• David Oberson, Partner |

Start-up entrepreneurs transform new ideas into thriving companies. But they face significant challenges on their journey from market newbie to mature player. We explore some of the main questions founders should be asking at four key stages in the business lifecycle.

1) Starting

Turning ideas into practical business reality is one of the most important initial steps. Founders need to think about what’s truly innovative about the business, whether the products or services are sustainable and how large their potential market is. Other questions to ask include:

  • How much money do you need (short-term and long-term)?
  • How is financing organized in the short and long term?
  • What kind of organizational structure do you need?
  • What kind of resources and talents do you need to reach your goals?
  • How do you attract and retain talent over time?
  • What kind of technology do you need for your operations as you start out, and at future points in the business lifecycle?
  • What regulatory requirements should you be monitoring (e.g. direct or indirect tax, accounting, social security, legal and payroll)?

Entrepreneurs need to sell ideas to investors to transform their ideas into reality and bring the start-up to a new level. Preparing well helps them do so successfully.

2) Development

The business takes off and the process of expansion to different markets begins. Entrepreneurs need to think about their growth strategy, including what’s driving growth and what the future direction will be. Regarding upcoming challenges, entrepreneurs should consider:

  • What are the operational consequences of the expansion?
  • How do you expand talent?
  • What is the tax strategy?
  • Is new financing needed and, if so, how should it be structured?

Decisions need to be made quickly to expand the business to new markets. This means updating the strategy, and hiring new talents to reach the growing phase and meet potential new investors.

3) Growing

  • Reaching this phase means that the business is generating income and attracting new customers consistently. The start-up should now improve operations and minimize risks. In a first step, this means identifying and mitigating key risks. Other questions to ask include: How can you optimize profits and reduce operational costs?
  • How can you improve supply chains?
  • How can you improve governance?
  • Can the legal structure of the organization be improved?
  • Does the company need to set up an employee stock plan to retain talents?
  • Is there a consolidated reporting requirement for the top management, owner(s) or investors?
  • Should you consider reporting according to international accounting standards?
  • How can you gain tax efficiency?
  • Do you need new technology to support current and future growth?

At this stage, monitoring the risks and operations is essential. Indeed, these components may positively or negatively impact the valuation of the start-up today or tomorrow.

4) Transitioning

Over the years, financials stabilize while operations become more complex. The potential transition phase has been reached and it is time to plan the future. It’s natural to want to maximize the value of the company, but how can this be achieved? It’s important to think about:

  • What is the value of the company or assets?
  • If you are planning an IPO, what are the information requirements?
  • What kind of transaction would be required?
  • Who can perform transaction due diligence?
  • Who can support you in compiling documents for this transition?

Transition is the most challenging step on this journey. It can bring changes for the shareholders, investors, stakeholders, employees, management and operations.

Every stage in a business lifecycle involves specific opportunities and challenges for any entrepreneur.

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