Some Must Knows For Entrepreneurs In 2016
"Make every detail perfect and limit the number of details to perfect." – Jack Dorsey, co-founder of Twitter
Truthfully, starting a start-up is always difficult. Every new product is unique and when someone really believes in what they have to share with the world, this becomes a whole lot easier. When the initial plan has been set and the basic framework of the company is in place, as entrepreneurs, we can, then concentrate solely on building our team and product, with the knowledge that the company in itself is as safe as can be from any external or internal factors. Here I aim to take you through some of the most important points to keep in mind before setting up shop in India in 2016.
All businesses have reason to create an entity, whether it is a private limited one to help in raising funding or a simple partnership agreement to distribute responsibility. Initially while setting-up a business, every entrepreneur faces the issue of which business model to choose. Picking the right business model plays a crucial role as it will ultimately affect every aspect of the future of the business. The most important point to note here is that every form of business is ruled by its own set of rules and regulations, with its own advantages and disadvantages. This is precisely why a lot of care has to be taken to ensure that all parts of the requisite legal framework have been complied with. The repercussion of not doing so will lead to hefty fines to the entity as well as a bad public image of the company. The government places a very large number of requirements on businesses which lead to early stage start-up founders getting caught up in policies resulting in utter confusion. This is what causes them occasionally, to choose the wrong type of registration for their business. Registering a business is an expensive affair since it involves getting the right registration done the right way by the right people. Most start-ups are bootstrapped at the outset, and this leads to the dissuasion from going ahead with the initial idea. There are a number of ways that this problem may be solved, from going online to get this process done, to paying for these services via EMI, today almost anything is possible, and this is constant innovation is what will completely change the game in today's start-up ecosystem.
This agreement is a legal document to ensure the co-founders are on the same page on all important matters: business goals, ownership, rules & responsibilities. Initially a product does not have much monetary value until the business itself is incorporated and the product is available for the market. Until this is done, it is so important to clear all doubts with regards to the management of the company. When the entity is founded by any number of people and there is an existing friendship between them, there is a very informal relationship that is formed. This makes working together extremely comfortable but it also makes it difficult to sign agreements and really go through financial matters amongst other things. Some of the main points that are covered within this agreement are:
- The product itself and the amount of initial capital invested
- How expenses and budgets are managed and maintained
- The ownership of the company
- Tax matters
- Dispute resolution and dissolution
A founder's agreement has always been highly beneficial, especially with new start-ups because it does ensure that from the get-go, everything is in place and is finalized so as to ensure that all the initial plans vis-à-vis the roles and responsibilities to be played by each founder as well as what the company is really about and the long-term vision is to be.