How to manage a start-up

Have the right mindset

Still, there are strategies you can use to lead effectively. It starts with building the right team—and the star player is you. A big part of your company’s success will depend on whether you have (or can develop) the right mindset and aptitudes.

Fournier—a serial entrepreneur and investor who has launched several tech companies—says founders need four key attributes:

• vision
• resilience
• ambition
• empathy

Mona Minhas, Partner, Women in Tech Venture Fund and Thrive Venture Fund for Women, BDC Capital, adds grit to the list. “The most successful founders share the view that failure is just not an option,” she says. In fact, a 2023 BDC study found that grit and relationship skills were essential for entrepreneurs at all stages of growth.

Start with the right people

Next, surround yourself with the right talent. Minhas says a common mistake is to be dazzled by someone’s previous experience, such as a role with a big name in tech. But what matters more is whether they have a “hustle mentality” and are willing to learn almost anything.

“There’s no buffer on a small start-up team,” she says. “Every member has to become an expert in a range of areas.”

If you don’t have the funds to hire people at the earliest stages, get creative, suggests Fournier, with co-founders, board advisors and a network of fellow founders. Caveat: With multiple mentors, you may run into situations where your advisors don’t always agree. Consider their arguments, but make your own decisions.

Finally, once you have these people in place, let them do their jobs. The amount of time you should spend managing other people in your early-stage company, says Fournier, is zero.

“A successful start-up manages itself at this stage. Your job is to establish core values, direction and vision. Your colleagues should manage themselves toward achieving those. If you feel you have to spend a significant amount of time managing them, something is probably wrong.”

That said, make sure your team members understand their roles and responsibilities.

“Map those out early and clearly,” says Fournier. “In my experience, the start-ups that take the time to really think about this are usually the most successful.”

Pursue the right funding

Fournier and Minhas advise against using equity financing to meet day-to-day expenses, such as inventory-related expenses. You’re better off seeking a business loan for these needs. Use equity capital to fund growth, such as hiring new staff members, launching a new product or funding a marketing drive.

Borrowing can entail personal financial risk—and, of course, interest costs. But raising equity is generally more expensive in the long run, says Minhas, because you’re essentially giving up some ownership of your company. Choose carefully and investigate other sources of funding first, such as tax credits and grants.

If your calculations still indicate that you should try to raise equity, make sure investors are a good match. “A venture capitalist will write you a cheque, but they also need to add value,” says Minhas. “What are they bringing to the table? Do they have expertise in your sector? Do they have a network of other investors? Do they have access to talent you can use?”

7 do’s and don’ts of managing a start-up

Minhas and Fournier provide the following do’s and don’ts for entrepreneurs who want to successfully grow their companies.

7 do’s of managing a start-up

1. Make your business plan sing
   Techniques for putting together a business plan are plentiful online. The critical thing is to make sure yours doesn’t look like you used a template. “It’s extremely off-putting to a potential investor to receive a document that looks like you just filled in the blanks,” says Fournier. If you do start from a template, make sure the final product makes it obvious that you spent some time thinking about your company.
2. Make your pitch deck compelling
   Even if you’re selling a complex product, your pitch deck should tell a story that is simple enough to explain to a 12-year-old, says Minhas. “The audience should walk away from your pitch able to re-articulate what you said with 90% accuracy, otherwise you’ve failed.”
3. Get traction early
   “Traction” refers to interest from your target market, even if all you’ve shown them is a minimum viable product. It could also mean sales and revenues if you’re further along.
4. Incorporate artificial intelligence (AI) tools
   For example, there are smart email apps that can sift, categorize and prioritize your messages and even draft messages for you, says Minhas, potentially saving you hours every week.
5. Commit to a tech-free time every week
   Get into a reflective mindset and use a pen and paper to put your ideas in writing. This will inspire your creativity and have a bigger impact than any technology can, says Fournier.
6. Consider an accelerator or incubator
   Accelerators and incubators can be great for founders, but you also need to recognize the trade-offs, says Minhas. You can get substantial support through access to a community, fellow founders, mentors, tools, services and exposure. Just know that some accelerators come with time-consuming requirements and responsibilities that you’ll be expected to keep up with.
7. “Geofence” your time
   Keeping out the distractions can help you be more effective when it counts. This is especially true when you need to achieve something critical like finishing a pitch deck or raising a round of capital.

7 don’ts when managing a start-up 

When start-ups fail, it’s often for one of the following reasons:

1. Building the wrong product
   This is also known as solving the wrong problem. This can happen if you don’t do enough upfront market research to confirm that people are willing to pay for the solution you have in mind.
2. Taking too long to validate your product
   This can lead to lacklustre market interest and slow sales. “Even if all you have is a mock-up, go out and show it to customers,” says Fournier. “Talk to them. They may influence your vision and give you valuable feedback.”
3. Not being cash-conscious.
   Basic financial acumen is important, says Minhas, as is being resourceful with limited funds, because “the goal is to stay alive long enough to prove your idea.”
4. Making financing mistakes
   Not understanding how an early-stage company should be financed can hamstring its prospects. Examples include becoming too indebted too early, raising capital with the wrong investor and using money for misguided priorities. “Too many early-stage start-ups raise tons of money and then spend it the wrong way, and it scares off investors,” says Fournier.
5. Not having a sustainable business model
   Your company needs to be built on a solid understanding of what your customers are willing to pay and what your costs are for manufacturing, operating, delivery and more. “It’s okay to lose money temporarily as you grow, but that’s not sustainable in the long term,” says Minhas.
6. Being overly focused on raising venture capital
   Most start-ups don’t need it, says Fournier. “The best way to finance a company is through revenues, so your priority should be to find customers and demonstrate the value of your product.”
   
   Some deep tech start-ups may need venture capital to build a minimum viable product, but even then, money should be seen as a means to an end, not the answer to all your problems. Above all, check your motives: It’s tempting to tell the world that someone else believes in your business enough to invest in it, but “that’s a bad reason to give someone ownership of your company,” says Minhas.
7. Conflicts between founders and partners
   These are rarely about products, technologies or operations, says Fournier. They tend to centre on disagreements about the company’s overall direction. This risk holds for the lifetime of the business, underscoring the importance of choosing the right people in the first place.

Take care of yourself

If your job feels like a constant juggling act, understand that it’s normal. As a founder, you have to be all over the place, says Fournier. “It doesn’t mean you’re doing something wrong or you’re inefficient. It’s practically part of the job description.”

Still, keeping it all running can take a toll on your mental health, especially as the business grows. It can be especially tough for solo founders, says Minhas. She suggests doing a “gut check” every week or two.

“Ask yourself how you’re feeling. Are you making time for wellness? Are you still feeling excited about what you’re doing? What’s worrying you?” Setting aside time to stay in tune with yourself can help you be proactive about managing your mental health.

Fournier’s final piece of advice is to stay in tune with yourself and find ways to stay calm and focused.

“Check in with your mom,” he says.

Next step

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