You have a great idea, and you know you can turn it into a profitable one. But taking the step into startup land is a big deal, and there is a lot that separates the initial seed of your idea and your first sale. With that in mind, here are three tips for entrepreneurs looking to launch their first startup.
[Related: How startups can survive co-founder issues, Strong capital raising activity amongst Aussie startups: how to ensure you are investor ready, When pitching your start-up to Steve Baxter, don’t use the word ‘give’ or you’ll p*** him off and The search for the Holy Grail: Four Challenges You Will Face When Trying to Sell Your Business]
1. Get On the Same Page With Your Co-Founders
Co-founders can be key to your startup’s success. Not only do co-founders provide moral support, but they also allow you to build a small, trustworthy team with a diverse skill set. However, sometimes co-founders end up going their separate ways, or find out that they are not quite on the same page as they get further into the process.
It is crucial to have clear conversations in the early stages and an understanding of what will happen if a co-founder pulls out. In particular, it should be clear what will happen to their shares in the company (this is where a Shareholders Agreement comes in). Great communication from the get-go will help to ensure you do not end up in a messy, emotionally-charged situation down the track.
2. Get Your Legals Done Well and Done Early
Fact: it is cheaper to get your legals done early (and done well) than it is to fix things later. This does not mean you need every legal document under the sun. What it means is:
- understanding the benefits of a company structure (as opposed to a partnership structure, for example) and why it will limit your personal liability and protect your startup’s assets;
- getting a well-drafted contract to provide to your customers (this could be a physical contract, or a terms and conditions for your website); and
- entering into robust employment agreements with any staff you bring on (that include a clause assigning any intellectual property an employee creates during their employment to the company).
A targeted and strategic legal approach is essential to ensuring your startup’s success.
3. Figure Out Your Work/Work Balance
While most people are trying to figure out what work/life balance looks like for them, you might be trying to find your work/work balance. In the early stages of a startup, many founders work another job and hope their side hustle takes off.
If you are juggling multiple jobs, the most important thing is to ensure that your employment contract allows you to be working on your startup, especially if you are doing similar work or operating in a similar industry. Check any non-compete or restraint of trade clauses in your employment contract – you do not want to be sued by your employer down the track.
Also, consider how you will juggle your time. Launching a startup is a huge commitment, and it can be a challenge to spend enough time on it while still working in your ‘regular’ job. This is also where co-founders can prove invaluable – you can share resources and workload, which can go a long way in getting your startup off the ground.
Launching a startup is so much more than knowing how to sell a great idea. It requires you to:
- be upfront with your co-founders;
- be strategic in your business structuring and contractual decisions; and
- ensure your current employer allows you to work on your startup.
While launching your startup can seem like a huge task, doing it right means that you could just be the next big thing.
If you are launching a startup and based in Brisbane, visit River City Labs on 22 May to see LegalVision’s CEO, Lachlan McKnight, chat to high-profile investor Steve Baxter. The Shark Tank star and River City Lab founder will share his top tips for founders and answer your burning questions.
About the author
A lawyer in LegalVision’s Business Structuring and Capital Raising teams, Madeleine Hunt has assisted a large number of Australian startups with their legal needs. She was also the co-author of LegalVision’s Startup Manual.