There is always a lot of discussion about how to raise investment, but we don't often talk about what happens next.
You're a startup company, maybe you've been bootstrapping for a year or two, maybe you've come together a new team recently. Either way, you have put together your business plan and raised investment. But then what?
You have shareholders that are invested in what you do, you have targets to meet. You also likely have a team to build, and products or services to deliver. Assuming you know how to deliver the products and services, there are still a lot of things that you need to get set up to run effectively as a business, and if you haven't got experience, it's a challenge.
This article looks at five top tips which may help you navigate those first few months, avoid some common pitfalls, and speed up the delivery of your initial goals.
Reporting to investors
Your business isn't just you anymore. There are now other people who have an interest in your progress. There may be an investor sitting on your board, but either way you're probably required to keep shareholders up to date at least once a year.
There is a lot you need to set up to run effectively as a business, and if you haven't got experience, it's a challenge
I would suggest that you don't just do the minimum required. Rather, it's sensible to ensure that all stakeholders understand the position of the business, whether it's good or not so good. Transparency and communication will keep stakeholders happy, but it will also (hopefully) make for a more supportive environment when things go wrong. And at some point, something will go wrong -- that's the nature of business.
However, you also don't want to spend too much time on reporting, as you need to be running your business. Setting up a reporting structure early will make things easier for you in the long run.
- 1. Create an initial report that sets the structure and content, and ask stakeholders for feedback, as well as agreeing how often you will deliver this report -- usually every three, six or 12 months, although I would suggest three or six months for a startup.
- 2. Automate what you can. Set up your cashflow so it's easy to create visual, high level reports.
- 3. Define clear goals that are easy for you to measure progress against in future reports.
- 4. Ensure that it's easy to digest to reduce likelihood of misunderstanding or questions -- keep it short, well formatted, and consider the appropriate tone.
It's likely that you will be growing your team, and as you will be under pressure to deliver, you may need to hire people quickly. However, hiring the wrong people can be disastrous for any business, so you should ensure that you allow time to recruit effectively.
Particularly right now with COVID-19, people will understandably be cautious about making big changes to their lives. It's important to allow time in your plans to get the right people, and to have a mitigation strategy for if you don't find them quickly enough. Slowing down your plans is preferable to hiring too quickly.
Once you do make your initial hires, it's important that all team members are supported in their roles. Even if you're only hiring one or two people, ensuring that you have onboarding processes, support processes, and clear expectations defined is critical.
Make time to have regular reviews, work with each team member to support their personal development, and make sure that the processes for day to day working are effective for your new team. Make sure that they are fulfilled and happy, enabling them to help you deliver the company goals as effectively as possible.
Cashflow management is critical to every business, but particularly to startups. Knowing how much runway you have and knowing that you can pay your team each month is critical.
It's also important to be able to model scenarios. What happens if your game doesn't generate revenues as quickly as you thought? What happens if the senior role you're hiring for requires a higher salary than anticipated? These feed into your risk analysis and mitigation strategies.
We don't talk that much about the personal stress and exhaustion of running a business, but we should
To have an accurate and useful cashflow will take time to set up, but once done, it will enable you to make informed decisions and spot potential problems early. Consider using a system such as Float, which pulls actuals from Xero for cashflow forecasting, allowing you to clearly see your runway, model scenarios, and easily track actual spend against forecast spend, as well as to produce reports.
Don't forget to look up
You are likely very busy, but it's important to take time to take a step back and review your progress. Having to report to stakeholders can be a useful mechanism for this, but it's likely that you need to do this more regularly and at a more granular level of detail for your own purposes. It can be very useful to have external advisors or non-exec board members who can help to provide some perspective.
A good way to start is to set up a structure. Define some KPIs that you can assess against regularly and set time aside to do just that. Ensure that everyone in the team is working to the same goals, and make sure that activity and outcomes are being recorded in a way that is easy to monitor.
It's much easier to do this at the start when things are going well. Not only will it allow you to identify potential issues earlier, giving you a greater chance of fixing them, but it is also more difficult to look up when you're struggling -- and the natural response is not to just keep working and to dig yourself deeper. Putting these structures in place when things are good helps you to keep them going when things aren't so good.
Personal stress and exhaustion
You are probably exhausted but elated. You've likely been quite stressed and working very hard to get to the point of raising the funding. And now you have a ridiculously long task list, new team members to train up -- who will take some of the load, but initially it's more of your time needed to get them ready to do that -- and a lot of pressure to deliver.
We don't talk that much about the personal stress and exhaustion of running a business, but we should. Not only is it not good for you to be stressed or exhausted, it's not good for the business either. And you should also consider that culture comes from the top, so setting a good example is key.
You should plan to have some down time. That may not be possible in the first few months, but it should be a key priority for you to get to that point and to give yourself the space to be most effective at your role, as you can't carry on indefinitely without a break.
In summary, those first few months after raising seed investment can be tough, with so many things to do, many of which may be new to you as a startup founder. But taking the time to get things set up correctly now will pay off later and will help to set the company off in the right direction.
Ella Romanos is a consultant at Fundamentally Games, which provides strategic support to developers and organisations to help make better and more successful games.