A Brief Look into the Characteristics of Startups vs. Conventional Companies

It has been widely known that recently, a wide range of Indonesian startup companies had been conducting various mass layoffs of their employees. In actuality, Individuals such as the President of the Indonesian Trade Union Association (ASPEK Indonesia) Mirah Sumirat have expressed concern about these concerning wave of layoffs (PHK) happening within the business world. The condition that befell such startup companies has been the impact of a multitude of macro-economic conditions incurred due to the many changes brought about by the Covid-19 pandemic. In order for these companies to survive throughout these difficult conditions, it has been only logically deduced that many employees had to be let go.

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Regardless of these current straining social circumstances, applying to startup companies in particular has remained in high demand for certain demographics, specifically for young people within the Millennial and Z generations. Within the popular imagination, working at a startup is often associated with a comfortable office atmosphere, flexible working hours, and free meals from the office.

Characteristics of Startup Companies

Following the aforementioned logic, it would seem that many would describe a startup company as simply small scale businesses that have only recently begun its operations. However, it is important to realize that startup companies and typic small companies have a variety of differing characteristics. The following are the characteristics possessed by startup companies in general.

1. Have innovation

In order to stay ahead in business competition, startup companies need to have product differentiation or be able to show a unique side that distinguishes them from competing products. Therefore, startups are required to continue to issue innovations for the success of their business.

2. Young age

As we explained earlier about what a startup is, it is known that a startup is a start-up company that is in the early stages of doing brand management, sales and employee recruitment. Many people assume that startups are young companies less than 3 years old. This is not entirely true because there are companies that are already 7 years old and can still become startup companies. It should be understood that a company can stop being a startup not only depending on the age of the company but also other characteristics.

3. Have a goal to continue to grow

Startup is a company that has a goal to be able to grow and develop rapidly. Sometimes it even takes on drastic proportions. This point is one of the things that distinguishes startups from small businesses.

4. Flexible

A startup can move very dynamically and is ready to adapt to difficulties that may suddenly arise. This type of business must also be ready to adapt the products they have to meet customer needs.

5. Risky

Even though startup companies have demonstrated strong innovation, there will always be some uncertainty regarding business success. Given that startup companies seek a lot of capital from various sources such as from investors, it can be said that this business is an investment with a high failure rate.

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What is the Difference Between a Startup Company and a Conventional Company?

So that you can better understand what distinguishes startup companies from conventional companies, please refer to our explanation below.

1. Source of funds

The first factor that distinguishes startups from conventional companies is the source of funds. A founder or business founder will initially set up a company independently. Furthermore, when the company has started to develop and shows promising potential, funding will come from third parties or investors. Whereas in conventional companies, apart from the founders of the company, the source of funds will be taken from the profits or profits generated.

2. Business goals

Startups in general will focus more on business growth or development, by continuing to issue strong innovations. That’s why we often hear that startup companies are constantly “burning money” in the early stages. This is done to find the market and develop its business model. Of course, the way this startup company does it has big risks. In contrast to conventional companies whose main goal from the start is to collect as much profit as possible.

3. Organizational structure

Startup companies generally have a horizontal hierarchy where superiors and subordinates can communicate directly two-way. In contrast to conventional corporate culture, which is still a bureaucracy that adheres to hierarchies and levels of office.

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