Three Mistakes CEO’s Should Try to Avoid as they Begin Their Start-up Journey

There are so many things to think about as you begin your start-up journey. The mental load seems to never decline as you figure out how to get from here to there and navigate your road daily. With that in mind, don’t set yourself up for issues when a little planning can help you avoid some pretty big problems and time sinks. Here is some prescriptive advice to make your days ahead a little more manageable.

1. Find the right founder(s) and then plan for the break-up

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If being a founder is tough, and it is, then how tough do you suppose it is to be a solo founder? Starting a high growth technology company is best done with a trusted co-founder.

Ideal co-founders will necessarily bring complementary skills to the company. Your co-founder or co-founders also need to be people with whom you like spending your time, because you will be relying on them in ways you may have never thought you would have. And will spend a lot of time together. Some co-founder relationships work out splendidly – all parties like each other, they all make fair and expected contributions to the company and generally everyday is a joy. This utopian outcome for founders is unlikely. What is more likely than a utopian co-founder relationship is the possibility that a founder may leave the company somewhere along the company’s journey. Most co-founder relationships involve many ups and downs and, if your are fortunate, your shared purpose and like for one another will endure while you knock out milestones together.

As noted, not all co-founder relationships work out and it is helpful to be aware of this possibly as you enter the relationship. A little planning can go a long way if it happens that one or more of the co-founders want to leave (or are required to leave) the company. The day may come when you appreciate the effort you put in up-front to ensure there is a mechanism and agreed upon methodology for you or your founder(s) to part ways and exit the company. A document like a founders’ rights agreement can be worth its weight in gold when founders decide to leave. Speak to your corporate lawyer as you are incorporating and learn about why having an agreement that dictates how founders would leave the company is so important.

2. Pay attention to pay

If you have raised some money, it may soon be time to hire an employee or to start taking a salary. Generally, I am all for folks being paid for their work 😊. But please, put in the time to set up payroll correctly, which includes withholding money for CPP, EI and personal taxes, which as a company you are obliged to remit to CRA. Not only must the company remit employee taxes, plus CPP and EI deducted from employees’ pay but the company is expected to kick-in employer contributions for CPP and EI. All of this may sound like a no-brainer, however, if this is your first company you may not be familiar with your payroll obligations as an employer.

I have seen a lot of mistakes made in this regard from not withholding statutory amounts, to not keeping records of payroll, to not remitting money owed to CRA and many things in between. The good news is this does not have to be difficult. Step 1 is to ensure you have a payroll number. Just make sure you have a business number (BN) first. A few Googles and a bit of reading will send you on the right path if you don’t already have one (or either). With a payroll number and other basic information about the company at the ready, sign-up for an online payroll service. There are many such services. Wagepoint is such a service with which I am familiar. Once set-up, properly running payroll is a piece of cake and you won’t have to worry whether CRA is getting their money – it will be automatically taken from your company’s bank account. When the calendar year rolls over most payroll services also produce T4s for all employees.

3. Don’t wait to do your bookkeeping

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You have a great idea, and your pitch deck (and a bunch of practice pitching) has landed you some money to get started. Time to start spending money. Maybe you even have a few sales, who knows? Perhaps you must buy yourself a computer, or rent space, or hire a contractor, get materials to do experiments – but no doubt you need to spend money to build your business. After all, there is a reason you raised that money, right?

Think about bookkeeping as your way of remaining accountable to the investors that gave you the money. Think about it as a way be organized when it is time to file a corporate tax return and prepare year-end financial statements. Bookkeeping allows you to keep track of HST paid on purchases (or charged on your sales). If you are paying more HST than you are collecting then the CRA will return the difference to you. Bookkeepers and online bookkeeping platforms can help you keep track of HST and help prepare your reports for CRA. Companies that want to raise more money, achieve goals, get acquired, become unicorns need a bookkeeping system. Decide to not put a bookkeeping system in place early at your peril. Choosing to put it off can lead to unneeded work, inaccuracies in your accounting, bills you forgot to pay, problems with investors and would-be investors and the list goes on. This is something you to which attention must be paid. Not to worry, it isn’t hard to put a system in place – just be committed to doing it. It is a commitment that will pay off.

As a start-up CEO or founder there are already enough items in a day to occupy your time. With a little early planning and a smart approach to business operations you can avoid many problems and minimize others.

About Bill

I have been working with start-up leaders and innovators for over 20 years in Halifax, Nova Scotia. I have worked in companies as a mid-level manager, as senior and executive management, as a founder and, on and off for the last 14 years, as an embedded executive and advisor.

If would like to automatically receive this newsletter in your inbox, or if you have questions about how I can help you and your start-up company email me at bill.power(at)powerforward.ca.