The practicalities of building a start-up: Part 1
I'm David, one of the co-founders of matterlab.
In my career so far, I've run two businesses and one thing is clear - it's not always obvious how you should approach things! Because of that, I thought it might be useful to share some information about what it takes to do it and which tools are useful for getting a new company up and running.
I'm going to break this into two posts: the first will go into how to set up a business from scratch and the practical aspects of new business creation; the second will delve into how we created sustainable growth in our business (beyond the first two months).
At this point, it's worth saying that there isn’t really any way to ignore the COVID-shaped elephant in the room when you're writing for budding entrepreneurs and small business owners in the current climate.
What I will say is this: we've all gone through - and will go through - the same troubles and anxieties. We also all lean on the same tools and processes to enable us to do what we do. In that respect, we're on a (relatively) equal playing field. It's not an easy time to start a business but hopefully these articles can help you to understand what works and what doesn't when setting up your own company.
In this article, we'll go through the first (logistical) steps for getting your budding new business operating. Some of it will seem obvious, but speaking from experience, these are the bits you can get wrong very easily.
We're going to cover the following topics:
- Upfront costs
- Getting a name and a domain
- Passwords and access
- Productivity tools
- Project management
When we set up matterlab, these initial steps were quick and easy. It happened like that for us because we had previous experience in setting up a business. It meant we could action the fundamentals quickly and get the right tools in place before a scratch of work was done or a penny was earned.
If you're starting from zero, you may need to think carefully about how to fund those first few weeks or months when money is going outwards only. You might need to find a little starting capital, as it'll make it much easier to get your licensing in place and have everything running smoothly sooner. For matterlab, we each put a nominal fee in ourselves for purchasing the essentials and then expensed it back once we were floating.
In the first few months, we also exercised a mix of 'WFH', cafes and rented desk space. If you go down this road, it's important that you don't have these costs running through your own bank cards and emails if possible, so use the information in the 'Banking' section to try to find a solution that suits your situation.
Getting a name and a domain
We spent so, so long testing names and buying domain names - and it'll probably be the same for you.
Notion boards helped - they gave us a way to share ideas and rank options. As soon as we'd settled on 'matterlab', we purchased the domain for it using Namecheap. I recommend this one over the likes of GoDaddy (who we used previously) purely based on price. If you can be frugal early on and spend your money smartly, do so. Here's a handy comparison of the two websites.
I'd also advise that you don't choose your name based on whether you can get a '.com' domain. If you do, you'll be limited to the handles only available on those domains and, because it's such a popular extension now, you'll probably end up with something nonsense word - something whacky or misspelled. Obviously this is all highly dependent on the type of company you are. For us, the domain wasn't hugely important as we didn't expect our website to be the stomping ground of our business.
Finally, you need to cement how you want to be referred to externally. Our old business was called Design Technology Solutions but that hardly fits on a business card - never mind being easy to stick on our software. So we branded ourselves as designtech.io and ran with it.
Now you've got your company name and domain, you need to set up your email accounts. In our previous business, we used Gmail and Google Services for nearly everything. They have a great ecosystem and a strong focus on small businesses who need low costs, flexibility and accessibility.
At matterlab, we use Microsoft. Some people seem to think that Google is for beginners and Microsoft is for intermediates - and, to be honest, we kind of proved that to be true. Microsoft certainly felt a step up in terms of complexity and getting our emails set up was definitely more involved. If you need further information, here's a comparison that might help.
This action had two main purposes: getting sales activities moving so we could contact prospective customers and beginning to buy tools for the company (moving away from anything on personal emails).
With this in mind, I'd suggest making a generic email such as 'info@', 'ops@' or 'admin@' - it'll cost you a small amount each month but it's definitely worth it. It means you can transfer any purchases you've already made to a company email address. This is important for your domain in particular, because a generic address means you won't need to change ownership to other users as you grow.
I cannot stress enough how important cash will be to you as you start your business. It is everything to a getting a start-up moving, so get these items in place as soon as you can.
When we set up our first business, we chose Santander as our bank simply because I already had a personal account with that. It seemed like a straightforward decision. This time, we wanted something more dynamic, flexible and a little more forward thinking, so we researched some online banking options and settled on Revolut. We did this for a few reasons: it allowed us to accept non-UK payments easily and we could pay out in other currencies as well; also it was really user-friendly and (very helpfully) integrated with our Slack and Freeagent accounts for tracking costs and activities. And lastly, it's definitely cooler than some dusty old bank, right?
But it wasn't as easy as we'd hoped - there were problems.
The flipside of trendy online banking is that you can't just visit a bank branch when something goes wrong. We started having difficulties when we were charged for moving currencies between our own accounts (we got paid $ but had to pay bills in £), which negated the point of being able to hold the currencies there in the first place. To make it worse, at the time Revolut's Euro accounts were highly restricted. This was an issue that cost us time, money and focus. In another example, we had a major customer's payment attempts fail and so cash didn’t come through for months. This wasn't completely Revolut's fault but we really could have done without it.
The lesson here is to do your research before you jump into any banking decisions. In the end, we backtracked and are now tucked up in the mediocre embrace of our old friends at Santander.
With our bank account live and lightly funded for small expenses, we got in touch with the same accountant we used in our first business. This was a contractor who wasn't kitted out for major tax or shareholding issues, but is great for simple payroll and invoicing. They suggested we bought a FreeAgent license to manage our early invoicing and this was something we were happy to do because we'd used it before, in our first company. It's a great, easy to use tool that works well for small businesses.
We also tried out a company called Xero who offer a great service. Unfortunately, we didn't find their interface user-friendly and their tools were awkward. Freeagent is much more accessible for people unaccustomed to accounting - invoices couldn't be easier.
Passwords and access
As you begin setting up your company infrastructure, you'll quickly accumulate accounts, logins and passwords all over the internet. Things can get very confusing at this point.
When we first started, we agreed on a 'base password' that stayed the same across accounts but we knew that this was a quick fix while we got things sorted elsewhere. Longer-term we wanted to utilise the auto-generated passwords that Google Chrome offered and so we decided to invest in some password management software to help us keep them secure and central to the whole team.
While there are a few options around for this, we went with Lastpass and began tying all of our logins to that. It's useful because it means I don't need to ask anyone on the team for passwords and we can also centrally manage our newly-acquired licenses (of which there were many). Finally, it meant that everyone could help in setting up the business - we didn't need to delegate certain processes to any one person and we could share workloads easily.
One of the first licenses we picked up was for Zoom. We had used it previously and we knew well that the quality was significantly better than others, like Skype (it's worth noting that this was all pre-COVID so things are somewhat different now). We also wanted a branded account that looked professional for calls specifically with our US customers. As it turns out, we now use it for pretty much every call we do and we're really happy with it.
As well as being able to call customers easily, we also needed a project management tool that could help us to deliver work for them. For that task, we chose Asana, which a web-based platform that lets you create projects and tasks in great detail, and choose owners for each bit. It's been a really useful investment for us - we've found it to be a helpful project companion end-to-end, and have enjoyed finding exploring its other capabilities, such as meeting minutes, resource schedules, invoice tracking, ideas boards and more. More than anything, we found that it reduced the sheer amount of time and energy we were spending doing basic admin on projects - this was a real life-saver at the start when your primary instinct is to ’just get it done’.
But that ability to track admin became initially more useful than tracking projects. The first couple of months of a new business can feel like you're not using your skillset properly. A lot of it feels menial and it can be frustrating. But the things you do during this stage are hugely important and will impact every aspect of the business moving forward. Whether that is was outlining a product roadmap, building a task list for onboarding new staff or tracking minutes from your team meetings, Asana became pivotal.
Needless to say, it's now the backbone of our company planning and pretty much everything that needs tracking goes there. See below my project for building this very website.
Timelines and project management
Some of the first projects we established on Asana were around marketing, new business and internal meetings (very important for early conversations - you wont always be on the same page as your colleagues). We also used it to get a feel for how the team would transition through the next phases of the business (set up, sales, delivery, growth).
Asana's timeline capability were helpful too, as it gave us a pretty clear understanding of when our products might generate revenue and what consulting work we would do to support that development - incredibly valuable information to have when you're starting up. We knew from experience that timing estimations can go awry, as we'd a couple consulting engagements in our first business that ran over and ended up losing us money. By having a much clearer understanding of resource, timeframes, costs, milestones and deadlines, this time we've been delivering work on time and on budget much more consistently.