Connect with us

Start-up Advice

Where Should You Begin?

It goes without saying that the right people on your team make all this possible. But this is a topic for another day.

Peter Castleden

Published

on

entrepreneurship-starting-a-business

When I first started what was to become IndieFin, I really didn’t know where to begin. I had been granted a tiny bit of funding – enough to last about a year – on the basis that I could figure out how to reinvent financial services for the digital generation.

The initial challenges were plentiful. My experience with technology was exclusively as a user. So, I had close to zero knowledge on how to execute anything that I dreamed up. I also was very aware that the financial services industry had a reputation for offering awful customer experiences, so the bar there was very low. And finally, having spent a good few years working on developing financial products in the industry, I realised the opportunities to improve on the industry’s products were vast.

While this sounds like a fairly ideal situation for an entrepreneur, and while I feel very grateful for the opportunity, the real challenge was that there were simply so many things that could be built, all of which would present radical improvements on the status quo.

First steps

A couple of us sat in a room and started putting ideas down on a white board.  We went wild, and kept coming up with more and more great ideas. In fact, we came up with both a very compelling retail investment proposition, as well as what turned out to be our insurance proposition.

Related: 4 Things Your Start-Up Needs When It Opens An Office

What this exercise revealed, was that ideas alone are pretty useless. And, too many ideas can paralyse you.

Our small team got stuck in that trap, which was made worse because we didn’t (yet) have the skills to bring any of those ideas to life.

Hard lessons

We wasted a good few months (and some money) simply working on the details of multiple ideas. We were generating lots of documentation, and a few pretty pictures, and truly believed we were making progress.

In reality, we were running on the spot. Things changed with the addition of some new talent – who brought with them a completely different approach and complementary skillsets. This combination of people changed how we were doing things, for the better, and we managed to launch something into the market a few months later.

If I could take out the key lessons from this early stage of our business, they are:

  1. Choose one thing to do, and focus all your energy on doing it. This does not mean you throw out the other good ideas… but put them on the “not yet” pile.
  2. If it’s going to take you longer than three months to build and deliver your one thing to the market, it’s still too big. Strip it down to its core, until you can confidently build it and ship it within a quarter. This may feel like you are watering down your idea, and maybe you are. However, working to a longer timeline than this will stall you, with the risk of never getting anything shipped.
  3. Launch what’s ready. You will know what can still be done to make it better. It’s scary to launch something that is nowhere near your mental picture of what it can and will be.  Do it anyway.
  4. Be ready to learn. The best market research you can conduct is with real people using something you’ve built in the real world. Sure, you run the risk of brutal feedback (and perhaps it’s because it was launched early), but the free lessons you learn will be priceless in developing version 1.2 and 1.3 and 1.4.

Related: 3 Dangerous Entrepreneurial Myths You Need To Ignore

Fear is your enemy at this stage of the business. Personally, I needed others to challenge that natural fear, and push “go”. And I’m glad I did. Most of what we built in the early versions of the product releases were not even on our original roadmap. The stuff we have built since launching, and which we are still going to build, have been inspired by our customers and the lessons we have learnt in launching something incomplete.

It goes without saying that the right people on your team make all this possible. But this is a topic for another day.

Peter Castleden, CEO of IndieFin, writes about all the lessons, mistakes and pitfalls he’s encountered in building a start-up from the ground up. Having been woefully ill-prepared for what was to come, Peter has had to learn fast, especially from his mistakes. Here he shares what he’s learnt, in the hope that it might help others who find themselves in similar situations.

Advertisement
Comments

Start-up Advice

Start-Up Law:  I’m A Start-up Founder. Can I Pay Employees With Shares?

Bulking up employee salaries with equity is a common method to attract, retain and incentivise top talent.

Published

on

company-shares

Every early stage start-up company battles with restricted cash flow and not being able to pay market related salaries to their employees. Bulking up employee salaries with equity is a common method to attract, retain and incentivise top talent.

Can I pay salaries with shares?

South African labour laws require that employees be paid certain minimum wages, and “remuneration”, as defined within the Basic Conditions of Employment Amendment Act, either means in ‘money or in kind’.  ’In kind’ does not include shares or participation in share incentive schemes, as determined by the Minister of Labour. As such, there is no room for start-ups to completely substitute paying salaries with shares or share options. However, there is no restriction in topping up below market related salaries with equity via an employee share ownership plan (‘ESOP‘).

Related: 7 Ingredients Of Small Business Success Online

Employee Share Ownership Plans

There are a variety of ways in which employees can be incentivised, and it will always be important for the start-up founders to consider what goal they wish to achieve by incentivising their employees.

ESOPs can be structured in several ways, for example: employees may be offered direct shareholding in the company, options for the acquisition of shares in the future; or alternatively, a phantom / notional share scheme can be set up.

ESOPs permit employees to share in the company’s success without requiring a start-up business to spend precious cash. In fact, ESOPs can contribute capital to a company where employees need to pay an exercise price for their share options or shares.

The primary disadvantage of ESOPs is the possible dilution of the Founder’s equity. For employees, the main disadvantage of an ESOP compared to cash bonuses or bigger salaries, is the lack of liquidity. If the company does not grow bigger and its shares does not become more valuable, the shares may ultimately prove to be worthless.

Related: 7 Strategies For Development As An Entrepreneur

Key Features

Some key features to consider when setting up an ESOP are:

  • ELIGIBILITY – who will be allowed to participate? Full time employees? Part-time employees? Advisors?
  • POOL SIZE – what percentage of shares will be allocated to incentivise employees?
  • RESTRICTIONS – will employees be able to sell their shares immediately?
  • VESTING – will there be a minimum period that service employees will have to serve with the start-up to receive the economic benefit of his or her shares?

Employee share ownership plans are great corporate structuring mechanisms for attracting and retaining employees, as well as fostering an understanding of the company ethos and encouraging loyalty and productivity. It is essential when implementing an ESOP that all the tax implications are considered and that the correct structure and legal documentation are in place.

Continue Reading

Start-up Advice

Beauty Of Failure: The Art Of Embracing Rejection

In this piece I will try demystify failure, and look into why it should be embraced and not feared.

Jordan Stephanou

Published

on

business-failure

“Chaotic”, “uncertain”, and “rollercoaster” are three words that would effectively describe almost any entrepreneurial journey. If death and taxes are certainties in life, then failure and taxes are the only two guarantees in business.

If failure is (to some degree at least) inevitable, why should we fear it? In this piece I will try demystify failure, and look into why it should be embraced and not feared.

1. It’s Part of the Job

We can start by separating failure into two different categories – micro and macro-failure. If a macro-failure can be considered as the overall failure and shutdown of the business, micro-failures can be seen as the day to day events that go wrong – that potential client that hangs up on your cold call; the sales pitch that gets the soft-no response of “we’ll call you”; the product launch that no one pitched up to. As Mark Manson puts it, business (as in life) is just a process of becoming less wrong over time.

Everything is a hypothesis that needs to be tested, and the process of business is applying the learnings from each hypothesis – each micro-failure – to be less wrong next time to move the business forward.

As Seth Godin says, “The cost of being wrong is less than the cost of doing nothing”. Embrace being wrong. Rejection and failure are part of the job.

Related: The Art Of Embracing Rejection

2. Opportunity to Refine

There is one undoubted truth about every failure – and that is, each failure gives an experience to dissect and learn from. The Roman Emperor Marcus Aurelius had a similar view; that to one person a situation is good, and to another, that same situation is bad – Only perception decides.

As an entrepreneur, it is important to adopt this stoic thinking of managing your perceptions. Look at situations rationally, and perceive rejections as opportunities to refine the product that the market really needs – not the product you are forcing on your market.

3. With each Failure, Fear it Less

fear-of-failureOne of the great things about rejection or failure, is that the more often you are exposed to it, the less you fear it. In fact, micro-failures can become such a common part of an entrepreneur’s day, that you stop even noticing them as failures at all.

You may look back on a day with multiple rejections from prospective clients as a normal day on the path to building a business. The goal is to get to that point as quickly as possible.

4. One Less Avenue

In the beginning, any failure will elicit a strong emotional response, however, when it becomes embraced as part of the journey, as crazy as this sounds, you may even get excited for the next rejection or micro-failure.

Why? Because each micro-failure takes away one possible path you could go down in your business. Entrepreneurs tend to be highly ambitious, highly idealistic people. This may result in wanting to do too many things, take the business in too many directions simultaneously, and run before walking.

The beauty of failure is it re-clarifies the path, stops the entrepreneurial mind from getting carried away, and brings everything back into perspective. What’s better than pursuing 1000 potential clients? Pursuing 999 higher potential clients.

Eliminate avenues that aren’t right for your business as quickly as possible so that you can spend time on providing best possible product or service for the ones that are right.

Related: 10 People Who Became Wildly Successful After Facing Rejection

5. Practical Tip to Embrace Rejection

So with all this theoretical talk out of the way, how do we get over that fear of failure to see the beauty of it? Start by watching Jia Jang’s TED talk of 100 Days of Rejection: https://www.ted.com/talks/jia_jiang_what_i_learned_from_100_days_of_rejection. The talk genuinely impacted my life. I have since implemented an annual (and much less impressive) 10 days of proactive rejection in my life. The goal is for 10 days, to do anything in any aspect of life that you would do if you weren’t ruled by fear. Ask yourself today, “what would I do if I wasn’t scared?”

The goal is to actively seek rejection to remove the power of fear from damaging your business’s potential.

Finally, I believe we should get our heads around the idea of celebrating our failures. Go for a drink as a team and give a toast to that failure even more than if it was a success. After all, if life is more about the journey than the destination, surely we should celebrate and cherish every event of the journey along the way?

Every event that happens will be critically important in forming the empire of a business that you are building. Take a step back, see the big picture, and smile whenever it doesn’t go as planned. See the beauty of failure.

Continue Reading

Start-up Advice

6 Resources For Start-ups Looking For Funding

Here are 6 online resources that can help you pay the bills and grow your business at the same time.

Josh Althuser

Published

on

business-funding

Anyone who has ever considered starting their own business, or is currently in the process of doing so, knows that every little bit helps when it comes to making ends meet. Part of the charm of start-up culture is the low-budget creative atmosphere that seems to continually fuel innovation. But, eventually you’re going to have to keep the lights on and water running, and you can’t do that with creativity alone.

Whether you are a business that is just starting out, or already well on your way, there are plenty of online platforms that offer start-ups advice and funding opportunities. Here are 6 online resources that can help you pay the bills and grow your business at the same time.

1. Kickstarter

kickstarter-logoAt one point it seemed that anyone with a clever idea could make a video showing why the world should invest in the next big thing. While a lot of crazy projects have gotten funded over the years, utilising a crowdfunding platforms like Kickstarter continues to be a viable way to get your project off the ground. Of course, if you want to reach your funding goals, it’s best that you have already done your market research, have a solid plan, and treat crowdfunding like a global VC.

Visit Kickstarter here.

Related: 4 Tips To Secure Funding For Your Start-up

2. Toptal

toptal-logoThose who are new to the start-up world might not know exactly where to start when it comes to looking for funding. While the freelance economy has grown immensely in the last 5 years, it’s important to know where to look.

Platforms like Toptal offer a wide range of freelance professionals that specialise start-up funding. Start-ups seeking a consultant on Toptal can also rest easy knowing that they carefully screen each candidate, ensuring they have the necessary professional background and experience to guarantee a successful project. 

Visit Toptal here.

3. Appbackr

appbackrIf you couldn’t already tell by the name, appbacker is definitely worth checking out if you are a start-up working in app technology for both Android and Iphone. The platform helps people discover different apps through the crowdsourcing model. Investors can scroll through apps from around the world, and if they like what they see, they can choose to invest. Funding incentive is based on an investor’s ability to purchase an app at the wholesale price, eventually making a profit once the app starts flying off the shelves in the official app store.

Visit Appbackr here.

Related: 7 Strategies For Development As An Entrepreneur

4. Gust

Gust logoInvestors are more likely to invest locally, which is why Gust is an attractive option for start-ups around the world, as they represent over eighty countries worldwide. Founded by a team of investors and lawyers, Gust knows their way around the start-up world.

With portals for both start-ups and investors, the platform seamlessly connects those seeking funds and those looking to invest. Start-ups can create a profile on Gust, and also have access to tools and tips to help them regulate finances and legal matters. 

Visit Gust here.

5. AngelList

angellist-logoNot just for investment, although that is a major part of the platform, AngelList is also a great place to find start-up jobs as well as recruitment. Those start-ups that are looking to expand can greatly benefit from this feature, while also getting their name out there to potential investors.

Their syndicate platform, led by technology experts make room for those who are looking to invest the chance to apply to a lead or directly invest in a fund.

Visit AngelList here.

Related: 6 Steps To Building A Million-Dollar Ecommerce Site In 60 Days

6. Seedrs

seedrs-logoFrom top corporations to big name accelerators, Seedrs aims to simplify the funding process for investors. Providing a vast network of investors from 48 different countries, who tap into an additionally impressive network of start-ups, there is plenty of room for collaboration on this platform. Seeders also encourages investors and start-ups to continue their relationship after the transaction is made. Their online and offline networks aim keep both start-ups and investors in the loop.

Depending at what stage of development your company has currently reached, exploring various funding options available to you is a worthwhile endeavour. Rather than blindly pitching investors, investigating each potential platform, whether it’s crowdfunding or a hiring a freelance funding expert, will save you time and resources so you can focus on the right type of investment based on your needs.

Visit Seedrs here.

Continue Reading
Advertisement

SPOTLIGHT

Advertisement

Recent Posts

Follow Us

Sign-up for Daily Newsletters

* indicates required
*
We respect your privacy 
Advertisement

Trending

FREE E-BOOK: How to Build an Entrepreneurial Mindset

Sign up now for Entrepreneur's Daily Newsletters to Download​​