What Types of Businesses are There for New Startups?

What Types of Businesses are There for New Startups?

Being an entrepreneur opens up a number of possibilities. You want to use your ideas and passion to create something special that people will love. However, you might not know how to go from an idea to a business. You may not be familiar with all of the types of businesses there are, either.

A startup, as defined by Steve Blank, a successful Silicon Valley entrepreneur, is a “temporary organization designed to search for a repeatable and scalable business model.” Keep in mind that there are pros and cons to each type of startup, so be sure you take each point into consideration. Picking the right option for your business at the start can save you time and money later on.

Types of Startup Businesses

You need to know what types of businesses there in order to make the right choice of which business idea would be best to pursue. Usually, when people think of startups, their mind goes to the tech field. However, there are a number of other options, some of which may surprise you.

  • Lifestyle startups: These startups give entrepreneurs freedom to work for themselves. They work on their own schedule and usually only work on projects they are passionate about. Think freelance web designers.
  • Small business startups: This type of startup can be thought of as a mom and pop shop. They exist to provide for their families and are owned by a family member. These are things like grocery stores, bakers, hairdressers, etc.
  • Scalable startups: Scalable startups believe that they will have an impact from the early stages of planning and development. They seek out the best and brightest workers, and every step they take is intended to help them scale their company. Some examples are Google, Twitter, and Uber.
  • Buyable startups: This business type is characterized by a certain product or idea that can easily be bought by a larger company. Web apps are a good example.
  • Social startups: Social startups are founded on an idea, and their main goal is to make the world a better place. They are not driven by money. In its early stages, TOMS shoes was a social startup.

What’s the Difference?

Businesses are configured in different ways based on their products or ideas as well as their clients. For example, a small business startup and a social startup have different goals, so they won’t have the same clients. Of course, there may be some overlap, but you wouldn’t create a social startup if your goal was to provide for your family, and vice versa.

Some businesses are meant to be scaled, or grown, while others don’t need to be. Lifestyle startups are made up of one person, so they can’t scale their services, and oftentimes, this is fine with them. They are passionate about the work they do and thoroughly enjoy it.

The Balance of Good and Bad

As mentioned earlier, there are always going to be downsides to go along with the positives no matter what model you choose to follow for building a successful startup. However, knowing what the cons are beforehand can help mitigate the setbacks they may cause. This is an important factor in the first years of a new business because it can help you avoid many common pitfalls. Some of the pros and cons you may encounter for each business type are listed below.

Lifestyle Startups


  • You get to work for yourself.
  • You can work flexible hours.
  • You can profit off your skills and passion.


  • You need to be vigilant about finding work.
  • You may not always have a steady stream of work.

Small Business Startups


  • These can be pretty profitable.
  • You own the business.


  • The location plays a big role in success.
  • These aren’t scalable.

Scalable Startups


  • You have the chance to be extremely profitable.
  • You get the opportunity to provide something valuable to a large group of people.


  • There’s a lot of pressure to succeed early on.
  • There’s a possibility that you may not be able to scale.

Buyable Startups


  • Your idea or product can be sold to a larger company.
  • You don’t have to worry about the daily operations after you sell.


  • You usually don’t get that much money for your product or idea.
  • You may not have as much involvement after you sell.

Social Startups


  • These can be highly rewarding.
  • You can make a positive impact.


  • These are historically not as profitable as other startups.

The Next Step for a Startup

If you plan on scaling your startup, there are a few signs that you have successfully done so. It might seem like it’s easy to tell if your company has grown out of the beginning phases, but it can be a bit tricky. One way to tell you’ve grown is if you are buying other smaller companies or becoming an investor. This means that you have the resources to help others even with running your own company.

Another way to tell is the 50-100-500 rule. If your business has a $50 million revenue run rate, has 100 or more employees, or is worth more than $500 million, you are out of the startup phase. You may even be out of the startup phase if you have more than 30 employees.

Final Thoughts

Starting a business for the first time can be a scary proposition. Nonetheless, your entrepreneurial spirit says you should push on, and that’s what brought you to us looking for where to start. Once you’ve come up with your idea or product, you need to decide which business type will best suit your needs. You can use our pros and cons lists as a starting point, but you should also think about creating your own based on your needs. If you need more help with your startup, 1dollarayear.com can provide you with more information.

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