3 Things Every Startup Needs
Imagine a stool with only one or two legs. Pretty wobbly. Just as every stool needs three legs to keep from falling over, so, too, does your startup. That’s why you need these three elements to start off on the right foot. Each has a crucial role to play.
A lawyer makes sure your startup is operating legally in every way. That way, both you and your company are protected. More than that, a lawyer can help you reduce risk by guiding you on issues such as:
- Legal entity (e.g., LLC, corporation, etc.)
- Founders agreements
- Employment issues
- Terms of service
But there’s more. If you have partners, everything you agree to verbally needs to be in writing — even if you’ve known each other since first grade. Haven’t made any money yet? Don’t kid yourself. The time to deal with these issues is before there’s money on the line. In fact, I recommend you set up a Grunt Fund.
If you’re planning to speak with investors — even if it’s your parents or your best friend — you need a lawyer advising you before you pitch anyone, so that you, your company, your friends and your family are protected. You want to be sure that you’re making the right kind of deal for you and your company. In fact, did you know that if you don’t structure things the right way now, you may impact your ability to attract investors later? Yeah, I didn’t think so. You’re not alone. So go ahead and talk to a lawyer who’s experienced in helping startups.
An accountant can help ensure that your financial projections are accurate and that your budgeting is realistic. They’re also great at helping you set up bookkeeping and tax routines that will keep you in good shape when it comes to Uncle Sam. Just as important, accountants can give your startup valuable advice on effective tax strategies that may allow you to legally lower your annual tax burden.
3. Business Plan
A business plan is your roadmap to success –and– will save you time and money. Lots of startups want to attract investors, but even if you’re self-funding (bootstrapping), I’m sure you want to avoid making expensive mistakes.
That means you need to understand the nuts-and-bolts of your business ahead of time. In other words, you need a business plan. Whether your plan takes the form of a Word document, a slide deck or a business model canvas, you need a roadmap for what you plan to do and how you’ll do it.
The time you spend up front will not only save you hours down the road, it will dramatically increase your odds of success. That’s because you’re taking the time to think proactively and work through challenges and issues before you open your doors — before getting caught up in the day-to-day challenges of running your business.
What’s more, you’ll be better prepared to explain your idea to your audience, whether that’s investors, customers, suppliers, partners — even employees.
A business plan helps you:
- Develop a profitable business model
- Map out your plan of action (an operating blueprint, if you will)
- Prepare your financial projections
- Persuade your audience — investors and customers
You need all three.
All three legs — lawyer + accountant + business plan — are indispensable if you want to launch your startup from a solid foundation. Even though these professional services aren’t free, I guarantee they will save you money in the long run and help you sleep better at night.