Formalizing Business Systems for Startups

Many startup CEOs have never thought of formalizing business systems for startups. They have only thought of accounting systems. But never of business process engineering for startups. Whether you are scaling up a hitech startup or creating a relatively small passive income stream, formalizing business systems for startups can be a key success factor.

If you do not have processes that you can write down; this should tell you something needs a major change.

Formalizing Business Systems for Startups

  • Financial Systems
    Of course you need a tool such as Intuit’s Quickbooks to address basic financial systems; invoicing, receivables, etc. You also need a Funding System that addresses all aspects of building and maintaining your runway at a suitable “length”
  • Corporate Development
    You need a system for planning your Financial Exit years in advance. You need to develop and maintain and extend relationships with those who might acquire. The idea is to have multiple companies bidding competitively when you are ready to sell. We have a technical term for this competitive bidding process. It is called a “Feeding Frenzy”.
    A good corporate development system will arrange for you to build to a Feeding Frenzy and thus get a higher exit price.
  • IT systems
  • Systems that describe how business is done
    Beyond Financial systems and IT systems you need systems that describe how business is done. Even before they stabilize; these all need to be written down in painful detail:

    • What is done
    • Why it is done
    • Include your secret sauce so you can change and improve it systematically
    • Note the experiments that did not work and why
    • Each system needs to become a robust document
    • The detail begins the process of delivering repeatable, high quality results. Detail also creates the possibility of delegation and of the startup CEO and other officers being away on a business trip (or vacation)
  • Non-financial systems
    • A process for developing and updating your Business Plan
    • Marketing systems
      • A system for developing and evolving your offerings (Product Development)
        • This starts with a system for identification and recording of customer requirements
        • It includes a complete product development process with involvement of qualified prospects starting at the level of paying alpha site customers; Other systems address metrics. Still others milestones
      • Customer acquisition
      • Customer retention
    • Administrative systems
      • Order processing, inventory and shipping
      • Customer service
      • Customer support
    • Legal systems
      • Tax residency compliance
      • Intellectual property
      • Etc.
    • Manufacturing systems
    • HR Systems
      • Systems for identifying staff needs, authorizing open slots, recruiting, on-boarding, payroll, training, etc.

Conclusion

Build the key systems early. Evolve the others as the startup grows.

References

 

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