By: Tim Malloy, BD Manager, NYC
After working with hundreds of founders, I have seen all kinds of issues appear. However there have been three challenges in particular that I have seen on a consistent basis.
1. .Hiring too soon
You have funding! Congratulations! Now let’s hire people and scale as quickly as possible. Growth is good, right?
Too many times have I heard founders say they are going to hire 20 people in the next month, when they are a team of 2. The first issue of scaling too quickly in terms of hiring is on-boarding. How do you plan on training these new people? Who will be handling benefits, payroll, and employee handbook discussions? Do you have a an employee handbook? These questions often get overlooked and the on-boarding process can slow down a company that is technically scaling. Before the first hire, have a solid process in place and define duties for each employee, even if they will wear multiple hats.
The second issue is, many of the duties you just hired can be outsourced to other companies on the cheap. Instead of spending thousands of dollars of your funding (plus those pretty stock options) on multiple people, you can outsource it. Today’s startup world has many different types of companies ranging from HR, finance, product development, and marketing that can handle a lot of these duties. Although these options tend to be temporary, they can help set up an infrastructure that future employees can work off of, instead of creating it from scratch. Ask fellow founders for referrals to see who has worked well for them.
In the end, when you get that first round, take a step back and think about the hires you must have and the processes needed.
2. Fear of Letting Go of the Wheel
I interviewed Jennie Fagen, Startup Executive Wellness Coach & CEO of Lights Camera Kale about founders and duty delegation. She had this great story to tell:
“I remember speaking with a founder who hadn’t taken a day off since she started her company. She couldn’t—everyone relied on her for everything. And who could blame her? She was good at what she did, understanding everything from sales to marketing to product development. Then the burnout set in, and something that started out as passion became a weighty drudge. She organized a meeting and asked her team, ‘If I were to leave for a month, what would happen?’ She was floored by the response. Her teammates began to talk through a detailed plan to where they could fill in the gaps during her absence. It wasn’t perfect, and mistakes were made, but the company was able to become a well oiled machine. It was almost as if they had been waiting for her to trust them. The founder was able to focus on more important duties, meetings, and vision. She began to see what most founders have trouble envisioning: a company that can run without them.”
It’s hard to let go of duties, but you may be surprised when you see what your team can do when given a chance.
3. Needing Financials for a VC in 2 Days…
Okay, so maybe 2 days is an exaggeration, but we have received requests for clean and audit-worthy financials in the next 2 weeks from prospective clients. Putting together solid financials–particularly for a Series A–takes time. Most often the companies we speak with are set up on a cash basis, instead of accrual, and items are likely not categorized correctly. You want to ensure you give whomever will be handling this task plenty of time to get everything in line. This is particularly important if you have been neglecting your books the past few months or even years.
This brings me to my next point. You are busy and priorities change as your company scales, so your finances can be a huge headache that gets pushed to the side in favor of the product. It’s good that you’re focusing on your product, but ensure your financials are being delegated to someone else and not just sent to that prized filing cabinet. Make sure whomever you entrust with this task understands the startup world and your business.
Financials are one of the most neglected items early on in the startup life cycle. They are not the most “fun” or awe-inspiring part of growing your start-up, but they are one of the most important. Set yourself up for success and don’t wait until the last minute.
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