The Prophets of Profit

Start­ing your own busi­ness? These are the ex­perts you need on your team be­fore tak­ing that en­tre­pre­neur­ial jump.

Virgin Australia Voyeur - - CONTENTS - Words: DAN F STA­PLE­TON

Find­ing the right ex­perts from the out­set is the key to mak­ing your startup a suc­cess.

Could Aus­tralia be on the verge of an in­no­va­tion revo­lu­tion? Ac­cord­ing to data from the Aus­tralian Se­cu­ri­ties and In­vest­ments Com­mis­sion (ASIC), we’re start­ing new com­pa­nies in greater num­bers than ever be­fore — ap­prox­i­mately 20,900 per month in 2017, com­pared with 20,380 per month in 2016. And politi­cians seem to be sens­ing the shift.

“Gen Y is say­ing, ‘We don’t want to work for a boss. We want to start our own suc­cess­ful busi­nesses,’ and the gov­ern­ment is re­spond­ing through tax­a­tion and other in­cen­tives,” ex­plains Brent Sza­lay FCPA, man­ag­ing di­rec­tor of Seiva, a Mel­bourne-based ac­coun­tancy firm.

Ini­tia­tives such as the $20,000 in­stant as­set write-off for small busi­ness, which was in­tro­duced in the 2015-16 bud­get and has been ex­tended to the end of this fi­nan­cial year, have boosted the con­fi­dence of young en­trepreneurs, ac­cord­ing to Sza­lay. But he adds that some schemes and reg­u­la­tory changes have been less well pub­li­cised.

“It’s not just about claim­ing de­duc­tions,” Sza­lay says. “Can you ac­cess gov­ern­ment grants? Can you take advantage of re­search and devel­op­ment in­cen­tives and con­ces­sions? In many cases, you will need to struc­ture your busi­ness in a cer­tain way to be el­i­gi­ble for these things.”

As the ap­peal of work­ing au­tonomously grows and the num­ber of Aus­tralian busi­nesses — both sole traders and com­pa­nies — swells, ex­perts such as ac­coun­tants, lawyers, lead­er­ship ad­vis­ers and PR strate­gists will play a larger role in many of our work­ing lives. The mes­sage from these gu­rus — par­tic­u­larly those who spe­cialise in star­tups and small busi­nesses — is that early ed­u­ca­tion can mean the dif­fer­ence be­tween suc­cess and fail­ure in the brave new world of in­no­va­tion.

NUM­BER CRUNCH­ING

Sza­lay’s firm Seiva is one of a grow­ing num­ber of ac­count­ing com­pa­nies that tai­lors its ser­vices to young en­trepreneurs, help­ing them man­age both their busi­ness books and per­sonal fi­nances in or­der to max­imise the chance of suc­cess. “Of­ten, they’re walk­ing into a dark room,” he says. “We try to turn the lights on for them.”

Ac­cord­ing to Sza­lay, rel­a­tively few founders visit him be­fore their busi­nesses have ac­tu­ally launched in some shape or form. He be­lieves those who do so are at a con­sid­er­able advantage.

“Some peo­ple are in fear of num­bers,” he ex­plains, with em­pha­sis. “They have a con­cept or an idea for their busi­ness but they haven’t thought through ex­actly how much it will cost. It’s not ter­mi­nal, but if you don’t do that mod­el­ling rig­or­ously — pro­ject­ing one, two, three, four years in ad­vance, and look­ing at mar­gins and cash-flow — then you’re leav­ing big ques­tions hang­ing over your busi­ness.”

De­spite the grants and in­cen­tives that have been in­tro­duced in re­cent years, the Aus­tralian busi­ness tax­a­tion sys­tem re­mains com­plex com­pared with those in some other de­vel­oped economies.

“But that shouldn’t de­ter en­trepreneurs from start­ing busi­nesses,” Sza­lay says. “Rather, it should en­cour­age them to align them­selves with an ac­coun­tant from day one. The key is to team up with an ad­viser who is up to date, be­cause you can get a tremen­dous amount of ben­e­fit.”

Some peo­ple have a con­cept or idea for their busi­ness but they haven’t thought through ex­actly how much it will cost. Team up with an ad­viser who is up to date.

LE­GAL EASE

Sza­lay says the sec­ond guru all founders should visit — ide­ally be­fore the busi­ness is for­malised through reg­is­tra­tion — is a lawyer. Like ac­coun­tancy, the le­gal pro­fes­sion is rapidly sprout­ing spe­cialised ser­vices for en­trepreneurs and star­tups. Some of these act as all-in-one so­lu­tions for founders wish­ing to regis­ter and struc­ture their busi­nesses.

Lawyer Sascha Sil­ber­stein joined Gen­eral Stan­dards, which de­scribes it­self as a ‘bou­tique yet in­ter­na­tional’ law firm that caters specif­i­cally to star­tups, in 2014. Since then, the firm has dou­bled in size and now has foot­prints in London and New York. Gen­eral Stan­dards op­er­ates a pretty lean ma­chine: founders pri­mar­ily in­ter­act with lawyers on­line, book­ing 30-minute con­sul­ta­tions for all but the most com­pli­cated sit­u­a­tions.

“Star­tups are cash poor, and we com­pletely get that,” Sil­ber­stein says. “We of­fer our ser­vices in­cre­men­tally, so you don’t have to do ev­ery­thing now. Es­sen­tially, we try to of­fer good ad­vice so you know what you need to do at a bare min­i­mum.”

De­pend­ing on what stage the busi­ness has reached, Sil­ber­stein can walk founders through the process of reg­is­ter­ing ei­ther as a pri­vate com­pany, a trad­ing trust or — in rare cases — a sole-trader oper­a­tion. But the two ar­eas that her firm gen­er­ally fo­cuses on are in­tel­lec­tual prop­erty (IP) and share vest­ing, both of which she says are crit­i­cal.

“IP is re­ally im­por­tant and it’s prob­a­bly what peo­ple un­der­stand the least,” she says. “Have you made sure all the key peo­ple, such as the devel­op­ers, have of­fi­cially as­signed in writ­ing all IP rights to the com­pany? You don’t want to have your tech founder run off with the code, for ex­am­ple.”

Sil­ber­stein likens share vest­ing to some­thing of a prenup­tial agree­ment that de­cides who re­ceives what if the part­ner­ship (in this case, be­tween two or more founders) breaks down.

“A share-vest­ing agree­ment works so that all or some of each founder’s shares will be put at risk of for­fei­ture — ei­ther by be­ing can­celled or be­ing trans­ferred to other par­ties — if they leave or stop pro­vid­ing their ser­vices,” she says.

Like Sza­lay, Sil­ber­stein thinks founders should con­sult le­gal gu­rus as soon as prac­ti­cally pos­si­ble.

“Like any­thing, preven­tion is bet­ter than the cure,” she ex­plains. “It’s al­ways more ex­pen­sive to clean up stuff down the track.”

CULT OF PER­SON­AL­ITY

Some founders rel­ish the op­por­tu­nity to rhap­sodise about their prod­ucts or ser­vices at the ear­li­est pos­si­ble op­por­tu­nity, while oth­ers spend the early stages of startup devel­op­ment shut away in base­ments (or locked in­side their own heads). Ac­cord­ing to Trevor Young, a me­dia guru and com­men­ta­tor known to many by his nick­name ‘PR War­rior’, both ap­proaches are un­wise.

Young ex­plains that mod­ern con­sumers, who learn about prod­ucts and ser­vices pri­mar­ily through the in­ter­net, are ac­cus­tomed to mak­ing snap judge­ments, par­tic­u­larly about prod­ucts or ideas that are still in devel­op­ment.

“That said, there’s a lot you can do in terms of con­tent and so­cial me­dia be­fore you even launch,” he sug­gests. “The pub­lic tends now to grav­i­tate to­wards peo­ple more than it does lo­gos — think about Elon Musk, Jeff Be­zos or even Mark Zucker­berg — so start telling sto­ries and build­ing a fol­low­ing of peo­ple who like your think­ing,” he con­tin­ues. “Stake out your po­si­tion.”

While Young admits that to­day’s new busi­nesses need more than just a charis­matic founder and a mar­ket niche to suc­ceed, he says those star­tups that have made the ef­fort to es­tab­lish com­mu­ni­ca­tion with an au­di­ence in this way prior to launch pre­vail more than those that haven’t.

“I’m a big be­liever in think­ing about PR early,” he adds. “So come out, have an opin­ion, tell sto­ries. Don’t hide in the shad­ows.”

There’s a lot you can do in terms of con­tent and so­cial me­dia be­fore you even launch.

One thing that binds all young en­trepreneurs to­gether is im­pos­tor syn­drome. Picture a 27-year-old who has mag­i­cally raised $3 mil­lion from in­vestors and is then told, ‘Con­grat­u­la­tions, you’re now the CEO of a com­pany.’ They’re freaked out.

IN­NER PIECE

Fi­nan­cial, le­gal and PR pre­pared­ness can cre­ate the nec­es­sary con­di­tions for your startup to kick off and suc­ceed. But even the most fas­tid­i­ous founders can find them­selves com­ing dras­ti­cally un­stuck when a busi­ness launches and the com­mer­cial, lo­gis­ti­cal and in­ter­per­sonal re­al­i­ties of com­pany man­age­ment be­come ap­par­ent.

“One thing that binds all young en­trepreneurs to­gether is im­pos­tor syn­drome,” says Jerry Colonna, a 20-year ven­ture-cap­i­tal veteran who now runs a men­tor­ing com­pany, Re­boot, from the moun­tains of Colorado. Colonna, who has been dubbed ‘The CEO Whis­perer’ by his ad­her­ents, is part of a new class of guru that is at­tempt­ing to deal with the fact that to­day’s founders, en­trepreneurs and CEOs are get­ting younger and younger.

Colonna says: “Picture in your mind a 27-yearold who has just mag­i­cally raised $3 mil­lion from in­vestors and is then told, ‘Con­grat­u­la­tions, you’re now the CEO of a com­pany’. They’re freaked out.”

He adds: “They get wrapped up in the prac­ti­cal­i­ties of the job: How do I hire peo­ple? How do I fire peo­ple? How do I lead? How do I make de­ci­sions? But very quickly that be­comes: How do I sleep at night? How do I bal­ance my work and my life? How can I not be so afraid all the time?”

Colonna and his team al­ways en­cour­age clients to prac­tise ‘rad­i­cal self-en­quiry’ and to de­velop both their prac­ti­cal and in­ter­per­sonal skills. But the CEO Whis­perer’s main fo­cus is en­cour­ag­ing the mod­ern world’s young en­trepreneurs not to con­stantly de­mand per­fec­tion of them­selves. “The be­lief that, ‘If I can just fig­ure out all the prac­ti­cal skills, then I’ll do a bet­ter job and I’ll feel bet­ter’ — that’s a false­hood and it ac­tu­ally leads to an enor­mous amount of self-doubt and anx­i­ety,” he ex­plains.

His best ad­vice for founders? Don’t lose sight of your­self. He adds: “I have a be­lief sys­tem that bet­ter hu­man be­ings make bet­ter lead­ers.”

Brent Sza­lay THE MONEY MAN

THE LE­GAL AD­VISER Sascha Sil­ber­stein

THE PR GURU Trevor Young

THE CEO COACH Jerry Colonna

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