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Start-up Advice

Starting Up: Who Really Controls Your Business?

In this article Adrian Dommisse will unpack how decisions are made in a company, who decides how to bring the business idea to life and what steps you should take to get there – all whilst maintaining your power as founder.

Adrian Dommisse

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As the brainchild of a start-up, it’s in your best interest to be one step ahead around decision making power and the effect new partnerships or investors could have on yours. If you don’t understand the legal authority given to each role player joining your business, your power can easily be diluted. This is overlooked by most start-ups, in favour of making tangible progress on product and sales.

In this article I will unpack how decisions are made in a company, who decides how to bring the business idea to life and what steps you should take to get there – all whilst maintaining your power as founder.

Company control – making sure you stay part of the process

Essentially, there are three groups with decision making power in a company. Each group has both special rights, and absolute limitations. Being completely clear on the rights and limitations of each group is perhaps a condition of your success, or even survival in your own company.

Related: 3 Ways To Take Your Business From Start-Up To Success

Group 1: Shareholders

The first shareholders are the founders of the business. They make a contribution to the business, usually in the form of cash or capital, effort, time or other valuable resources. Their reward is that they get a return on capital, as their shares grow in value and they receive dividends from the profits of the business. They have the right to appoint the custodians of the company: the directors.

Shareholders are consulted and have the final decision making rights on major decisions, influencing the value of the company. However, shareholders have no right to take part in the business of the company. They have no role in the operations, finance or other day to day business of the company. If this comes as a surprise to you, it’s probably because you are (like I was eight years ago) both shareholder, director and employee of the company. Read on.

Group 2: Directors

These are the custodians appointed by the shareholders. Carl Bates from Sirdar (a leading consultancy, focusing on company governance) once put it something like this: The shareholders provide the cash and set their expectations for a return on capital. Then they appoint directors and charge those directors with the task of building the road map, or “strategy”, for achieving that return on capital.

After building the strategy, the directors develop the practical steps that will result in its achievement. Then they monitor the company, which involves “fine tuning” monthly, quarterly and annual deliverables.

This is a big picture, conceptual role – directors don’t roll up their sleeves and descend onto the office floor, coding software, manufacturing car parts, or whatever the activity of the company is. They have the mandate of keeping a broader view. To see the wood for the trees, so to speak. Having a group of people who are not subjectively involved in the day to day work of a business is incredibly valuable. This is a reason why mentors or independent directors are so valuable.

Group 3: Employees

These are the sales people, the manufacturing or production people, the finance team, the HR, the digital marketing team – the people that take the practical day-to-day steps of creating a company (the same company that was funded by shareholders, conceived by directors and is now being set up and run by employees?)

Take note – this is where it becomes interesting and highly relevant for the archetypal client of our law firm: when starting up, the start-up client is all three of the above. She has the skills and capital, she develops the idea, she builds the product, leases the premises, hires the accountant and buys the milk and coffee every day. Sound familiar?

Although it would be great to have all three perspectives of the founder’s roles, this is usually not really necessary to kick things off. At the beginning stage of a business, it’s about making progress on the product, validating the business model, and finding the customers.

However, fast forward a few months and things will change radically as the founder brings on partners and investors. When this happens, additional people are involved in the decision making – and when THAT happens, who actually has the decision making power?

Related: 4 Questions You Must Ask Of Your Start-Up To Remain On The Road To Success

Who is really on top?

Looking at these three stakeholders, you will appreciate a bizarre inverse reality. The most “junior” members of the category probably think of themselves as most valuable, yet they have the least power over the bigger picture.

Employees are the face of the company, but they have no say at all when it comes to the biggest decisions of strategy, funding or even the sale of the company.

Directors are charged with building the strategy and making the essential decisions around the implementation (i.e. signing off all contracts, employing new staff etc.), yet they are appointed and can be dismissed by shareholders.

Shareholders have no employment role and have a limited say in the overall strategy – except if it will affect the overall value of their shares. That said, they are the only ones that can authorise major decisions such as taking on more funding, selling the business, merging the business, etc.

The danger then? Finding yourself in a situation where you feel that you are building up the business as an employee, but your power as shareholder and director have been diluted by other partners. This is why your shareholders’ agreement and MOI (memorandum of incorporation) is so critical – it clearly sets out these rights with no room for confusion. In essence, this is where a start-up lawyer plays a key role and can directly contribute to the value of your stake in the business.

Keep an eye out for my next article on funding your business and bringing on new shareholders. Here we’ll take an even deeper dive into how to best navigate your way around organisational growth and restructuring, without losing your power and voice.

Having established Dommisse Attorneys in 2008, Adrian’s firm offers corporate finance and commercial law, with a strong focus on providing start-ups with the legal support they need. As the founder, Adrian thrives on guiding clients in the start-up space, by understanding their products and helping them take their businesses to the next level. With over a decade of experience in law, he is eager to use innovative ways to help his client’s gain value.

Start-up Advice

Entrepreneurship Is All About Overcoming Obstacles

Confronting your own doubts and fears is the essence of being an entrepreneur.

Kimanzi Constable

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Entrepreneurship is not a destination; it’s a journey. On this journey, successful entrepreneurs don’t have an expectation of “arriving” to some finish line. If you do have that expectation, you won’t continue to push yourself to step outside of your comfort and grow. You won’t seek out the things that truly help your business experience explosive results because all those things require you stretching yourself.

On any journey, you have times of joy and more than a few setbacks. During the times of joy, you feel like you can accomplish anything. It gives you the strength and motivation to continue to put in the work that helps your business.

During the hard times, negative feelings and emotions can easily take over. Before you know it, you’re feeling sorry for yourself and you turn to your familiar coping mechanism.

That coping mechanism could be food, alcohol, binge-watching TV or any other thing that takes your focus away from what you want to accomplish in your business. Since you don’t have a boss or company dictating your day and what you accomplish, that time “coping” could turn into weeks of your doing no work at all.

Related: Why You Shouldn’t Quit Your Job To Start A Business

Becoming a successful entrepreneur means understanding hard times are when you need to push. When there are obstacles, here’s what you need to do.

Acknowledge, then process your thoughts

The only way to get through obstacles is to start with acknowledging that they’re there. The gateway to your feelings and emotions is your thoughts. What you think about and focus on is what you’ll attract more of into your life.

When you’re dealing with obstacles, your thoughts focus on what you can’t control and why that situation is happening to you. That can be a dark place.

When you feel your thoughts spiraling, give yourself two minutes to fully feel what is going on in your head. Don’t try to suppress those thoughts – let them out. When you try to suppress them, they grow stronger and threaten to get control.

Related: How To Survive 150 Straight Rejections

Once you have given yourself two minutes, take control of your thoughts. Focus on what brings you joy and what you’re grateful for in your life. It’s hard to be down when you’re expressing gratitude.

Focus on what you can control

Life is messy. Change is hard. Growing a business is not easy and it feels like everything can go wrong at once. There are always going to be things you can’t and shouldn’t try to control.

Related: 3 Key Law Areas To Know When You Launch That Start-up

There are, however, things you can do something about. If your marketing plan is off, you can readjust. If your sales are lacking, you can go back what you know works. If a team member is causing more trouble than is worth helping them, you can let them go.

The point being, there are tangible things you can fix in your business no matter what is happening. Identify what the things are that you can do something about.

Create a plan that will help you get on the path to recovery. Make it practical and actionable. Fill up your to-do list and calendar with the tasks that lead to results.

Ask for help, then take action

Some obstacles feel like more than you can handle. Seeking counsel and support can be the difference between you getting through it or failing.

Don’t try to be Wonder Woman or Superman. Seek help. One of the best things you can do is make decisions that help you recover. Talking and planning with someone who understands and is trained in dealing with a crisis is valuable.

Then, make decisions that are action-based. If a decision pushes you toward the action that helps your business, make it. One of the best ways to recover from difficult situations is to take massive action. Taking action on the things you can control will give you progress. As you consistently take action, you’ll be closer to your goal before you even realise.

Related: What You Need To Know About The Lean Start-up Model

Obstacles don’t have to be business breakers in your life. You can learn from them and use them to make you a stronger and wiser entrepreneur. The most successful entrepreneurs understand that it’s not the crisis – it’s your response that determines how successful you’ll be. Stay strong, process your thoughts, create a plan and then take action.

This article was originally posted here on Entrepreneur.com.

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Start-up Advice

Start-ups: Creating A High Tech/High Touch Environment

Here are some practical tips for creating a ‘high tech/high touch environment’.

Dirk Coetsee

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In this fast-paced tech orientated world things are changing at a frightening yet exciting rate. It is so easy and so quick to create a tech start-up from anywhere in the world and office space as a requirement to start up has become obsolete, your garage will do. Yet because it is so easy and so cost effective for so many to create a start-up it is so hard to stand out amongst this entanglement of serial tech entrepreneurs and innovative start-ups.

The millennial generations’ general paradigm of thinking, which is more open –minded and entrepreneurial is slowly but surely breaking through the barriers of traditional business operations, mechanisms and methods, imbalances are created, however, when tech is the sole focus and people are forgotten in the process. As is so evident throughout history eventually by some means balance is sought in order to create equilibrium.

This writing serves as advice to all tech start-ups to seek balance from the onset in creating a “high tech/high touch” environment. A “High tech/high touch” environment can be defined as a balanced approach where both tech solutions, and of equal importance, team empowerment and inspiring leadership form a potent combination of enduring success.

Related: What Is Limiting Your Entrepreneurial Mindset

Technology by itself cannot solve everything but technology applied in unison with a strong people centred approach can be a powerful catalyst towards solving at least some of this worlds’ major challenges.

Although many factors such as for example fiscal discipline and other management controls play a vital role in your start-ups’ success do not forget to create an inspiring environment for your team within which they feel safe and united in purpose. Key to business growth is the individual growth of all team members and no stone should be left unturned in moving from a toxic and/or culture of complacency to a learning and growth culture.

Co-create an inspiring vision for your team and get their full buy-in. If you cannot do that you might have to put in more effort when it comes to your own leadership skills and/or “free up the future” of complacent and lethargic employees whom simply do not want to work hard to collectively actualise your business’ co-created vision.

Although very hard, it is worth the effort to only hire people that are passionate about and have integrity in what they do. If a sustainable and successful “high tech” environment is the aim ensure that it is underpinned by very smart hiring and training practises further enhanced by a good dose of inspirational servant leadership.

Generally speaking, everyone wants to feel part of something bigger, exciting, and inspiring. It is your responsibility as founder and leader to create a motivating and energetic business climate wherein every team member is empowered to execute at a rapid pace and with a “zero defect” mind-set. A team environment wherein everyone sincerely wants to be great at what they do and are energised by ‘small wins’ on the path to actualising the grand vision of the company is far more inspiring and sustainable as opposed to an environment where ‘subordinates’ are only managed and basically forced to do their jobs.

Related: The Anatomy Of Peak Performance

Sincerely care for your people yet maintain balance,as caring does not mean you treat them like children. Caring means taking great interest in both their career and personal development, and to be tough enough to eventually let those go that does not constructively contribute to a positive growth culture.

Here are some practical tips for creating a ‘high tech/high touch environment’:

  • Have a balanced approach in hiring. Hire for technical and people skills and ensure that there is a clear development and training plan for all team members that is reasonable and attainable.
  • Find your purpose as an entrepreneur and with great enthusiasm model that purpose at every juncture as to inspire others to find their purpose.
  • As ‘culture eats strategy for breakfast’ guard the positive and growth culture that you model as a leader with all your energy and remove anything and anyone from the aforesaid culture that is counter-productive to your business performance.
  • Sincerely care about and show that you care about each individual team members’ personal and career development.
  • Regularly put having fun and inspiration high on meeting agendas as we generally take ourselves too seriously.

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Start-up Advice

Why You Shouldn’t Quit Your Job To Start A Business

Rather than taking the plunge, consider dipping your toe in first

Yannick van den Bos

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As the world becomes more digitized and access to the internet is something we all enjoy, more and more of us want to quit our day jobs to start our own businesses. The word “entrepreneur” is thrown around a lot these days, with many people seeing it as a means to enjoy a whole new level of professional, financial and personal freedom.

It is not difficult to see why, either. Having the ability do what you love, when you want and on your own terms is certainly attractive, especially when you could potentially build it into a sizeable income. Don’t be too quick, however, to abandon your day job to pursue your entrepreneurial dreams. Many of today’s best-known entrepreneurs consider doing so to be reckless and unnecessary.

“Entrepreneurs” are rarely the modern-day maverick who suddenly decide one day to quit their jobs and pursue their dreams. After all, quitting a job to pursue business is risky, especially without having a safety net in place. In fact, the majority of people who decide to start an online business will fail within the first year.

Further, there is far more involved in transitioning from being an employee of others to becoming your own boss than you may realise. Changing your mind-set from that of an employee to an entrepreneur is a major key to successfully bridging that divide.

Related: 3 Key Law Areas To Know When You Launch That Start-up

If you operate with the mind-set of an employee — a person who is used to working for others and being paid by them – you will almost certainly fail. When you work for others, you do what they tell you to do. As an entrepreneur, you decide what the next best step is, and you execute that step in your day-to-day actions. The latter requires both a significant mind-set shift and major discipline.

At the same time, in our rapidly changing economy, you would almost be doing yourself a disservice not to start a business. But, how can you do so while working full-time?

Take the “hybrid path” to entrepreneurship

If you’re willing to sacrifice much of your free time now to reap the rewards later, you have what it takes to become an entrepreneur. Often called the “hybrid path” to entrepreneurship, many successful entrepreneurs started their business while still being employed full-time.

Research has shown that those who kept their day jobs while starting their businesses were 33 percent more likely to be successful than their risk-taking counterparts.

Leveraging your full-time job in the early days of your business, allows you to build on firmer financial ground, increasing the likelihood that your enterprise will last and thrive through the initial stages.

Related: What You Need To Know About The Lean Start-up Model

In addition, being entrepreneurial within your existing job allows you to build the necessary skills and traits you will need as you transition from your employee to entrepreneurial role.

Being impatient and chasing short-term gratification by quitting your job and going all-in, is risky and often ill-advised. Building slowly and steadily for the long-term is often the wisest course of action.

Today, it’s more important than ever to start a business

Still, with all that being said, the time couldn’t be more right to start your own business and become self-sufficient. Unlike in years past, having a job no longer guarantees financial security.

Rapid developments in technology and the ever-increasing digitization of our world puts creative and business-building tools in the hands of everyone. Whether you have skills to market or a great idea for a product, you too could be the next Bill Gates or Elon Musk.

Even if you set your sights a little lower, consider what skills you have that others would gladly pay you for. Figure out what you can charge per client, and how many clients you would need to completely replace your income. Unless you’re already earning seven figures, you’ll soon realise that the numbers are not that daunting.

Related: 6 Resources For Start-ups Looking For Funding

I was able to build my first business through affiliate marketing With affiliate marketing, you don’t have to create your own product. Rather, you earn a commission by promoting other people’s products.

Though the thought of running your own business, spending your days working on something you’re passionate about, and choosing how and where you spend your time is enticing, realise there are days if not years of sleepless nights, cash flow shortfalls and mind-set hurdles between you and your destination.

By building your business while working full- or part-time, you will have the cash flow in the short term to get your enterprise off the ground. Once your business begins bringing in an income which rivals that of your day job, then and only then should you consider whether to pursue it full-time.

Building a business is not for the faint of heart. But, if you’re willing to work crazy hours, delay gratification and learn from your failures, you can build both a business and life like few others. After all, “Life is too short to be living somebody else’s dream.”

This article was originally posted here on Entrepreneur.com.

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