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From my experience your first startup is a bit like going to high school without having been to primary school – there’s lot of basics that you’re expected to be able to do, i.e. setting up a company, bank accounts, finding an accountant, writing a shareholders agreement etc. These things add little to no value to your business but are essential to getting things up and running.
First time around they can consume 70-80% of your time due to the steep learning curve that’s involved to get them done properly. Face them again, and you can do them with your eyes closed, leaving more time to focus on customers and the product itself.
For all the first-time founders out there, here are my top five tips that will help you with the first phase of your start-up journey.
1. Don’t be afraid to invest in the basics to get set-up
Find a great accountant who can help you with the basics. Ask for referrals from people at a similar stage – and find someone you can trust in a small business – you don’t need a ‘brand name’ at this stage. Similarly, find a lawyer who can help you with the basics and be ‘on-call’ as required. But never sign a retainer, this should be on hourly agreed rates. Top trick is to find someone who has previously been at a large firm, who’s recently gone out on their own. They’ll have all the benefits and training of a large firm but they’ll be very focused on helping you, and it’s one third of the price of the ‘brand name’.
2. Clear agreement/understanding with business partner/s from the start
Make sure you’re crystal clear with your co-founder about how the business will be structured and operated. Write a shareholders agreement with your co-founder which is no more than 250 words, and then send it to your lawyer. Don’t let the lawyer do the first draft. Also worth noting that if you and your business partner can’t agree on the terms at this stage, don’t go into business together. It’s that simple.
3. Market research
Get out there and start talking to customers. Do market research. Don’t assume “build it and they will come”. Unless it’s solving a problem – they won’t! Nothing beats plenty of cups of coffee with your target users. In most cases they’ll be more than happy to go into lots of details about the problems they currently face, and ways that you could potentially solve them. Be careful though, and remember you won’t be able to “please all of the people, all of the time”. Your first product should aim to solve one main problem really well. Over time you can come back and add functionality.
4. Funding plan
Work out how you’re going to fund your start-up. Are you aiming to boot-strap, get professional investors involved or friends and family? Who’s in charge of fundraising? What if this isn’t successful, or takes longer than you expect? Always have a plan B.
5. Don’t do it on your own
Find a great mentor (or five). I’m a strong advocate of this. They’ll be very helpful in working through the problems that you’ll face – not only in the early days, but (hopefully) as your business grows and expands. I have been fortunate enough to have some great managers and bosses with a real diversity of experience prior to venturing into ‘start-up land’. Not only have they been incredibly helpful in shaping both the business (and our overall mentality to running a business), but many of them have also become investors and so are properly ‘on the journey’ with us.