4 Crucial Service Providers for Early-Stage Startups
As entrepreneurs, we tend to focus on raising funds and coming up with a growth hacking strategy for our startup. While these are…
As entrepreneurs, we tend to focus on raising funds and coming up with a growth hacking strategy for our startup. While these are important efforts, there’s an equally important area that many founders including myself often overlook — choosing the key and professional service providers. Surrounding yourself with the right people and understanding the level of experience and value they bring to the table can make a huge difference to your startup.
While your early employees and angel investors can help guide your vision and contribute to your company’s growth, there are certain areas where lawyers, bankers, finance/accountants, and human resource professionals can come handy. After all, you can’t possibly be a subject matter expert in everything. I like to consider these people more than just service providers. I see them as partners, providing advice and guidance when navigating the world of entrepreneurship. You want the right team of professionals around you from day one.
So which service providers are crucial for your early-stage startup?
Lawyers
Legal help is essential when establishing your startup, especially if you’re operating in a heavily regulated industry. Lawyers can help with the following:
Incorporating your startup
There are many ways you can structure your business. Depending on your business, you might need to incorporate federally, provincially, or even both. The structure of your business will significantly impact your taxes, investment and financials going forward. Getting good legal advice about these decisions will ensure you make the right choice for your startup and saves you tons of money in the future. A couple of law firms have startup programs that are entrepreneur friendly. I personally recommend Denton’s startup program. Our friends at North One have launched an incorporation service to help you get started.
Intellectual Property & Trade Mark
By refraining from having a proper Intellectual Property strategy and Trade Marking your brand, you’re putting your hard work and hard-thought brand at risk — or accidentally infringing on someone else’s. Both can cause problems down the line. But wait! You’re signing NDAs and have a nice copyright notice on your website. I hate to break it to you, but it’s more complicated than that. Seek professional lawyers who will help you identify what needs to be filed including patents, registering trademarks, and preparing the right documentation to protect your hard work.
Startup fundraising
If you’re relying on term sheets and convertible note templates that you found online to negotiate your investment terms, please stop. While you might be cutting some costs, you’re putting yourself at risk of missing something important that could cost you even more in the future — like your company. Having a good legal firm that is familiar with your space and startup fundraising will mitigate any future risks by ensuring that your investment terms are clear and fair to everyone.
Banks
Coming from someone in the FinTech space, I admit that banks are often ignored as a source of assistance for startups. Having good relations with a savvy banker who understands the startup scene, can be of great help down the road. Each startup has different banking needs, and establishing this relation will increase the value your bank brings to the table in the future:
Investor introductions
Bankers are well connected individuals and can connect you with potential investors, especially if they are involved in the startup scene.
Bank financing
Establishing a strong relation with your banker will increase your chances of securing debt financing in the future.
Accountants
The chances of hiring a CFO in an early-stage startup are low. At this stage, startups do not need and can’t afford one. However, a startup still needs financial guidance on managing the day to day books and staying in good standings when it comes to tax and payroll liabilities. Accountants can help with the following:
Manage day to day accounting and ensuring compliance
Unless you’re an accountant, don’t try to do this yourself. Figuring things out on your own can be risky, time consuming, and distracting you from what’s important — growing your business. Outsource your accounting tasks to a professional bookkeeper/accountant.
Create accurate financial projections
Managing your financial data and preparing accurate projections will help you forecast your runway, create a realistic operational budget, and generate insights about your company’s financial health.
Referrals to investors
Similar to lawyers and bankers, accountants at known financial services firms have a big professional network and can be helpful in connecting you with the right investors.
Human Resources
When it comes to HR in an early-stage startup, entrepreneurs tend to overlook this aspect of the business. Whether it’s payroll or managing your staff, HR professionals can help your startup with the following:
Recruitment
Your initial employees are key to the success of your startup. Savvy HR professionals can help you locate the talent you need, design good compensation packages, and learn about your responsibilities as an employer.
Policies and procedures
While you won’t need this from day one, a good HR professional will ensure that you’re up-to-date with the policies and procedures needed to protect your company and employees. This includes employee guidebooks and manuals, orientation, etc.
Payroll and benefits
Payroll and benefits go beyond your bi-weekly issued checks and team 5 a 7 on Fridays. You need to make sure you’re compliant with federal and provincial payroll and benefits laws. HR is a full-time job and your time should be spent focusing on growing your startup.
Each startup has different budgets and needs, but teaming up with the right professionals can have a huge impact on your long-term success. Many service providers understand the needs of startups and have started to offer discounted programs. Take advantage of them and focus on growing your business.