Access to Information
Ask any start-up entrepreneur what are their most urgent needs, and most will respond about having access to some type of finance to scale and grow their business. Once the question is rebuffed about having access to markets, they realise that financing by selling more product to their customers is by far the best form of financing available to any business, whether large, small, established, or our start-up.
That logic leads to a further line of thinking, surely if the entrepreneur had access to crucial information they would be empowered to make the correct strategic decisions instead of arriving at an obvious, but incorrect conclusion? There is no doubt that entrepreneurs in start-up phase need access to:
- Markets; and
In this article we’ll try to demystify the access to information jigsaw facing the start-up founder.
Yes, everything is readily available on the various search engines, but if you do not know what it is you’re searching for, you’ll struggle to find it. While there is plenty of information available on the Web, and you can do a lot of the necessary tasks yourself, you will probably have to appoint sector specialists at some stage of your business’ lifecycle. These sector specialists include some level of legal input, and a healthy dose of financial assistance, especially if you are not that way inclined. Appointing an accountant who is well-versed in the operations of small and start-up businesses should more than pay for themselves in taxes saved, and more importantly, reduced stress levels, namely yours. As soon as your business is generating revenue you should appoint an accountant to assist in managing your financials. There are a number of options available so that you do not have to appoint an in-house accountant during the start-up phase of your business. These skills can be obtained for a relatively small monthly retainer. Understand that you need to build a total business, not only your product.
Back to the Beginning
Let’s assume that you are starting out on your entrepreneurial journey – you’ll need to start at the very beginning once you have found a problem to solve that you could generate revenue from a potential target market.
1. Company Name
Your first step is to identify and register a company name that people will remember and that will highlight and hint what you do and reflect your company’s corporate personality. In order to attend to this effectively one has to check with the relevant authority in your country whether your chosen name is available for registration. You will probably have to be very creative in creating a name that is not a real word as most of the regular words have been reserved for use with the respective Intellectual Property country authorities. Have some fun with this as you want a name that will be easily remembered and will bear some resemblance to your intended business. If you already have a name registered that is not suitable for your new business, then use the “Trading as…” option to create a new trading entity in an existing legal entity.
2. Business Entity Classification
This decision has to be made with the end in sight (your exit plan), bearing in mind that different business entities have different legal requirements and tax implications. Different countries have different business entities, but the common and probably most suitable would be the private company for the start-up. The two most important considerations for choice of entity would be the tax implications and the exit strategy. You need to pay as little tax as legally possible, and to have a vehicle to be able to onboard new shareholders at some point in the future when you exit.
3. Company and Tax Registrations
Your company will have to be registered with the relevant country authority and comply with the various appropriate requirements for registration. Many governments in Africa are striving to reduce the time and bureaucracy required to register a start-up. There are also numerous government agencies established to assist entrepreneurs to set up their businesses. They are there to help you so use them.
4. Shareholder’s Agreement
Also known as planning for the divorce, the shareholder’s agreement is a crucial document that should be compiled and signed up front. There should be provision for arbitration proceedings if things do get nasty and the directors have to utilise external influences to assist in strategic direction.
More importantly, the shareholder agreement should establish the mechanism to enable the shareholders to dilute their respective shareholdings in a predetermined manner so that all the shareholders are on the same page on this process. There should be agreement with regards to the timing and plans to dilute the shareholdings according to the company financial roadmap.
Let’s emphasise once more, you need to build a complete business, not only your (simply amazing!) product. By working through the process of completing a business plan as though you were preparing to pitch to potential investors, will discipline your thinking of the business as a whole. There are many examples and templates of business plans available on the Web for free. However, the simple basics of ensuring that the “Four Ps” of product, price, place and promotion have been addressed in some depth will go a long way to building your business plan.
The business plan is only the first step in this journey as you then have to implement that plan and execution has been the downfall of many a well laid plan. This phase is all about execution and the business plan should provide the roadmap for the business strategy, with alternatives available when things do not work out as planned. The plan should be a living document that you as the leadership team should refer to regularly, especially when cash flow is tight and you may want to tackle short term project to generate desperately needed cash flow to pay the bills at the end of the month. Stick to the plan!
Find the right mentor
Getting over that fear hump may require a good support group or mentor. It’s a lot easier for another person to identify your blind spots than it is for you. You need to be careful in selecting your advisors. Otherwise, you will just listen to people who collude with your current weaknesses, and blind spots such as procrastination. They will simply feed your procrastination instead of helping you move past procrastination. The chemistry between the mentor and mentee is vitally important to ensure the partnership works effectively. This does not mean that you have to agree with every suggestion or piece of advice from your mentor. This creates an obvious double-bind. How do you trust a mentor you disagree with? That has more to do with you than it has to do with the mentor. You have to be willing to question your viewpoint and listen to other viewpoints, but not necessarily blindly adhere to those viewpoints.
You do, though, give yourself time to reflect on those viewpoints in an attempt to discover what you might be missing. If you spend time with your mentors, you can get a feeling for them and cultivate the ability to sense whether or not they are coming from a place of wisdom.
There is plenty of information, advice, finance and unfortunately also charlatans freely available to the entrepreneur. Get the right advice and follow your plan.
As an entrepreneur doing all the paper work and start up administration yourself might seem valuable and you would be in a position “where you assume that you will be saving costs”, however having the experts assist in the beginning of your business journey will ultimately prove invaluable in the future of your new business.