Here are ten key steps to running a successful business for go-it-alone tech entrepreneurs.
(1) Have a plan
A three-year business plan and a clear strategy are essential for every tech entrepreneur. A good plan can be helpful in measuring whether the business is on track, along with identifying any potential opportunities or threats which should be acted on. Allowing the management team to have a comprehensive view of all aspects of the organisation is vital for the growth and protection of the business and its interests.
(2) Use robust forecasts
Transforming a tech idea into a successful business proposition with longevity depends on having robust forecasts in place. Controlling spend in the early days of the business and preparing for future growth, especially in terms of people and resource, will help to ensure that the business doesnt over-stretch itself in the future.
(3) Lock in talent
In the crucial early stages of developing a tech business, retaining talent is important. With many tech entrepreneurs unable to offer large cash incentives to employees, business owners must think of other ways to attract and retain the right people. Attractive workplace cultures and business identities, along with employee ownership schemes, such as an Enterprise Management Incentive (EMI) scheme, can help reward key staff members in a tax-efficient way.
(4) Plan for overseas trading
Overseas trading can offer a potentially-lucrative, untapped market for tech entrepreneurs. Seeking advice from organisations with international reach and planning for import and export operations are both useful proactive activities for new businesses. It is important to consider the practical and financial logistics of overseas trading will a separate trading entity need to be set up Or a new branch office opened Are there any intellectual property implications Should national tax regimes or licensing arrangements be taken into account
(5) Choose the right business structure
Adopting the right business structure can be beneficial for businesses in a number of ways. Internally, it allows management teams a greater amount of visibility and control over their organisation and to potential external investors, it gives the venture a degree of credibility and shows that an entrepreneur has control over their business.
(6) Think of time as a resource
Many tech entrepreneurs want to do everything themselves, but is this the best way to spend their time Would they be better off adding value to the business in other ways For example, tasks such as pulling together cash flow and balance sheets can be outsourced to accountants for a fairly modest fee, freeing up time for entrepreneurs to work on more important matters; pushing sales or securing investment. It can also ensure that they do not miss out on opportunities to realise value, such as the claiming of R&D tax relief.
Read more articles about time management:
- Seven time-saving apps to boost productivity
- SME growth more likely to happen with effective time management
- Is technology taking too much of your time
(7) Keep an eye on costs
Managing cash is important for all small businesses and keeping the books in good order from the start is fundamental. Solid in-house accountancy practices not only allow accurate forecasting, but also mean budgeting for areas of extra spend, such as sales and marketing, can be well planned from the start.
(8) Keep investors close
Tech entrepreneurs need to demonstrate to potential investors that they are in control of their business and that they offer a credible investment opportunity. Presenting a clear business plan and accurate financials can help reassure investors that the business is capable of hitting its targets.
(9) Keep suppliers closer
Fostering strong relationships with suppliers is an essential part of growing a business. Having the right supply partners in place allows entrepreneurs to react rapidly to market changes and move quickly to act on opportunities that could benefit both parties.
(10) Risk assessment
All tech entrepreneurs should carry out a risk assessment of their business model. Data protection and cyber security are two areas which could be at risk. Smaller tech companies often hold a large amount of data, making them targets for “spear-phishing” activity. An annual “cyber essentials” health check is a good way to minimise risk and also potentially reduce commercial insurance costs.
More information for tech entrepreneurs looking to go-it-alone is available in the recent Menzies technology whitepaper.
Stephen Hemmings is partner and head of the technology group at accountancy firm Menzies.
With PayPal to launch a third Start Tank startup incubator in London in 2016, Real Business spoke with the US firm’s global director of startups, Corrado Tomassoni, about the parties to graduate the programme so far, what’s changed since it debuted and how the company benefits.