Scaling a business requires many skills and areas of expertise. Our recent LaunchTalks panel covered several key elements that startups need to take into consideration from a legal, financial, human resources administration and marketing perspective. Here is a recap of the key points.
From a finance perspective, Jeff Glick, founder of StartUUp, outsourced accounting and financial reporting, discussed how solid financial reporting is the cornerstone of running your business and keeping it going. Companies should begin by having a business plan and putting in place the proper reporting.
“A solid financial snapshot should capture where you came from, where you are now and where you are going as this will be required information from any banks who are looking to provide financing and will do their due diligence.”
Growing companies care about bringing in and keeping the right staff. Eric Richmond, regional consultant for TriNet, explained how the PEO (Professional Employer Organization) structure can be a useful model. Small to mid-sized businesses have the PEO act as employee co-administrator to handle benefits, employee onboarding and workers’ compensation compliance, benefiting from lower costs and outsourced administration, while companies then manage the hiring and staff selection internally.
How do you ensure your business grows?
Branding and marketing expert Lenore Kantor of Launch Warrior, a strategic marketing partner for high growth companies and founders, shared some pointers:
- Understand and focus on customer needs first – it’s not possible to be all things to all people, so determine your initial primary segment focus
- Clearly define your business’ value proposition – differentiate yourself from the competition by providing what your customers value
- Align your marketing with your brand and culture – develop an authentic and consistent voice that represents your business and choose the right tactics that support your goals
- Know your company’s strengths – focus on building the right team, distinguishing your solutions and offsetting any weaknesses
- Communicate with all your stakeholders – get the message out frequently and consistently across different mediums. Consider a “surround sound” approach to cut through the clutter and make an impact by choosing the right outlets to be in front of your customers.
- Define your key metrics and milestones – you have a better chance of hitting your targets the more clearly you can outline the details of what you are trying to achieve by when and why.
“Too many technology organizations don’t think through how they will drive user adoption. Delivering the product to market is not enough to drive sales – you need a plan in place and a thoughtful strategy around how to build growth.”
From a legal perspective, Lee Schneider, counsel at Debevoise & Plimpton who specializes in financial services offered 3 key points to prepare your organization:
- Define your company structure. For example will you create a holding company? What is the best legal formation from a tax and liability perspective? This should include consideration of the ownership structure. Who will own you and how – is it worth creating phantom stock plans for employees to give them an incentive for performance?
- Set up contracts to properly define relationship structures. Protect your intellectual property and get trademarks or patents. Consider the right arrangements to keep your data safe – with the focus on cybersecurity, some organizations are opting for hosted solutions vs. SaaS (Software As A Service) to protect their data from potential vendor infiltration risks.
- Understand the compliance framework that your business operates within. Within financial services regulatory consideration is critical – other businesses that may be less highly regulated still require awareness of the customer’s requirements.
Lisa Seim, principal of Strategic Exchanges, moderated the panel and asked for examples of how things could go wrong so companies can protect themselves. The panel stressed the importance of being prepared and planning ahead. Companies should be ready to scale so they can accommodate growth. By setting up the right processes and doing due diligence in advance, it can save time to establish relationships with potential experts before you may need them. As a company founder, it’s helpful to know where you and your team add value and when it might be beneficial to bring in other partners to help you.
How can cash-strapped startups get things done effectively? While startups can do guerilla marketing and develop creative strategies to capture prospective customers’ attention, beware that any effort is not actually free. Social media, for instance, requires a significant investment of time and planning to manage effectively and may not always drive sales, since it is more useful in generating awareness and creating interest.
When something is free, you can get what you pay for. For example using free legal templates off the internet may get you 80%, but the remaining 20% may be what is most critical for your business. There was some discussion around service providers working for equity, however most noted that outside expertise has a value and every business needs to assess its needs and budget to find the right partner who can deliver the best value for money. Startups with great ideas, but little money can get effective professional advice by being clear about what they need.
From a branding perspective, investing up front in getting your overall business positioning and messaging right can save big money down the road. Lenore Kantor shared a story about a client who shifted their strategy to a new market segment – this repositioning helped them have a more focused target while avoiding wasted effort and development costs building for the wrong niche. Lenore mentioned the importance of thinking ahead and developing a launch strategy for new initiatives or organizational events, such as mergers, acquisitions or capital raisings. Launches are key milestones that companies can capitalize upon.
Finally, Lee Schneider mentioned the value of relationships and creating mutually valuable exchanges. People want to work with people they like and trust. Spelling out the nature of your relationship terms in your contract can help to clarify roles and responsibilities. On that note, the event concluded with the importance of introducing your partners to other prospective relationships – everyone benefits when satisfied clients refer other clients to providers.