6 things that every prospective startup founder should know

I founded a startup just over two years ago. Here's what I've learned distilled into six simple easy points, for your benefit.

1. Read up on limited liability companies

If you are lucky, you will have friends or colleagues who know all about the structure of limited companies and are dying to sit on the board of your company, so you won't need to know anything about the respective powers of the executive, the employees, the board and the shareholders, and your experienced friends will just handle all that for you.

But it's unlikely.

Learn about the various roles of the components of limited companies in your jurisdiction, and do not just assume that, for example (as was the case for me), Finnish companies are some kind of obvious blend of English companies and stuff you saw on American law shows.

Find out the key deadlines (tax filing, annual general meeting, closing of the the books, trooping the colours) and mark them in your calendar with at least a one month and a one week reminder.

Don't worry too much though - almost every mistake you make can be fixed (usually at a financial cost though), and at worst you'll have plenty of time to catch up on your corporate law reading when you're locked in a cell.

2. Study what accepting investment will actually cost you

You don't want to end up in the situation where your company has an IPO for 1 billion dollars, but you've been diluted down to owning a mere 5% of the stock.

Hang on, you do.

But that kind of success story is unlikely. Investors are far more experienced than you are. They want to keep you motivated, but of course ultimately they need to make a profit, and they are more powerful, experienced and generally superior to you in pretty much every way except for technical inventiveness. They will think nothing of shutting you down - even if you're doing kind of okay - if you fail to hit the targets. And there will be lots of targets.

Furthermore, accepting investment means board briefing packs, more board meetings, admin, scrutiny, paperwork and less opportunity to do what feels right to you.

On the plus side you may get good advice, if your investors actually take in interest in your well-being.

But what do I know? I bootstrapped my company.

3. Have a purpose for everything you do

In my first year I:

• went to a pitching contest (and won) and then turned down the prize because it involved commitments that my company couldn't afford to make.
• got an appointment with a Finnish member of parliament, but didn't have a sensible story to present to him. So it was interesting from a social perspective, but a waste of my time, and more to the point, his (my apologies to the Right Honorable Gentleman).
• attended a foreign blockchain conference at great cost that turned out to be pretty much only about cryptocurrency speculation, and not underlying fundamental technologies.

If you are going to spend time, or more importantly money, on doing something, make sure you've written down what you are hoping to gain from the experience, take a one day break, and then look at again to see if it makes sense.

Don't think "but this is a unique opportunity" - swimming with dolphins is also a unique opportunity, but it's not going to give you customer insight or drive any sales.

Unless you are selling to dolphins.

4. Know the numbers

You should always know how much is in the company bank account, what big bills are coming up, when your sales payments are expected, what your burn rate is (that's your net loss per week or month) and how much runway you have (that's how many weeks or months you have before you can't pay the bills and have to shut down).

You should also know about VAT, reverse charging, tax rates that are applicable, and know how to use a spreadsheet like a boss. And how to produce a slide deck that illustrates all the numbers, preferably with graphs that go up and to the right.

Remember: up and to the right.

If you can't or won't memorize the numbers, then at the very least make sure you know what next week's winning lottery numbers are. That's the only decent other option.

5. Have an exit strategy

You should keep in mind where you see yourself in one, two, three and five years time. Ultimately you're probably going to want to either sell your business (and retire), or hand over the reins to professional management, live of dividends and stock sales (and retire).

To get there you need to determine, based on thorough empirical research, how to adapt your initial product idea so that it becomes irresistible to customers, and hence your company becomes irresistible to buyers. You're always going to be selling.

Or you can adopt the more common exit strategy, in which you guess what is going to succeed based on the uneducated opinions of your executive, and eventually sell your house to cover your debts.

And then move into a trailer home (and retire).

6. Use social media

Find out what areas are available for you to improve your reach and engagement, and conduct A/B testing with your content. That's when you try two slightly different approaches or pitch two different messages to achieve the same goal, and work out which was better at sticking. Then you repeat the process again, and again until you get extremely bored.

Read articles on how to improve your social media presence. Post often, post early. Or rather - at the statistically most opportune time. Regularly examine and act on the analytics. If you work out how to make sense of all those numbers and actually use them, rather than just getting a warm fuzzy feeling from looking at them, let me know.

And of course, write lots of articles with titles that start "6 things that ..."