doesn’t have to be this long, and it may overlap with the next stage, but you get the idea!


This is the stage where you put your ideas into practice. You start developing your product, define the processes your business needs, and source project funding. It is essential to remain flexible at this stage, ready to adapt to the results of testing and market research.


At this stage, you have a product, and it is generating an income for the business. Your business is gaining traction in the market, and your start-up business is growing. This is a critical stage for the company. You will transform from the entrepreneur with an idea into the company owner. Your role is changing at this point, and the different tasks you must carry out are increasing. It is difficult for some people to let go at this stage and delegate responsibility, but it must be done for the company to grow. The alternative is to remain a small niche company.


Your initial idea and product is now producing a steady income stream, but to scale the business, you need to go back to the initial point of concept and research. Are there variations of the product that work for different consumer groups. Can the product be developed in a different direction? Think of Dyson again as a start-up business. The company began by producing vacuum cleaners, using a new bagless system. The core product remains vacuum cleaners, but the same technology has been used in fans, hand dryers, and other products. But they didn’t stop there. They’ve expanded into washing machines and beyond to scale the business. 

During this stage, you may need to look for investment to fund the development of new products. Maybe it is time to look for shareholders? This is another critical stage of a start-up that requires careful planning.


With a successful product, investment into the business, and a growing product range, your business is no longer a start-up, but an established company in its sector. As an entrepreneur, this may be the stage where the leadership of the company changes. You might decide to sell on the business and look for the next exciting idea to do it all again.

What will you Business do?

It sounds like a simple question, right? But coming up with that killer start up business idea, that transforms into a profitable business is challenging. It’s often said that 80% of start ups fail in the first couple of years. This may be an exaggeration, but the attrition rate is nevertheless high. A quick read of our business ideas blog might get you started.

Start first by asking yourself some questions:

  • What are you passionate about?
  • Do you have qualifications or expertise in a particular area?
  • Have you enough capital to start a business?
  • Is this what you want, or just a dream?

If you are not 100% convinced going it alone is for you, then maybe start small and part-time while keeping your full-time job. Many people have started in business this way, and it can be an excellent method to test the water—both for you and your business idea.

Where do you Start?

Okay, you’ve got a great business idea for your start up, but where do you start? Do you need a start up loan? Are there start up business grants available? What are the start up costs? As a start up company, are there local business advice centers? Maybe there are government-funded schemes to help a start up company. What type of business structure do I need? 

Researching all this before you start is essential, as some grants and loans cannot be claimed after you start your business. Making a mistake early on and not rectifying it can have a massive knock-on effect on the future of your business. 

Plan, research, do, evaluate, learn from the past, and plan again. Follow these steps, and it will help your business to succeed.

Business Start up Costs

Starting a small business from home, such as a blog, online social media management, or similar entails little start up cost: a laptop or personal computer, a scanner, a printer, and a telephone connection. It is the ideal start-up model for a sideline to your primary employment.

More traditional businesses, such as opening a retail store or working as a tradesman, incur start up costs. A retail business needs stock and premises from which to sell them. A tradesman requires tools for his trade, transport, and often qualifications and registrations that must be renewed regularly. In both cases, local advertising will help get their business off the ground. Don’t forget taxes will also be a significant cost.

Research local and national financing schemes. There may be a start-up incubator scheme that offers office space, advice, and guidance. 

We’ve come full circle, to where research is the key.

An essential aspect of any business is finance. Open a Penta Business Account to keep your business and personal finances separate.

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