On Being A Startup

Being a startup gives certain advantages over a more established company. For one thing, I don’t need to worry about bringing in a lot of money each month to support a heap of employees. I can move quickly, and I don’t have a lot of legacy systems to support.

One of the more surprising advantages of being a startup is that cash is short. Without money coming in, I am constantly having to make decisions to protect the financial health of the entity. This means that I am not going out to buy new servers, expensive software, matching office furniture, or even renting an office. All this means that costs are fairly low at the moment. And I want to keep them low. I have heard a number of companies talk about wanting to remain as startups as they grow. I want that too.

With financial management, I feel that if the company has a spare $500 that it should pay that to me as a business owner rather than for a new chair. Really, there is not that much difference between a $500 chair and a $100 chair, and for most people the extra expense is wasted. Sure, sometimes employees can be bought off with office amenities, but that still in my mind, that keeps in line with the whole startup concept.

And if the business takes a lot longer to get established than hoped, the financial resources of the company will last a heap longer if they are not wasted. Which also means I will not need to find more funding for longer, if that is needed. This does not mean that I intend to skimp on expenses. It is more that I am being frugal where that makes sense, and then spending money where there is a payback.

For the first product, I have come up with a case that looks the part based on an off the shelf design. So, rather than spending $10,000 for design work and then $5,000 to get a heap of moldings made up, I can spend about $2 per unit for an off the shelf product and get it modified. It will not be perfect, but until I have verified that there is a market for the product, this means that I have an extra $15,000 to pay other people.

One of the other things with being in a startup is that they generally have fairly simple management structures. Richard Branson or Virgin fame is famous for saying that he employs small teams of smart people. This is a great philosophy to work by. Rather than hiring a lot of middle management, employ smaller teams, and give them more autonomy. Don’t get rid of middle management totally, but make it smaller, and use it was a way to improve things rather than to get in the way.

Not sure I agree with some of the other things people suggest, like turning email off, or having standing desks, but I guess I will come to that over time.