Managing Money, People and Yourself as Founder

 

Recently, I was having a conversation with one of my friends about his startup and I noticed he was doing some things that might give him a big set back. He was very serious with his startup. He quit his job and was doing some freelancing work for his daily needs and funding for his startup. He initially started coding himself by learning Ruby on Rails. After doing this for some days he could not develop any further and asked me for a reference to introduce him to a good Rails developer.

I shared with him a few points which are helpful for every entrepreneur:

1. Quit your job when you have enough to develop the project when you are not a developer.

When you are serious about your startup think about money. Don’t take from your monthly salary and spend it on your startup. What happens if you lose your job or income source suddenly? You might lose in two ways. One is your startup gets put on hold until you get another income source. You will also get into trouble for sustaining in life too. Never quit your job until and unless you have money to develop the alpha version and try to keep surplus money as you don’t know when you will be in need of money.

2. Get maximum productivity out of a developer.

I introduced him to a developer who I feel is the best in the market right now. I gave him tips about how to do this. Here are few suggestions which might be useful for other entrepreneurs too:

  • Give the developer detailed explanation about the project. Tell them about your vision and make them feel that they are one of the most important people for this project.
  • Emphasize job security. Tell the developer how many days they will be useful for this project and give a commitment of time — whether it’s a month or two or three – so that they will not be worried much about looking for other jobs or looking for other part-time jobs while working on the project.
  • Communicate early and often about the work to be done. Hiring a good developer is an important thing, and ensuring the developer takes responsibility for their work is another BIG thing. As entrepreneurs we need to communicate properly and explain everything upfront.
  • Be as open as possible about finances. If at all there is lack of funds don’t wait until the end of the day. Always better to prepare the developer upfront for this so they will be able to look for other jobs as an alternative. Also, by conducting business this way there’s a better chance the developer might come back to you when new funds become available. The good ones usually do if they’re worth it!

(After a few days I asked the founder how the development was going and he said he was not happy about it. I was shocked as the developer who is working with him worked with me for four years and is in fact a tech champ. So, I talked with the developer and was told the code he wrote was not being used, things were re-started from scratch, etc. As it turns out, the founder was worried about the code and other technology issues and didn’t trust the developer’s work.)

4. As founder, prioritize what’s most important to the overall success of the business.

The developer came highly recommended and is proven. This should not be a worry. There are many other things the founder should be focused on during this critical time to execute on the vision. List everything out and choose to focus on the things that you are best at and leave the remaining to others on the team. It makes things difficult for others to give their best when the founder is always focused on everything and not especially on several key things. This is also a lesson in hiring and managing a team.

5. Have enough funds to get through the alpha phase.

Concentrate on getting funds from your friends and family initially. Launching a product is not just launching your website, but doing marketing and PR and other tasks so calculate buffer when you calculate money for your startup. If you plan this way, you won’t expect anyone to work on your startup full time because you will have a realistic outlook on the finances of the business. People will respect this and will want to continue working on the business as more funds become available.

What all these helpful points speak to as a founder is making a decision and sticking to it. Every founder should take responsibility for everything that happens to their startup as they are the one who is ultimately going to make the tough decisions. Once you hire your CTO and give him a nod to use particular technologies then you don’t have to learn those technologies in order to check whether they are doing it the right way or not. Your responsibility is hiring people who you think can best move things forward and then empower them to do so!

 

About the Author | Bhanu Prasad Madala

Bhanu is CEO at Ruby on Rails Software Kitchen. He resides in Hyderabad Area, India. Connect with him on LinkedIn.