Most people advising startups focus on critical points like the business model, revenue model, and team. Remember, I said “critical” but I’m going to skip over them since so many people already discuss them.
In this post, I’m going to present a straight-forward check-list of other, very important things to do when rolling your own startup.
- Think about corporate governance issues on day 1. Whether you have a partner, partners, or it’s just you, you should identify how the company will be governed.
- In good times, we tend to loosen our belts a bit and be a little lax in our control of expenditures. It can be excused when times are good but good times don’t last forever. Keep strict policies on managing your cash (and cash-flow) at all times.
- Manage every aspect of your expenses. Know what your fixed and variable costs will be. Put in a process for tracking money that you and other employees have spent on behalf of the company and have a reimbursement policy. A very simple expense spreadsheet could do the trick.
- Whether you’re prospecting for clients or not, figure out how you’re going to run sales and marketing in your company. Use some form of a CRM. The cheapest and simplest way to get started is with a spreadsheet. Don’t go wasting time on setting up your own free CRM and definitely don’t waste the money on a paid CRM service until you’re generating revenue and have a team of sales/marketing folks that are managing many clients.
- Think about and layout your equity plan for founders, investors, employees, etc. How many classes of stock will there be? What, if any, vesting cycle will be used for founders and employees? Will employees buy stock in the company? Will employees be GIVEN stock in the company for free? Will the employees be given options (ESOPS)? What are the economic impacts of these models to the company and to the employee? Much of what you decide and do here will also affect point 1.
- Find a good CPA/CA that has experience working with these kinds of corporate structures and share allocations, etc.
- Find a good attorney with relevant experience and build a relationship with him/her as well.
- Build a library of various types of contracts that are relevant to your business. Many of the relevant contracts can be found for free on the Internet. However, it is worth having a good attorney review them to make sure you and your business are protected.
- Learn a bit about the law, a bit about economics, a bit about financial accounting, and a bit about technology. Entrepreneurs and top-line managers MUST have a knowledge of all these things to be effective in running the business.
Here are a few resources that might be useful.
Resources:
US Resources:
Indian Resources:
Please let me know of other very important items that you’ve come across.