- K
- Aug 2, 2019
- 5 min read
Updated: 6 days ago
More than three years into starting up, I acquired a new-found respect for many areas in the day-to-day operating of businesses which are presumably overlooked by most people. These range from back office functions, human resources, payroll, corporate communications, financial reporting, legal and compliance, sales and marketing to overall general management.
In short: a lot of work goes into the creation of a business and even more goes into supporting it. I think all founders go through that same process, though everyone's experience is slightly unique depending on which stage your business is in.
For some it could be the fundraising process, for others it could be human resources, developing sales channels, etc. I thought it might be useful at this juncture to summarize a few important aspects of the process as a gentle reminder.
Cashflow. You have to be really ready to be comfortable with very little cash in your bank at some point of time. Everyone’s financial background is different, just make sure you evaluate and prepare yours accordingly.
Do something everyday. When you find yourself lost, just keep moving - meet people, read stuff, explain to friends what your business model is about. As long as you move, you’ll learn and get something out of it.
When it comes to matters involving shareholding, always respect the money. It can be tough to quantify who contributes more at the onset of any start up given everyone's level of experience, age, capabilities and financial situation. One way to do this is to have everyone commit to an agreed amount of capital to put into the company and split the shareholding based on contributed capital. Even if one party had 20 years more experience over the other doesn't mean the more experienced party deserved a larger portion of the pie. Last drawn pay is irrelevant, only the economics and spirit of the equity injection matter. Take for instance the founding of Blackstone: Pete Peterson and Steve Schwarzman both put in $200,000 of their money and split the shareholding equal ways, even though Pete was held a more senior position in Lehman Brothers.
Really have a shareholder agreement. Even a simple one is good, because that gets everyone committed to the business (at least statutorily).
Do up a budget. THe idea here is to have some idea of how much expenses will be incurred each month. Everyone usually has some idea of how much is required but once this is inked on paper, it becomes crystal clear in terms of where the largest expenses are going, especially when it comes to manpower, tech spending and travel.
Banking and money matters. Where bank and money matters are concerned, as far as possible always rely on joint signatories for check and balances.
"Cheerleaders" are good but the will to execute is more important. It is absolutely critical to maintain a encouraging and positive mindset when starting a business, but also equally important to differentiate those who "cheerlead" vs those who actually do the work. The will to execute is probably more important, sometimes even more so than simple idea contribution.
Everyone in the boat must paddle. All co-founders must be technically strong and have skillsets which are ideally complementary. No passengers allowed.
Resolving disagreements. In pushing a point across or in any disagreement, no one should ever counter an argument by saying “I don’t need this”. Co-founders may never agree on everything, but when the decision is made, everyone must remain fully commited to execution.
Trust is important. There is trusting in a person's integrity and also trusting in a person's ability to deliver. Both are important. Trust through years of friendship should not cloud judgement in trusting a person's execution or their ability to deliver.
Change and growth. Be fully prepared that your idea and vision of your start up will evolve and change significantly along the way. This is mostly a good thing. Just be mindful and open-minded of the possibility that you could end up with a business that is quite different from what you had set out to do.
Share options. Dilute no more than 20% of the company. Founders always need more skin in the game. Then comes the how and when to give share options: Reward those who have contributed to top-line and growth of the business. Here are some suggested guidelines: (i) Contribution to the business top-line (revenue) (ii) Where revenue is irrelevant, evaluate based on overall execution support
Never give away equity. Not even to buddies who cheerlead you, period. See point above on respecting the money.
Talent. Identifying, sourcing, acquiring and motivating people are ultimately key in growing and sustaining the business. As business owners, always: (i) Lead by example, be hands-on and show the way (ii) Invest in your strongest staff: train them professionally but also develop them personally as individuals (iii) Hire for attitude over aptitude (iv) Always be upfront and honest in your communication All employees will leave the firm one day, but the social goodwill generated during their time at your firm will be intangible and will go a very long way in establishing both you and your company's reputation.
Beautiful presentation decks do not win deals. Good ideas, actionable strategies and the executing the plan builds credibility.
Good decision making achieves multifold benefits. In making any decision, try to see if it can achieve multiple purposes.
Don't undermine the importance of a healthy digital footprint. Anyone who tells you not to publish your background on LinkedIn is smoking you. In today’s digital age, a website, a corporate LinkedIn page and proper email account is almost synonymous with legitimacy. Corporate "mileage" or existence can also be a fairly strong indicator, register your company as early as possible.
Stay positive and be comfortable with uncertainty. Complain less, do more. Be comfortable with uncertainty. There is always a possibility that an idea will not work, but if you fail, fail fast and pivot quickly to another strategy that works.
Failure is an opportunity to learn. When you make a mistake, just get up and just move on. Otherwise, you may never grow as a person. Failure makes you a humble person, adversity builds character, and makes you a better person.
Never victimize yourself. Our strengths and weaknesses are all shaped by our experiences and our will to do things. No one will bail you out from your self-pity and self-limitations.
Be solution-oriented. Instead of close captioning the problem at hand, think of ways to solve the problem, then execute it.
Make time for sanity, whatever the definition of sanity is to you - chilling over coffee, taking time to travel, spending time with family, etc. No one should work 24-7. At the end of the day even if you make it at the expense of the things that matter most to you, think about it: is it worth it?
Keep in mind that everyone draws a pay check is fundamentally an employee. An employee’s mindset is different. Remember this always when you manage staff, work with partners, negotiate with clients and even raising funds from investors.
You can learn a lot by working on the day-to-day mundane stuffs. You learn a lot when registering a business, making payments to mandatory employee provident funds, pay suppliers, write invoices and chase for payments.
Trade receivables is a very real thing. Working capital and cash collection are some of the most important aspects of any business. When you are on the paying side just remember not to spoil market and always pay your suppliers on time.
Take responsibility for your decisions. Good or bad, you are always responsible for the outcomes of your actions.
Never look desperate. When fundraising or getting customers, never ever be desperate. Prospective investors and clients can smell desperation.
The world works in ways more complex than you can think. Don’t believe everything you see and read.
Teamwork is everything. There are no heroes in starting up.