Starting a business entails understanding and dealing with many issues such as legal, financing, sales and marketing, intellectual property protection, liability protection, human resources, and more. Following are the key points to help startup companies rollout a great company formation.
Use Business Consultants to Supplement Your Team
At the early stages of your startup, you will likely want to have a small employee team to minimize expenses. A good way to fill in for specialized expertise is to use Business consultants. That way, you avoid taking on employee costs and benefits payments. Their expertise on business processes. technical and market knowledge will give you an unwavering outreach to meet your potential goals and targets in a short span of time.
Come Up with a Great Name for Your Business
Selecting the right name for your startup can have a significant impact on your business success. The wrong name could result in insurmountable legal and business hurdles.
Here are some basic tips on how to name your startup:
• Avoid hard-to-spell names.
• Don’t pick a name that could be limiting as your business grows.
• Conduct a thorough Internet search on a proposed name.
• Get a “.com” domain name (as opposed to “.net” or another variant).
• Conduct a thorough trademark search.
• Make sure you and your employees will be happy saying the name.
• Come up with five names you like and test market the name with prospective employees, partners, investors, and potential customers.
Build a Great Website for Your Company
You should devote time and effort to building a great website for your business. Prospective investors, customers, and partners are going to check out your site, and you want to impress them with a professional product.
Here are some tips for building a great company website:
• Check out competitor sites.
• Start by sketching out a template for your site.
• Come up with five or six sites you can share with your web site developer to convey what you like.
• Be sure the site is search engine optimized (and thus more likely to show up early on Google search results).
• Produce high-quality original content.
• Make sure the site loads quickly.
• Make sure your site is optimized for mobile devices.
• Make it clean and simple; visual clutter will drive visitors away.
• Make sure you have a Terms of Use Agreement and Privacy Policy.
• Make the navigation bars prominent.
• Obtain and use a memorable “.com” domain name.
• Make the site visually interesting.
• Make sure it’s easy for site visitors to contact you or buy your product.
Obtain a Company Registration and Tax ID Card
Obtaining CR is the first step in the company registration process. In most instances, you will need to get a tax ID from the General Tax Authority for your company.
Set Up a Good Accounting and Bookkeeping System
You will need to set bookkeeping/accounting system to keep track of your finances—income, expenses, capital expenditures, EBITDA, profit, and loss, etc. This is important to understand your business’s cash flow situation and also for tax-filing purposes. There are a number of online software solutions which can be taken help from outsourcing to the Consultants in initial phase of the set up.
Understand Financial Statements and Budgets
It’s important to keep on top of your expenses and learn how to thoroughly understand financial statements and budgeting. Many startups fail because the entrepreneur isn’t able to adjust their spending to avoid running out of cash. Establishing a detailed, month-by-month budget is crucial, and this budget must be reviewed regularly.
Understanding your financial statements will also help you answer questions from prospective investors. Here are some financial statement questions you can expect to get from investors:
• What are the company’s three-year projections?
• What are the key assumptions underlying your projections?
• How much equity and debt has the company raised, and what is the capitalization structure?
• What future equity or debt financing will be necessary?
• How much of a stock option pool is being set aside for employees?
• When will the company get to profitability?
• How much “burn” (losses) will occur until the company gets to profitability?
• What are your unit economics?
• What are the factors that limit faster growth?
• What are the key metrics that the management team focuses on?
Market Your Business Like Crazy
To succeed in business, you need to continually be attracting, building, and even educating your target market. Make sure your marketing strategy includes the following:
• Learn the fundamentals of SEO (search engine optimization) so that people searching for your products and services online might find you near the top of search results.
• Use social media to promote your business (LinkedIn, Facebook, Twitter, Pinterest, etc.).
• Engage in content marketing by writing guest articles for relevant websites.
• Issue press releases for any significant events.
• Network continually.
Drive Traffic to Your Website
While entire books have been written on this topic, the key ways to drive traffic to your website are as follows:
• Pay Google, Bing, Yahoo, or other search engines to send you traffic (such as through the Google Adwords program).
• Build a great site with lots of high-quality, original content that is search engine optimized.
• Have a smart social media plan to drive traffic from Facebook, Twitter, LinkedIn, and other free social media sites.
• Get links to your site from high-quality sites.
Don’t Go Overboard on a Business Plan
It’s useful to come up with a business plan to think through what you want to do for the development of the product or service, marketing, financial projections, and more. And you should then get input from trusted business and finance advisors. But don’t go overboard with a 50-page business plan. In reality, many startups have to deviate from their plan as the business develops.
Set Up Appropriate Books and Records for Your Business
You will need to keep multiple books and records for your business, including:
• Financial statements (P&L, balance sheet, cash flow)
• Employee records
• Board and stockholder minutes and consents
• Stock and options ledger
• Tax filings and records (federal, state & local income, sales and property taxes)
• Secretary of State filings (Certificate of Incorporation, annual filings, etc.)
• Invoices & contracts
• Bank accounts
• Creditor records.
Determine How to Divide Equity Among the Startup’s Co-Founders
There is no one right answer to the question of how equity should be divided among a company’s co-founders. But everyone involved should discuss this issue and come to an agreement up front to avoid misunderstandings later on. If you are the original founder and brains behind the idea, a good argument can be made for more than 50% ownership.
The split should take into account the following:
• The relative value of the contributions of the co-founders
• Vesting dependent upon continued participation in the business (you don’t want to give away 25% of the company to someone who leaves after a few months)
• The amount of time to be committed to the business
• The cash compensation to be paid as an employee
• Whether the co-founders will be contributing cash as an investment in the business
• Whether one person wants to maintain control over decision-making
Source: Forbes
Conceptual Framework for Small & Medium Enterprises Business Growth
