Module 1 – So you want to change the food system
3. Where do you start?
Before getting started, it’s useful to arm yourself with as much knowledge as possible.
You should understand what’s ahead of you and have some understanding of general
business concepts – something we’ve included below. We’ve also listed several additional
resources at the end of this chapter. Beyond doing lots of reading, a great way to get
started is to talk about your idea/concept to as many people as possible.
Many entrepreneurs feel the need to be secretive about their idea, but most people
don’t start businesses, and there is a big difference between having an idea and actually executing it. The benefits of talking to people – friends, family, industry experts, potential customers, people you look up to, researchers – will be immense: they help expand your
thinking and develop your network. So, don’t be shy, reach out to people and get started!
Business Concepts 101
A business is composed of many disciplines and as the founder (or co-founder) of a startup, you need to be involved in or at least have some understanding of all of them:
Strategy: this refers to determining how your company will achieve its objectives and vision for the next few years. It’s essential to plan how you will do things.
Accounting: this is the process of keeping financial accounts and recording transactions in your business such as what goes in (revenue) and what goes out (expenses).
Financing: the process of obtaining or providing capital (i.e.: money) to fund business activities.
Sales: the backbone of any business. Without sales, you cannot have revenue and turn a profit, meaning you cannot survive.
Marketing: the process of promoting and selling products and services. This includes disciplines like advertising, PR, and pricing strategies.
Operations: refers to functions relating to how products and services are made, like managing your supply chain and logistics.
Human resources: refers to people management, taking care of your team.
Return on investment (ROI): this refers to how much benefit is derived as a result of an investment. This tends to refer to a financial return, though it can refer to wider returns (environmental, social) in the case of sustainable companies. Investors will be looking to understand what kind of return they can expect if they invest in your business.
Supply & demand: every market is composed of a supply side and a demand side. The supply side consists of sellers, people or businesses selling products and services, and the demand side refers to buyers, people (consumers) or businesses buying products and services. As an entrepreneur, you should see yourself on the supply side as it’s what you sell that will determine your business’s success. You’ll of course be on the demand side too as you buy products and services from others in your value chain.
Competitive advantage: is what makes your product or service stand out against the competition. It may be price related (e.g.: you stand out because you are cheaper than your competitors) or may refer to a certain attribute or condition that means what you offer is superior.
Going at it solo or having a co-founder?
If you haven’t started yet and are unsure whether you should go at it alone or with (a) co-founder(s),
consider the benefits and disadvantages of both sides:
Solo
- Potential for less startup costs (fewer salaries, fewer people to support)
- Allows you to set your vision by yourself, and you make all the decisions
- Less potential for conflict (well, none if you’re by yourself), BUT…
- It can get very lonely and carrying all the responsibility yourself is daunting
- Investors often refuse to back solo founders and prefer backing teams
With a Partner
- More likely to have a broader range of skills and experiences (which can only be a good thing)
- Less likely to head in the wrong direction as you can bounce ideas off each-other and act as sounding boards
- You get to share the stress, the costs and responsibility, BUT…
- Conflicts can happen and having a co-founder is very much like being in a relationship (or a marriage) and takes a lot of work
- If one of you is a woman, research has shown you may hire up to 2.5 times more women than an all-male team – so you’re ensuring a more diverse company from the start. Why is this important? According to a study by Pepperdine University, Fortune 500 companies that endorsed gender equality in the workplace were calculated with 34 percent higher revenues and profit margins as compared to industry medians
Women cofounders are still sorely lacking in the startup world – as well as on boards of big companies – but times are changing as people realise that putting a women in charge is a strategy that supersedes ‘any growth hack that has been in practice all these years’:
- Private technology companies led by women are more capital-efficient, achieving 35% higher ROI, and, when venture-backed, 12% higher revenue than startups run by men, according to the Kauffman Foundation (Source).
- Women founded companies in First Round Capital’s portfolio outperformed companies founded by men by 63% (Source).
- According to a survey commissioned by McKinsey and Company, European firms with the highest proportion of women in power saw their stock value climb by 64 percent over two years, compared with an average of 47 percent (Source).
It’s worth considering a few points when taking on a partner:
- Are you equally committed to making this venture work both financially and from a time perspective? Make sure you both (or all if more than two) have similar expectations of the commitment you’re bringing to the table.
- Do you like each other? You will spend a lot of time with your co-founders. A lot of that time will be in a stressful situation, so you should find people whose company you enjoy.
- Do you have complementary skills? Two heads are better than one. Assess what your skills are and see how they complement each other (or not). When you’re starting, you need to be a master of many professions (accounting, business development, marketing, compliance, human resources, sales, vision etc…) so it makes sense to find co-founders who are better at and more enthusiastic about certain tasks than you are.
- Finally, make sure you discuss early on what will happen if there is a conflict, how decisions are made or if one of you wants to leave. It’s always better to have those difficult discussions when you’re on good terms than further down the line under stress.
Check out co-founder networks like FoundersNation or coFoundersLab that help you find co-founders but also vet compatibility and provide tips and advice on how to make your founding team a success.