Tag Startups | Jenifer Bartman

October 27, 2021 by Jenifer Bartman

MEDIA: Business Building a Key Part of Innovation (The Hill Times Op Ed)

This Op Ed was published by The Hill Times on October 25, 2021, in conjunction with its Innovation Policy Briefing.

Innovation tends to be viewed as something that is associated with labs, microscopes, and other technical spaces, and although it might start here, this is not where it ends. Products of invention that are viable in the marketplace do not get to customers on their own; rather, there is a need to develop this important connection point, which often involves building a business.

There is a common misconception that the “invention” phase of innovation is the hard part, and although it is far from easy, the “build a business” component can be equally, if not more, difficult. It is at this point where the potential of what has been developed thus far can be stopped in its tracks, with novel products failing to reach the marketplace and generate a revenue stream. This situation represents a dual loss, as the innovation does not get the opportunity to benefit whoever it was designed to help, and there is little in the way of financial returns to offset the investment that was made during the research stage. Unfortunately, this is the fate of many “bright ideas”, often because the business aspect has been underestimated, underfunded, or not prioritized.

Building innovation-based companies that are robust and sustainable represents an opportunity to create a foundation for further development, a cycle that is well positioned to generate ongoing economic wealth. This challenging task is too often left to those with primarily technical backgrounds, lacking formal business education and experience. Although technical founders certainly have relevant skills and experience to contribute (product and business development are good examples), leading and growing a company requires a different skillset, with a depth of experience in areas such as management, finance, raising capital, and scaling early-stage companies. In other words, this complex task, which tends to unfold in the uncertainty of emerging markets, requires a collaborative range of competencies in order to achieve success.

Equally important is ensuring that sufficient resources are allocated to the business-oriented areas of the company, such as finance, sales, human resources, compliance, and administration, as the technical (or product) function tends to already be well established. Access to adequate levels of “smart money”, including venture capital and growth-oriented financing, is integral to the process, as companies tend to be financially challenged when they are on the brink of achieving significant milestones. Having emerged from the early days of small fundraises and research or business start grants, young companies that have attracted customers and opportunities to generate larger revenue streams too often find themselves with an insufficient capital base, with many simply unable to get past this stage.

Although Canada has a growing venture capital industry, it is much smaller than the US, when considered on a pro rata basis (For 2019 venture capital investment, Pitchbook reported $136.5 billion in the US, while the Canadian Venture Capital & Private Equity Association reported $6.2 billion, approximately one-half of the 10% measure typically used for comparison to the US market, prior to including foreign exchange). Raising money can be extremely difficult, and although not all businesses are worthy of investment, many promising companies are left unfunded; those that are led by women or minorities face even greater challenges. Businesses that are successful in raising capital and generating significant growth tend to encounter limits in the level of investment that can be raised, with a need to look beyond Canada’s borders or relocate elsewhere. It is difficult to find Canadian innovation-based companies with a dominant global presence, as compared to those such as Google, Amazon, or Apple, representing a missed opportunity to bring Canadian technologies to the world and build significant wealth here.

Canada’s innovation strategy would benefit from a greater emphasis on the commercialization stage, with a specific focus on building a business around commercially viable intellectual property, to create capacity, distribution, and a revenue stream. Sufficient growth capital and targeted business advice are required in order to achieve this on a sustainable basis, resisting the temptation to cycle back to the invention stage, in terms of funding and attention. The road to opportunity is ahead, and it requires a greater degree of practical input and engagement from experienced business minds in order to reach its full potential.

May 3, 2021 by Jenifer Bartman

MEDIA: CBC News Network Weekend Business Panel (May, 2021)

Lots to talk about on the May Day version of the CBC News Network Weekend Business Panel, alongside Mark Warner and John Northcott; here’s an overview of our chat:

The Sick Leave Debate, as the pandemic has been part of our lives for over a year, the federal and provincial governments are still wrestling with the issue of sick leave. Where does this leave the workforce?
Rising Capital Gains Tax in the US, as the Biden Administration looks for ways to pay for its initiatives, could a proposed significant capital gains tax increase impact Canadian companies?
LL Bean Ventures into the Canadian Outdoors, with plans to open additional stores, what might be behind this decision?

It’s disappointing that the issue of sick leave is so far from resolution, 14 months into the pandemic. This issue should be considered in the context of the range of work structures within the modern Canadian economy, ranging from a relatively small segment that have comprehensive benefits coverage (such as the public sector), to those in the entrepreneur or contract worker segment, who have little to no coverage and are far from job security. Bottom line: COVID19 is a contagious disease that can only be stopped with the cooperation of everyone involved, and when people are sick, they should not be going to work. Economic realities are something that need to be fully appreciated, in that many people simply cannot afford to opt out of the work day without compensation; this is why a well designed sick leave program is so important, especially, in these challenging times. Everyone needs to get together on this issue in order to arrive at a feasible solution, including workers, employers, provincial, and federal governments.

Those who are familiar with the capital markets pertaining to startup and early stage companies in Canada will recognize that it is a challenge to find funding to launch and grow a business. Although Canada has made strides in the volume of available capital, it has historically been behind the levels of other countries. It is important to recognize that capital at the early stages carries a higher level of risk, but is integral to creating jobs, economic growth, and innovation in Canada. This is why the potential for a significant increase in US capital gains tax rate is so concerning, in that it could impact the level of investment activity, including in Canadian companies. It is no secret that there is inequity in the tax system and that ultra-high net worth individuals likely do not pay their fair share, relatively speaking (a complex issue to be resolved). As this proposed capital gains tax increase is a recent development, it will be important to monitor how this situation develops.

And, finally, US retailer LL Bean has proven to be popular in Canada, in a year when being an outsider was on the menu for many. Plans to open an additional four stores runs against so many of the online retail stories we have discussed, although LL Bean has been well established in this area and catalogue sales for years (the catalogue still comes to my mailbox, by the way). Being outside is, perhaps, one of the few ways we have to get together in times of COVID19, and it will be interesting to see if this trend continues into the future. In the meantime, LL Bean footwear has been a favourite of mine for years; I wear them every day. Here’s a couple of styles from my collection, including the classic Bean Boot and an ankle version in a “short run” cherry red colour (similar to a limited edition, where products are featured in different colours in small quantity). I also have a couple of other pairs that are too dusty to be photographed at the moment!

Thanks for watching, and see you again soon. In the meantime, Spring is here, get outside and enjoy the fresh air and sunshine!

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September 28, 2020 by Jenifer Bartman

MEDIA: When the Stores Come to You (Winnipeg Free Press)

There’s no doubt that COVID19 has impacted the way that we live, be it what we do (less), where we go (not far), and perhaps, most apparent, how we do things (differently). Although there’s been a shift in how consumers procure goods and services that has been evolving for some time, the days of COVID19 have left many looking for solutions, some of which are not entirely new.

Consider shopping. The rise of companies like Amazon and improved online shopping and delivery services from a range of retailers have changed how consumers interact with the retail experience. We’ve come a long way from the nostalgic home delivery services of mid-last century, evolving through a time where mobility was all the rage (think malls, super malls, and the ultimate retail lifestyle experience) to arrive at a period when convenience is perhaps the most important consumer driver, closely followed by selection. Online and mobile technologies have made a lot of this possible, but improvements in the area of logistics might be an even more important piece, something that is still very much in progress.

Fast forward to a range of upstart companies seeking their space in this lucrative market; fueled by the gig economy of those who have capacity to sell, as we’ve seen in areas such as ride sharing and short term home rentals. I discussed one of these shopping/errand companies in a recent interview, where consumers can receive groceries and other items from various stores in their area, delivered in one convenient order

Although these services might bring important convenience in times of COVID19, will they last? The impact of demographics might allow at least some of these companies to survive into the future, with evident trends including aging Baby Boomers, older seniors living in their homes for longer, and some geographic areas where the availability of younger family members to help is limited.

Market opportunity, however, is only one side of the equation; consider the following keys to success:

Capacity. Delivery companies are only in business if they can attract and retain a sufficient number of drivers/contractors to provide services. In a competitive world with a limited pool of potential “gig” contractors, which companies will be in the best position to attract them? As a side note, beware of the potential for these workers to be deemed as employees for income tax and other purposes, which could represent a costly impact and need for business model revision.
Know the market/area where success is possible. As this type of service offering is local, the geographic area must be sufficient to draw contractors, customers, and be competitive. Those who do the math will realize that this isn’t so easy, especially on a sustainable basis.
Implementation. Some might say that the devil is in the details; those who have been business operators know that the devil is in implementation. Young companies can plan their service offering, but success is only realized by way of strong implementation on a sustainable basis, and with this type of logistical, “transaction heavy” business that utilizes a casual workforce, lots can go wrong.
Keeping up with the future. Recognize that these companies will have to evolve in order to be sustainable, in areas such as enhanced logistics (think autonomous vehicles) and providing a competitive offering, where customers see value over the service cost. This includes understanding costs, down to the last detail, as well managed and better capitalized companies will be in a stronger position to compete over the long term.

There’s no doubt that we will continue to see changes in how we live, including over what is expected to be another challenging season of COVID19 into the Fall and Winter. Companies considering their next steps would benefit from the advice of those who have experience in building and managing businesses; it’s an advantage to have strength in your corner.

in Business & Strategic Planning / Entrepreneurs / Leadership / Management / Media / News 0 comments

December 5, 2018 by Jenifer Bartman

MEDIA: Dragons’ Den Blog Interview

Thanks to the Dragons’ Den Blog for being in touch to discuss The Worst Ways to Raise Cash as an Entrepreneur; it’s always great to share some tips and traps when it comes to building a company.

Although it’s no secret that there are various approaches than an entrepreneur could take to finance a young venture, this should be considered in a broader context. Startup companies typically receive their initial financing through “founders, family, and friends”, with perhaps some support through grant and similar programs. What tends to get lost in the process is whether or not doing so is actually a good investment. Considering this includes determining the likelihood of: (i) the capital being repaid, at some point in time; and (ii) the return that could be generated, if any. Doing so can really only be achieved by way of developing a thorough and complete business plan, including a financial forecast for at least a three year period.

Entrepreneurs and business planning don’t always have a good partnership, however. Business planning tends to get downplayed as “not that important” or “impossible to do for a startup”; both of which are false. When an entrepreneur prepares a business plan, they tend to insufficiently address areas that are of significance to investors, such as industry and market issues and the right business model, and instead, focus on an abundance of product and technical content. The impact? Little to no chance of raising investment capital.

Entrepreneurs should, instead, consider whether or not a startup is worth spending their time and money on, as it will surely take plenty of both. It is important to take the time to do so before investing one’s own capital, regardless of the source, and before asking others to do the same. As a business advisor and former venture capitalist, I have seen too many young companies that likely would not have been launched, had these questions been asked and answered in advance. Further to this point, rarely have I met an entrepreneur who actually took the time to do their business planning homework first, although I have met many who wished that they had better understood the financing implications and realistic potential of their company sooner.

Not sure how to address these important areas? Advisors can help. Not only can they assist with putting the right business planning efforts in place, they can also help to identify opportunities to generate cash sooner, which is another area that entrepreneurs tend to miss. Contact us to learn more.

in Business & Strategic Planning / Entrepreneurs / Insights / Venture Capital 0 comments

October 1, 2018 by Jenifer Bartman

EVENTS: Speaking at CIX (Canadian Innovation Exchange)

Pleased to be on the Speakers list for CIX, the Canadian Innovation Exchange, “where connections are made and deals get done”. CIX is a must attend technology innovation destination, where investors, innovative companies, entrepreneurs, and facilitators converge to drive economic growth and accelerate the development and implementation of new ideas. This two-day, internationally recognized technology investment conference includes a range of sessions and powerful networking opportunities, including the showcasing of CIX’s Top 20 Companies for 2018, a group that I had a hand in selecting again this year, as a member of the Selection Committee. This year, the Top 20 includes companies from Ontario, Quebec, BC, PEI, and Saskatchewan.

Experience has taught me that action-based implementation assistance is an area that young companies do not always fully appreciate. Implementation tends to require far more time than anticipated and involves more challenges than one would expect, resulting in many promising companies failing to reach their potential. What’s critical is having access to experienced resources, be it advisors, investors, or senior level executives, who possess tried and true strategies that accelerate growth. No matter how poised for success you might think your company is, don’t make the mistake of failing to build out your team to include experienced people who have the ability to help generate success and avoid pitfalls.

If you are a leader of a high potential company attending CIX, feel free to drop by and say hello. See you in Toronto!

in Business Transactions / Early Stage Financing / Entrepreneurs / Events / Financing / Venture Capital 0 comments

March 7, 2017 by Jenifer Bartman

Getting Started: Preparing for the world of entrepreneurial adventure (Finale)

Published by CPA Canada in CareerVision

Over the course of this series, we’ve considered a number of skill areas that are helpful to companies in the startup stage of development. Whether they realize it or not (and many will not), startup companies need much more than technical skills and enthusiasm to build a business that will grow and prosper over the long term. Some of the skill areas that we’ve identified include opportunity-based thinking, risk management, and the ability to handle and overcome rejection.

For those who are keen to find a young venture and start contributing, it often takes much more than skills and enthusiasm (sound familiar?) in order to find the right fit. Startup companies can flash and burn like a shooting star in the night sky, and it can be difficult to identify which way a situation is trending until you’re on the way down. Perspective is critical, and in order to ensure that you’re investing your valuable skills into the right situation, it’s important to understand some of the cold realities about start up companies.

Most will fail: Bottom line, the vast majority of startup companies won’t survive, ranging from quick failure to becoming stagnant and fading away over time. Don’t be fooled by those who achieve quick notoriety or attention, as many a startup who graced the pages of magazines or TV screens went on to subsequently fail.
They consume without apology: Like a young child that relies on adults to feed, clothe, and keep them out of harm’s way, startup companies are all about consumption. They can require (or ineffectively use) an abundance of resources, including human, financial, and time. If you’re not careful, a startup company can consume your time and energy around the clock.
They often don’t know what they need: Many entrepreneurs are new to both their venture and running a business and are typically not in a good position to understand what they need in order to move forward. This is why so many advisors are able to earn a living (for those who seek help) and also why so many startup companies fail (for those who don’t). The category that the startup you join falls into can impact your future in a big way.
The work isn’t glamorous: Building anything is a “hands on”, trial and error, messy business. Whatever the roles in a particular startup company might be, far more is required in order to keep moving forward. Recognize that joining a young company means performing lots of less than glamorous tasks, and if you’re not willing to get your hands dirty (literally), you will likely be happier doing something else.
Things can change really, really quickly: Young, emerging companies require agility, in order to chase opportunities, stay ahead of market trends, and make modifications in order to get closer to customers. What the focus is one week can quickly change, requiring the team to quickly adjust, adapt, and move forward. Surviving in this type of environment requires comfort with constant change, as well as the ability to work within it.
It happens in real time: For all the planning that needs to be done in order to develop and move a venture forward, managing the business is live, not a dress rehearsal. Teams are often small and they rely on individuals to have the ability to determine what is required and take action; there are no layers of checks and balances here. Although this might sound exhilarating to some, the reality is that startup companies face and endure risk every single day.

If this doesn’t sound like an environment for the faint of heart, that’s because it isn’t. Having said that, the rewards are many for those who are up for the task. Like the childhood fairy tale, you will likely have to kiss a lot of frogs until you find a prince (or princess!); that right startup opportunity. If you recognize that this is what’s required in order to get started, the focus can be on the journey to find “the one”, as opposed to being on the setbacks that emerge along the way.

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September 29, 2016 by Jenifer Bartman

Getting Started: Preparing for the world of entrepreneurial adventure (Say Yes!)

Published by CPA Canada in CareerVision

It’s been said that some people see the glass as half empty, while others see it as half full. Some people don’t even see the glass, much less believe that it actually exists! Related to this idea are people in the business world who assume the role of naysayer; nothing is good enough, no idea will work, the road ahead is a minefield of challenges and despair. This is perspective that the last thing that a startup business (or any company, for that matter) needs.

People who hold this “no glass” perspective are focused more on why things won’t work instead of why they will. While it’s true that startup companies, rich with new ideas and ways of doing things, might face more challenges than the average business, it doesn’t mean that that success can’t happen. It can, does, and there are startup companies out there who find success every single day. The key is bringing the right perspective to “get to yes”, and in doing so, make the world your oyster. Sounds a lot more interesting than doom and gloom, right?

Why it Matters

Since there is no shortage of people who can tell you why things won’t work, those who see otherwise are of real value. What’s more, people who can find practical ways to advance an initiative or resolve a problem are extremely valuable. Any seasoned executive, who’s been there and done that, recognizes just how true this “getting to yes” skill set is.

Think about the last time you were in a situation where good, or at least, interesting ideas were put on the table, only to be quickly shut down by others. What could have been the outcome if even one of those ideas had been further investigated to find a workable solution? Even more compelling is a situation where you see a competitor move forward with an idea that you had considered, but didn’t invest the time to make something of it. Your competitor ended up with money in the bank, while all you were left with was a missed opportunity.

Get Started

Startup companies need people who can apply creativity, ingenuity, and a positive attitude to make things happen. Seeing the glass as excitingly half full takes practice, something that can change your mindset over time. Getting started is as easy as adding these approaches to your to do list:

Let every new idea have a life: Make it an unspoken rule that any idea that can be clearly articulated has a life; even 10 minutes of time will do. Talk about it, consider who could utilize the outcome, what success would look like. Keep track of the concept, so that you can rank it in priority in rational terms, as compared to other things that could be pursued. If you can’t make this change in your current workplace, try doing so on a personal level.
Practice seeing the other side: Every good debater knows that there is more than one side to any situation, and solely focusing on the position of personal choice won’t advance the argument. Have an opinion, but take the time to thoroughly understand alternative viewpoints, as this can be valuable to finding solutions to move forward.
Take on a project: In situations where others dump an idea, consider exploring it a bit further on your own. You might be surprised what you find, resulting in the opportunity to take a more fully developed concept forward at a later date. Don’t be surprised if others are impressed by what you’ve been able to achieve.
Learn how others get it done: Successful entrepreneurs and executives are skilled in finding ways to get things done, as they understand how valuable it is to be able to do so. Work closely with them to learn what they know; it will be some of the best experience you ever receive.

In a world that so many see as stacked against them, you can set yourself apart by shedding light where they see nothing but grey. Even better, once you have some examples of initiatives that have been successfully advanced, despite the odds, others will begin to take notice. “Yes” is the word, indeed.

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August 29, 2016 by Jenifer Bartman

Getting Started: Preparing for the world of entrepreneurial adventure (Opportunity-Based Thinking)

Published by CPA Canada in CareerVision

One of the fundamental ways that a startup company can find success is by focusing on opportunities. This could include new ways of doing things, a better solution, or markets where demand exceeds supply, to name a few. Being successful in this regard requires a special perspective, one that understands customer needs and wants today, and also in the future. It requires the ability to look beyond the company at hand and pay greater attention to the marketplace, outside your window.

Corporate jobs are often more about focusing on what’s in front of you, ranging from tasks that relate to the past (think audits and tax returns) or immediate future. Although you might look forward from time to time, as in the case of budgeting, forecasting, or planning initiatives, sitting back and considering what the future might look like and the opportunities that could be created isn’t typically in the mix. This is a much different range of view and represents a successful entrepreneur’s golden time.

Why it Matters

You might have been asked at some point in your life to “read between the lines” or observe “the negative space”. Both of these concepts require a person to see what isn’t obvious at first blush, and some people find it quite difficult. It requires looking past what’s in front of you and connecting the dots to arrive at what could be a very different answer or idea. Apply this concept to a startup company (or any business looking to expand its horizons, for that matter), and you will begin to understand what opportunity-based thinking is all about.

Businesses need people who can bring this important perspective, in order to be successful over the long term, as many simply do not have this ability. Missing opportunities in the marketplace has led to the failure of many companies, as well as career setbacks for a host of business leaders, entrepreneurs, and senior team members. Prepare in advance by learning how to make the marketplace your new BFF, providing access to the powerful opportunities that await!

Get Started

In a world of glancing in the rear view mirror, you can begin to practice the key skill of looking forward in advance of when it’s actually needed; here’s how:

Take on forward looking projects: Bring a new approach to organizing your workload, by separating tasks or projects that require a past or present perspective, as compared to those that look forward. You will likely find that you have far more work that involves looking backwards or at what’s in front of you, so seek out projects that look ahead to balance the scale. Projects that involve budgeting, forecasting, and planning can be a good place to start.
Trend is your friend: Taking on tasks that involve research or an external focus will help you to understand what drives markets, key trends, and where the opportunities are. Once you spend some time doing this type of work, it will become obvious just how different the perspective is.
Look outside of your own organization: Challenge yourself to spend a portion of every day thinking about what goes on outside of the four walls of your organization, such as with customers, competitors, and industry/market developments. Start with 20% of your time and progress upwards from there to develop a meaningful external perspective (and, no, 50% is not too high!).
Check in on a regular basis: It might be relatively easy to make some changes in routine for a short period of time, but seeing opportunities that will propel a company forward only starts to happen after you’ve developed the necessary skills to do so. Whatever you call it; a mind shift, a fresh perspective, or creative visioning, it won’t happen unless you “check in” with yourself periodically to ensure that you haven’t fallen back into a focus characterized by short term, internal matters. Change your perspective for good.

The ability to look forward in advance of when it’s needed spells opportunity, no matter how you slice it. What’s more, it can lead to opportunities for you to play a key role in the startup companies that need this perspective more than either of you know.

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July 8, 2016 by Jenifer Bartman

Getting Started: Preparing for the world of entrepreneurial adventure (Attitude)

Published by CPA Canada in CareerVision

Although you’ve completed years of education and gained some experience, there is still much to learn. Whether this reality hits you as daunting, exciting, or somewhere in between, you probably don’t realize just how much your attitude matters when facing future learning. Many of us were raised with reminders to “think positive”, but probably didn’t realize just how important this is when facing something new. This concept is particularly relevant in the startup world.

Generating success isn’t just about getting something new to “work”; but rather, in the case of startup companies that require assistance and investment from others, it’s more about what comes along with the quest for capital. Investors tend to have many choices where they can put their money, and there are often far more options than what can be financed. For this reason, those with capital have the latitude to select the opportunities that represent the best “fit”, in terms of returns and the ease of getting there. A big part of this has to do with attitude.

Why it Matters

One of the “screens” that early stage investors tend to use to evaluate investment opportunities is the attitude of a company’s leadership, particularly in terms of responsiveness to advice. For all that is known, there is much more to learn, and investors typically bring a host of knowledge that is critical to moving a young company forward. Although they might not understand all of the intricacies of a startup’s technology platform, investors understand enough to generate success, as well as many other things that entrepreneurs typically don’t have the depth of experience to appreciate.

What is powerful is when experience and emerging ideas come together to build something that is both competitively advantageous and soundly executed. In order to do so, startups need to be receptive to good advice and demonstrate an ability to work well with those who have more experience than they do. What many startups don’t realize is that investors have better things to do than fight with entrepreneurs who will never see the light, and, as a result, will bypass these situations for more productive opportunities. Don’t let this happen to your business!

Get Started

Experienced investors know that smart entrepreneurs will do whatever they can to reduce the risk of rejection. Since grace in times of what could be a hearty dose of reality isn’t a given, take the opportunity to get some practice; here’s how:

Learn how to focus on “breathing”: If you’re not in the routine of receiving constructive criticism, it’s time to get used to it. When facing times of difficult questions or advice, learn how to respond. Practicing how to reflect on the question, “count to 10”, or give all ideas a “positive life” for a period of time can help.
Reflect on what you don’t know: Step 1: Accept the fact that you don’t know everything. Step 2: Accept the fact that there are things that you will be wrong about. Step 3: Make an active effort to learn about what you don’t know. Step 4: Reconcile the first three steps and move forward with a positive attitude, not grudgingly or with resentment.
Refresh research skills: Although it might be easy to find information online and think that this alone addresses the question or combats the advice, this is only half the battle. Investors know that understanding what to do with the information is what really matters. Think about it.
Practice developing responses: Startups seeking capital will be asked a lot of questions and face a great deal of advice. Make the most of these opportunities (yes, these are opportunities!) by learning how to address inquiries directly with responses that are thorough and relevant, yet concise, and then utilize “smart advice” for all it’s worth!

There are lots of entrepreneurs who take the position that pushing forward with reckless abandon is what matters; be difficult, be original, never surrender. The reality is that when investment capital from others is needed, this type of approach just doesn’t cut it, and although some things might be worth fighting for, the list should be short. Failing to do so can result in alienating the audience that startups have such a critical need to engage in order to move forward; one that’s counting on your positive attitude.

in Career / Early Stage Financing / Entrepreneurs / Financing 0 comments

April 5, 2016 by Jenifer Bartman

Getting Started: Preparing for the world of entrepreneurial adventure (Finance & Business Acumen)

Published by CPA Canada in Careervision

You’ve spent a good portion of your career in the business world, working with those who manage, keep track of the numbers, and hopefully understand it well. In addition to this practical experience, you’ve probably spent a number of years completing formal business and finance study. It’s easy to take management and finance for granted, when it’s a big part of what you and those around you do on a daily basis.

Although entrepreneurs tend to end up in the leadership role in startup companies (often by default), most lack actual business experience; this is particularly true in terms of finance. The bulk of the emphasis tends to be placed on the product, service, or technology (entrepreneurs are typically guilty of this!), resulting in the business and finance aspects that are so important to any company being overlooked. This can also be a function of entrepreneurs simply preferring to spend their time on what they love, and it isn’t accounting.

Those who have formal education and experience in these areas have knowledge and skills to offer to startup companies, to a degree much more than they realize. What’s important is to understand what the real needs are and why, so that the opportunity to prepare in advance isn’t missed.

Why it Matters

As already explored in this series, startup companies lack the stability of more established businesses, and one of the main areas of risk is cash flow, closely followed by the challenge of attracting investment capital to support growth. Non-financial entrepreneurs typically don’t realize the degree to which their venture is at risk in financial terms, nor do they understand the needs of early stage investors, when it comes to raising capital.

As a result, startups often find themselves in double trouble: (i) short of cash and the skills to manage it; and (ii) an inability to provide the financial oversight and reporting that investors require. The outcome, too often, is a predictable death spiral, where these two factors get caught in an endless loop, resulting in the business running out of cash and being unable to generate what’s required in order to stop the plunge.

Get Started

Chances are that you have underestimated just how much the business and finance skills that you have learned and practiced are of value to startup companies. Put a lid on the typical excitement and hype associated with new technologies and opportunities and focus instead on accentuating the value of what you have to offer:

Become acquainted with the “hands on” finance role: Since startup companies are small, the “accounting person” often has to do it all: transaction entry, generating financial statements, and dealing with billing and banking matters. Recognize that startup work is much more involved than a lofty oversight role and that the buck will truly stop with you.
Map out routine processes: Make the most of limited time by developing checklists to guide task completion, including on a weekly and monthly basis. Most entrepreneurs don’t have the financial experience to do this and it will make everyone’s life easier, as well as provide the discipline that investors seek.
Revisit financial accounting, in reporting terms: Recognize that internal reporting and recordkeeping often differ from what external parties expect to see. In order to keep investors and financial institutions happy, ensure that you’re able to produce monthly financial statements in the standard financial accounting format.
Master cash flow management: Being able to manage cash with confidence is critical, and may not be a skill that is practiced much while working in a larger company. Cash flow management is not an area to be learned on Day One of working with a startup, so get lots of advance practice now.
Learn about what investors require: Early stage investors look for a qualified person in the Finance Chair, as it’s this individual who will take care of their investment. Recognize this and seek to learn about their particular needs, in terms of reporting and ongoing operation of the finance function.

Early stage investors recognize that the majority (if not the vast majority) of startup companies fail. There are a variety of reasons for this, including products that aren’t competitive in the marketplace and an inability to attract enough customers. What’s more typically the problem, however, is poor execution on the part of Management, in terms of not running the business well. At the core is often a lack of financial acumen, resulting in the company running out of money before it even had a chance to get started.

in Accounting & Finance / Career / Early Stage Financing / Entrepreneurs 0 comments