As a startup, it is hard to know how to prioritise your limited time and funds. Furthermore, while you know your core business inside-out, you are often tripped up by all the other things that come along with business ownership. Lumec is coming up to 4 years in business so we did some reflecting, and came up with 4 things we wish we had known when we started. We thought we would share them here, so those taking the plunge into small business ownership can make good decisions from the start.
1. Take time to develop your brand
One of the first things every startup needs is a name, which is integral to your brand. We came up with a name after a few days of bouncing ideas around with friends – ‘Resource Research and Strategy Consultants’. It was a mouthful, no one could remember it, there was a competing business in our space that had almost the same name, and the ‘resource’ was confusing us with human resources and environmental resources businesses. Bad, bad, bad.
Our advice: if you don’t come from a marketing background (like us) we strongly recommend budgeting for a professional to assist with brand development. Take time when choosing a company name and ask everyone you see what they think of your potential name. You are going to be saying your company name A LOT – you need to feel confident and proud of it. But developing a brand is much more than just a name and a logo. Our brand consultants took us through the essentials of who we are as a business, what makes us different and what drives us. It was a highly beneficial process. If you want to read more about our brand and journey check out our about section on our website.
Don’t forget to check that your name has an available URL for your website and to reserve the name on the CIPC (Companies and Intellectual Property Commission) website/portal.
2. Outsource support services
Similar to branding, we wish we had outsourced support services sooner, particularly, website development and accounting. We spent a lot of time learning WordPress and doing creative accounting and payroll in Excel in year one. This is a tricky one for a startup because whatever money is in the business is needed to keep the founders housed and fed for as long as possible while work becomes consistent. Furthermore, blindly handing over all bookkeeping in the beginning is not recommended – learning the basics is critical.
However, website development can be outsourced fairly cheaply and even one accounting consult can get you up to speed quickly on what accounting programme is recommended and what the basic legislated requirements are for a registered business (hint: they are significant and can have hefty fines attached). It is also worth meeting with an accountant even before registering the startup to figure out what type of entity to register and what this may mean for taxes down the line. Several accounting and web development firms specialise in small businesses, are understanding and have good rates. SARS also have some good resources that are free. As you grow, you should meet more regularly with the accountant and hand over more responsibilities to avoid stress meltdowns (of which we had many).
Note on points 1 and 2 above: Although registering your business is a hard-to-resist psychological step to small business ownership, it may be worth holding off until you actually have revenue. Part of us rushing the naming exercise was so that we could register the business and part of the accounting headache we experienced was because of registering the business too early. We see many startups falling into this trap. Registering a business does not mean you have a business, paying customers means you have a business. You can develop your brand and website, advertise yourself and get paying customers often all without being registered, especially as a consultant. As soon as you have income you can register and open a bank account within days.
3. Set up sound internal processes from the start
Only 2.5 years into Lumec did we start to collect meaningful data on how we were spending our time. We now use this data, amongst other things, to see exactly:
- When we have exceeded our billable hours on a project and why,
- If we are working enough billable hours to cover our monthly expenses,
- If we are doing enough business development and staff development, and
- If we are spending too much time on admin.
We use Clockify to measure our time, but there are other equally useful tools such as Toggl. There are several other monitoring tools that we have put in place from client queries to social media – the point is to determine your key metrics early and start tracking them from the start.
Another useful process was implementing Monday morning meetings where we discuss, divide and prioritise our tasks for the week, as well as provide feedback from the week before. Some businesses use Trello or Asana to manage tasks, but as a small business of just three, we find old fashioned to-do-lists work just fine for us.
4. Be smart about your recruitment
In our first couple of years we required ad hoc work to be done. We reached out to our own networks and to the local university for recommendations and we temporarily employed several people but no one had the particular skills we were after. This cost us time and money. Based on this experience, when we decided to recruit a full time staff member, we knew we needed to conduct a rigorous recruitment process.
Our processes included a job advert on employment sites leading to a google form which was used to shortlist candidates. We then asked for CVs from the shortlist which were used to further refine the list. We did personality tests, interviews and writing tests for the top 10 candidates and our final choice we interviewed a second time. This process took at least 2 months but it is one of the best ways we have spent our time in our four years. We wish we had used a more rigorous process for hiring even temporary staff right from year 1.
This blog is the first of a series of posts we will be sharing to assist the startup business. Look out for future posts on funding, business planning and others here and follow us on Facebook and LinkedIn (@lumecsa) to get other related updates and information.