The Importance of Setting Up Your Business Correctly from the Start
Setting up the structure of a business with the initial founders is critical because it sets the foundation for how the company will operate and make decisions. This structure determines the roles and responsibilities of each founder, as well as how profits and ownership will be divided.
Failing to establish a clear structure early on can lead to misunderstandings and conflicts among the founders. For example, if the roles and responsibilities of each founder are not clearly defined, it can lead to overlap and confusion about who is responsible for what tasks. This can create friction and lead to resentment among the founders. Similarly, if the ownership and profit-sharing agreements are not clearly established, it can lead to disputes over who is entitled to what percentage of the profits. This can be especially problematic if the business is successful and the founders have different ideas about how the profits should be distributed.
Another important aspect of setting up the structure of a business with the initial founders is establishing an agreement on how much time each person is promising to work. This is especially important in the early stages of a business when there are often many tasks to be completed and a limited number of resources.
If the founders do not have a clear understanding of how much time each person is able to commit to the business, it can lead to resentment and frustration. For example, if one founder is putting in long hours while the others are not, it can create tension and lead to feelings of unfairness. Establishing a clear agreement on how much time each founder is able to commit to the business can help to prevent these issues from arising. It allows the founders to plan and allocate tasks accordingly, ensuring that the workload is distributed fairly and that the business is able to make progress.
In addition to setting expectations for time commitment, it is also important for the founders to establish clear lines of communication and have regular check-ins to ensure that everyone is on track and meeting their commitments. This helps to foster a sense of accountability and keeps the founders aligned and working towards the same goals.
The complexity of trying to set up the structure of a business once it is already up and running can be overwhelming. It is much easier to address these issues at the outset, rather than trying to retroactively fix problems that have already arisen. Furthermore, trying to establish the structure of a business after it has already begun operating can create disruptions and distractions that can negatively impact the overall success of the company. It is important for the founders to get these issues sorted out as early as possible so that they can focus on growing and scaling the business.
In conclusion, setting up the structure of a business with the initial founders is critical because it establishes a clear foundation for how the company will operate and make decisions. Failing to do so can lead to misunderstandings, conflicts, and potentially the closure of the whole firm. Establishing an agreement on how much time each founder is able to commit to the business, as well as clear lines of communication and regular check-ins, can help to ensure that the business is able to make progress towards its goals and avoid conflicts among the founders.
Jonas Consultancy 