Unfortunately, in the haste of starting a company, many people overlook the less glamorous side of building a business. It’s easy to make painful and costly mistakes as you focus on building, growing and scaling an early stage company.

Learn how you can avoid these common roadblocks with a trusted business advisor.

1.     Co-founding clarity

Your cofounder might be your best friend or even a family member, but that doesn’t mean you can operate a business on a handshake. Too often companies are split apart by feuding cofounders.

The best thing you can do for yourself and your cofounders is to draw up a formal agreement with a seasoned business lawyer. Your lawyer will write a legal document outlining who owns what percentage of the company, vesting schedules, job responsibilities, how to operate if a co-founder wants to leave and a vision for the business.

2.     Business filing

No matter the size of your company, you need to form a legal entity if you want to scale in the future. Filing as a legal entity protects your personal finances from liability in case the company is sued.

You can file as a sole proprietorship, partnership, C corp, S corp, or an LLC. The right entity depends on your goals for the future, so don’t be afraid to think big. Filing incorrectly now will give you headaches down the road.

Of course, will your taxes and operations may get more complex so consult with a legal and business experts to make sure your company selects the optimal business structure.

3.     Contracts

Early stage companies don’t always create proper contracts when they should. When you’re in the business of growing your company, a contract protects your business.

Minimize liability by drawing up contracts for vendors, clients, and employees. A lawyer can help you draft a standard, templated contract that will help you minimize your liability.

However, you do not want the legal process to slow down your business growth. To avoid this outcome, you must streamline the contract process and develop a playbook of common negotiation issues that can be addressed upfront.

You must minimize and shorten the negotiation phase so you can focus on delivering your products and services. Consult with a business advisory firm like The Hollines Group to minimize this cycle and implement a process for the fastest path to revenue.

4.     Intellectual property

It’s likely that your company has built something the world has never seen before. Early stage companies live and breathe by their innovative products and processes.

How would you feel if another business got wind of your idea, copied it, and made millions? Unless you’re guarding your intellectual property through the legal system, you have little recourse for dealing with copycats or thieves.

File patents, copyrights, and trademarks to protect your valuable ideas. Patents protect physical products while copyrights cover authorship or art. A trademark is essential to guard your business name or tagline.

You must also implement Non-Disclosure Agreements (NDAs) to cover yourself. This gives you legal recourse if someone shares your proprietary information.

Additionally, one of the critical components to building a repeatable and scalable business is implementing a licensing scheme and framework that aligns with the goals and objectives of the business. This is critical if you want to create a recurring revenue business and garner the highest valuation multiples.

5.     Taxes

Business taxes are very different from paying taxes as an individual. When you’re in the thick of starting a new company, the tax implications can be overwhelming and even paralyzing.

This is why it’s so critical to choose the right entity for your business. You’ll have different requirements for taxes on the federal and local level. Sales tax, payroll taxes, tax credits, and deductions play a role in your company’s success.

Partner with a stellar lawyer and sharp accountant to do the heavy lifting. You want your company to stay compliant as you scale, or risk toppling your hard work.

6.     Employment

Hiring employees is a monumental step in your journey to growth as an early stage company. But many startups fumble the employment process.

So many companies fail to properly classify employees. They don’t require identification, forms, or contracts when they hire and onboard new employees.

The most common legal employment issue for startups is incorrectly classifying workers. Many startups want to avoid the cost of full-time employees, so they hire “contractors.” However, the law is very clear about the difference between an employee and a contractor.

This is a recipe for legal and tax problems down the road. Don’t get in hot water because you aren’t following employment guidelines.

7.     Naming

You probably already have a name for your startup. However, naming can be a legal minefield, and it should be taken seriously.

Just as you protect your business legally, other business entities do the same. It can be difficult to know if your name is legally free and clear. If you don’t do your due diligence, you can get into hot water for violating trademarks.

The worst part is that I’ve seen startups decide on a name and then realize it’s taken. They’ve already spent thousands on materials and a website, only to receive a cease and desist letter.

Hire a business advisory service to start on the right foot and engage a lawyer to do professional background research on potential names to avoid legal problems.

The bottom line

Startups are no strangers to bootstrapping, especially when it comes to hiring outside resources. It’s tempting to hire a friend of a friend for free advice. However, not all advisors, mentors or coaches are equal. Select an advisor that has decades of experience dealing with these issues and working inside startup and early stage companies.

Choose someone who specializes in the competitive startup environment. The Hollines Group offers end-to-end assistance with your early stage company. Start right and give us a call now.

The post 7 Painful and Costly Startup Mistakes appeared first on Hollines Startup Growth Strategy & Transactions.

You could speak with dozens of investors before one agrees to partner with you. But are they really the right fit for your business?

As a startup founder, you have to learn how to sift through investors to find the right match. Go beyond capital investments and find someone who has a stake in your development.

How to find better investors

Early stage companies don’t always need more money. If anything, you need the right investor at your side to make the best use of your existing resources and guide you around common pitfalls.

Here’s how startups can connect with better investors.

1.   Define your ideal investor

It’s easier to find your ideal investor if you know what qualities to look for. Make a list of criteria for your investor. What background, experience, or personality do you want? This will help you determine which investors you shouldn’t pursue so you can focus your time on the best potential investors for your company.

After developing a list of criteria, the real work starts. Research and identify a list of investors who fit these criteria. Go after reputable and well-known investors in your industry. To start building your list, speak with other startups, consult local news, or use sites like AngelList.

2.   Do your research

Once you compile an Excel sheet of potential investors, do your research. Determine their specialty, education, similar investments they’ve made in the past, their track record and success, and contact information.

Once you’ve done your research, it’s time to pitch. To best manage your pitches, consider using a customer relationship management (CRM) platform.

Store all information about investor outreach in one place so you monitor and track outreach efforts. This streamlines the search for investors and keeps your co-founders in the loop about who’s been contacted already.

3.   Network

Some of the best investors are right under your nose. Go local and ask your network to find the best investor for your business.

Attend university mixers, casual parties, professional get-togethers, and conferences. These are your chance to build a relationship with fellow attendees.

Remember, networking is about fostering a relationship. You can let people know about your company and that you’re pursuing funding, but don’t go in and ask for financing at first blush.

Be patient. It might take months to build the right relationships, but it will have a big payoff for your business.

4.   Join an accelerator

Accelerators offer programs that train you as a founder to get your business off on the right foot. It’s a great option if you’re looking for mentorship, community, and support as you grow your business.

Depending on the accelerator, they may set you up with meetings where you can connect with investors. Accelerators give you a big network not just of investors but also of potential mentors and fellow founders. I would with several Accelerators in the area and I can attest to the benefits of engaging that community.

5.   Ask for referrals

Investors are sometimes wary of working with people they don’t know. You can build trust quickly with an investor by requesting a referral from your network. Warm referrals vouch for you and help you build a relationship with the investor.

Even if an investor isn’t the right fit for you, they may know someone who is. Don’t be afraid to ask for referrals and connections; they’ll take you far.

6.   Trust your gut

Investments are a financial decision but you’re also giving a portion of your company to the investor. They’re going to have a seat at the board room and this isn’t a step you should take lightly.

It’s important for early stage companies to establish a positive working relationship with investors. You’ll be working with this investor intensively to get your project off the ground. You need to share common values, interests, and vision to pull the project off without a hitch.

Even if all the numbers line up, it doesn’t mean the investor is right for you. If they make you uneasy for any reason, don’t follow through with the deal. The right investor is out there for you, and choosing the wrong one could be disastrous for your business.

The bottom line

The right investor helps you avoid the mistakes that come with creating a new business. It’s never too early to start looking for funding for your startup. The right investor will not only boost your business with their capital investment but also the guidance and resources to help you grow. Put your head together with an investor and partner who’s been there before.

You don’t have to go alone to find the right investor. Partner with The Hollines Group to seek out the best investor to grow your business for many years to come.

The post 6 Essential Steps for Startups and Early Stage Tech Companies to Find Better Investors appeared first on Hollines Startup Growth Strategy & Transactions.

However, I know from working inside companies for decades and trying to build my own company that saying ‘No’ is essential to success.

The companies I worked at that had a clear and thought out strategy would say ‘No’ to many engagements to stay focused on executing the core strategy. On the other hand, companies I’ve worked at that did not succeed or failed to reach their potential always said ‘Yes’ and chased every opportunity that knocked on the front door.

That inability or reluctance to say ‘No’ is one of the reasons startups and early stage companies fail . . . I refer to it as the ‘I can’t say no’ pitfall.

On this point, I remember Berkshire Hathaway CEO Warrant Buffet once said, “The difference between successful people and really successful people is that really successful people say no to almost everything.”

From my perspective, here is what saying “No” represents and why it is so critical to success:

1. ‘No’ means you clearly defined what is in the “Yes’ bucket otherwise you are not comfortable responding ‘No.’
2. ‘No’ means you believe in your go-to-market strategy and business model and this should be applauded.
3. ‘No’ represents discipline and that is a key attribute of success.
4. ‘No’ means neither you or your employees will waste valuable time chasing deals that do not make business sense and instead laser focus on executing the core strategy and scaling the business.
5. ‘No” requires confidence and all the great leaders at successful companies have at least one thing in common . . . they are confident – if not conceited – in what they are building and how they are building it.

In reminding myself of the context in which Buffett made his statement, I came across the following article in which successful leaders and advisors were asked if they agree with Buffett.

What about you? Do you agree with Buffett? Can you recall a situation where you walked away from a deal? Do you remember continually changing ‘Who’ and ‘What’ your business stood for in an attempt to win any deal?

Tell me about your experiences and always feel free to drop me an email at: harry@hollinesgroup.com. Also, download our free eBook at www.hollines.com on how to avoid common growth roadblocks .

The post Why Saying “No” is Critical to Success appeared first on Hollines Startup Growth Strategy & Transactions.

TTM is a critical metric that shows the time required to develop a product or service and commercially launch to the market. The shorter the TTM, the faster you can book and realize revenue. TTM is an indicator for efficiencies or problems with internal development, manufacturing,  and other operational processes. That’s why the most efficient companies in the world master the TTM process.

As a former C-level executive in business and legal positions, it always baffled me that lawyers, whether in-house or outside counsel, were not held to the same TTM KPI as their business and operational counterparts.

Anytime I held a dual business and legal role, I would apply the TTM KPI concept to both departments. To make it more applicable to lawyers, I referred to it as Time-to-Completion, or TTC, KPI. We implemented, a multi-step process to shorten the drafting and negotiation timeline to positively impact and improve TTC. By doing so, contracts were completed faster, products and services launched more quickly, and we shortened the path to revenue.

The TTC Playbook

While the process will be slightly different for your company, you can follow a formula to optimize TTC in your own organization. I developed a 10-point checklist to successfully implement this framework at various companies.

Leveraging this TTC process ties lawyer KPIs directly to your business performance. Measure how to optimize operational success with this important metric.

There are additional benefits to this process outside of revenue and efficiency. TTC positively changes the perception of the lawyer and legal department. By treating the legal side similar to the business departments, the lawyer and legal department are viewed as more of a business partner instead of a scary place that holds up deal progress.

Drop me an email at harry@hollinesgroup.com and I will send you a FREE copy of the 10-point checklist.

The post Increase Revenue and Fuel Startup Growth with a Business KPI for Lawyers appeared first on Hollines Startup Growth Strategy & Transactions.

We know the studies that demonstrate a strong correlation between diversity and fiscal performance. This happens because diversity leads to better ideas. Better ideas lead to more innovation and innovation equals better financial performance.

However, prior to the Covid-19 crisis, minimal progress has been made as there continues to be a lack of diversity at every rung of the ladder – from management to the C-suite. One of the reasons for such minimal progress is that as social animals, (we) humans subconsciously choose to associate with other who are like ourselves. Will this crisis change that behavior or reinforce it?

We know the studies that demonstrate a strong correlation between diversity and fiscal performance. However, minimal progress has been made as there continues to be a lack of diversity at every rung of the ladder – from management to the C-suite.

I am curious as to what, if anything, will change going forward – during and after the Covid crisis? There hasn’t been a lot of discussion about D&I during this crisis although racial disparities are being uncovered right before our eyes in this global health crisis – there is a relationship.

We are in the midst of a global war and we will not return to a pre-Covid way of life. We are at the forefront of a “new normal.” Therefore, it’s the right time to ask the question because companies are making their “business pivots” to develop strategies to grow and scale in the new post-Covid world.

We are at the forefront of a “new normal”. Therefore, it’s the right time to ask the question because companies are making their “business pivots” to develop strategies to grow and scale in the new post-Covid world.

Will there be an increased – or decreased – focus on D&I? Will there be new impactful D&I initiatives implemented or will D&I take a step back and be put on the back burner to be addressed at another time?

Diversity isn’t a frilly concept or a box to tick on your to-do list. It’s a philosophy that should be part of your company’s cultural fabric.

The post How will Covid-19 Impact Diversity & Inclusion Strategies? appeared first on Hollines Startup Growth Strategy & Transactions.

Why do we accept failure as an inherent risk of founding a startup? Failure isn’t an option when you leave your life’s work on the chopping block. We don’t need any more early stage companies to taste defeat.

After 20 years in business development, corporate development and law in the technology industry, I’ve seen my fair share of failures. However, after advising and investing in many startups myself, I’ve come to realize the real reasons startups fail.

Pitfall #1: The 1,000 ping-pong ball strategy

Every startup wants growth, expansion, and scale. They have to determine how and where to sell more products and services at scale.

The problem? Most startups go too far. Instead of juggling a few ping-pong balls, they pick up hundreds more in an effort to be the best. I’ve seen that most startups will do whatever they can for their customer, supplier, or partner to make a sale happen.

This results in what I call market and sector “dabbling.” Because startups flex to make sales (any sales), they have a handful of customers spread across multiple sectors.

Suddenly you have more ping-pong balls firing at you from multiple directions. You have a small sample size of clients and little credibility in the market. You can’t specialize in or understand a specific sector because you’re all over the place.

The solution

Unfortunately, most startups don’t have time on their side. You have to pick the right sector and market as soon as possible if you want to scale.

Ask yourself one important question: “What real, meaningful, and identifiable business impact do we give the customer?”

I’m not talking about soft business drivers, but hard, measurable impact. Demonstrate how you save customers time, money, or frustration in a meaningful way. This will keep you focused as you grow in the right areas.

Pitfall #2: The “It depends” business model

Has a customer or investor ever asked you, “What’s your business model?”

If your answer was, “It depends,” you have a major problem. This steals focus away from your startup, leading into Pitfall #1 and a cycle of failure. 

You can’t change your business model to suit a different customer every day.

Every company, no matter its size, needs a scalable and repeatable business model. This business model must align to the key business drivers for customers in your market. A solid business model is critical to growth in any market sector.

The solution

Determine what your business stands for. What kind of business are you building?

Whatever your model, stay true to it. Be willing to walk away from a deal if the opportunity doesn’t align with your model.

The sooner you recognize a bad customer-model fit, the sooner you can move on to the next opportunity.

Pitfall #3: “I can’t say no!”

This point links back to all the other Pitfalls, but it deserves a special mention.

Look back on your business dealings in the past year. Can you remember a situation where you walked away from a deal? Do you remember continually changing your business model or strategy to win an individual deal?

If this happened to you, you don’t know how to say “no.” When you morph to fit every opportunity that comes your way, it’s impossible to have a repeatable, scalable, or profitable business.

The solution

Pick a strategy and business model that works. Use this model as a yardstick for every new opportunity.

If the opportunity doesn’t match your model, simply say “no.” It’s that easy.

Pitfall #4: “All I know is they purchased it”

Do you know why customers buy from you?

No? Unfortunately, you aren’t alone. It’s astonishing how many startup and early stage companies don’t know why customers buy from them.

What’s more alarming is how few companies take time to understand their customers. The result is startups wasting resources on products that don’t address customer pain points, ultimately leading to failure.

The solution

Talk to your customers. Listen to your customers. Invest the time to reach out and understand why they buy from you. Verify that they’re actually using the product and not simply purchasing and abandoning it.

What problem does your product address? What more could it do for your customers?

Quantify the value of your product for customers, whether in time saved, tasks streamlined, or money saved. Use these as metrics to market and improve your product over time.

Pitfall #5. “I don’t know how to lead”

Let’s take a page from sports here.

A head football coach can’t defer blame to an assistant coach. No matter the circumstances or actions of their subordinates, failure falls to the leader.

In the case of a startup, failure always falls to the CEO, regardless of the actions of other executives or employees. It’s this failure to lead that causes so many companies to fail.

Leadership has nothing to do with capability, experience, or your IQ. Most CEOs are incredibly intelligent.

The problem is that most CEOs fail to define their role as CEO. A CEO needs to understand how he or she works in the business. This helps them hire capable folks to handle key business tasks outside the CEO’s skillset.

The solution

There are so many types of CEOs. They have varying backgrounds in finance, product, legal, marketing, sales, strategy, operations, and more.

The key is to understand your area of focus as the CEO. What is your experience? What are your daily duties as a CEO?

Once you’ve defined your responsibilities, outline what else needs to happen to run your business. Hire team members to do these tasks through smart delegation. Hold each leader accountable for growing a team under them.

This sounds simple enough, but delegation requires a lot of awareness, confidence and emotional intelligence.

Some CEOs naturally develop these skills in life, but many others need to work on self-awareness. Leverage counselors, mentors, and consultants to help you improve your leadership style.

The bottom line

These five pitfalls are responsible for the failure of many great startups. Don’t let your early stage technology company fall prey to these mistakes.

Scale intelligently to bring your solution to the world. Skate around these pitfalls with a trusted, experienced advisor like The Hollines Group.

Sign-up above our weekly newsletter and shoot me a quick email at harry@hollinesgroup.com to brainstorm and discuss your business strategy.

The post The Real Reasons Startup and Early Stage Companies Fail appeared first on Hollines Startup Growth Strategy & Transactions.