Record Keeping – Good for the Soul!

Welcome back to my startup blog. Thank you for taking the time to read it!

The last few blogs we discussed discuss the establishment of your business regarding the financial matters. Today we talk about administrative organization. This topic seems boring yet is essential. Learn to love it like you adore your new product!

Importantly, keeping good records is vital as a startup especially if you are accepting other people’s money for investment. Here are some basic issues to consider and establish in your company.

What records and reports to keep – Basic bookkeeping is important, as when you are audited by a company that wants to purchase your product or your company, they will want to see clean financial records (1,2).

For a startup, perhaps, the best available product is QuickBooks online that gives you excellent bookkeeping capability for as little as $150-200/year. Other accounting software is available, and may be worth considering for features specific to your company (3). Be careful to establish your chart of accounts carefully and in adequate detail as it underpins usable reports.

What information should be kept in a bookkeeping program?

  • Transactions – These should be entered into the financial records and should include: expenses, invoices, deposits, payroll, and income with their transaction dates and details. From these entries, several key reports can be generated:
  • Profit and loss – This report gives the story of what has happened to your company over the reporting period and terms of cash flow and changes to the balance sheet.
  • Balance sheet – This report gives you a snapshot of the status of your company based on the changes from the prior report and includes liabilities, equity, and assets. It should probably be kept in the cash method, vs. accrual method, for tax purposes. Check with your accountant. These reports are basic and any investor or potential buyer would want to see them.
  • Cash flow – Shows gains and losses in cash over a specified time period.
  • Financial projections – You should create financial projections for at least the balance sheet and profit and loss statements, with enough elapsed time to when you believe you will make a profit. Although these projections, for both the balance sheet and profit-and-loss statement may ultimately prove inaccurate they show a potential buyer that you have at least considered costs and when a profit might be realized. Be sure to have some basis for these projections as best as possible.
  • Equity records – You should keep carefully investor related financial information. If you are seeking outside investment to develop your product then additional information needs to be kept.
    • Equity software – Equity software or online versions are available that tracks investor monies and their related equity. These are numbers that you do not wish to confuse. From such a program you can generate the capitalization chart which shows each investor’s ownership in the company, the total stock distribution, the option pool and the total amount of stock available. When seeking new funding the potential institutional investors or sophisticated angels will ask for the cap chart. There are several available products online (such as eShare and Capshare) (4).

Thanks for visiting and please join us again next week as we continue to discuss money management for your new business.

  1. https://www.shopify.com/blog/15334373-small-business-accounting-101-ten-steps-to-get-your-startup-on-track
  2. https://www.marsdd.com/mars-library/bookkeeping-basics-startups-manage-financial-records/
  3. http://www.toptenreviews.com/business/accounting/best-accounting-software/
  4. https://esharesinc.com/; https://www.capshare.com/
Disclaimer: This blog is meant as a general educational tool and not for advice for any specific startup or issue at any company. Dr. Stewart is an entrepreneur and advisor to ophthalmic start-ups for general development plans and goals. He is not trained specifically in any one area of development or in entrepreneurship. Specific development questions should be directed to appropriate experts in the field in question. In addition, Dr. Stewart assists start-ups in identifying sources of potential investment funding for companies. Dr. Stewart is not a financial advisor. This blog does not promise financial or professional success. Each potential entrepreneur should do their own research and gather information from multiple sources and use appropriate attorneys as well as financial and trade advisors to make informed decisions on their own product and company.

Copyright © 2017 PRN Pharmaceutical Research Network, LLC. All rights reserved.

More on making the most of every saved dollar!

Welcome back to my startup blog. Thank you for taking the time to read it!

The last blog we begin to discuss money management and handling excess cash- a good problem to have! In this lesson we continue to discuss financial matters and a word on debt.

My general rules of debt for new business are:

Startup

  • Avoid it if possible! A startup that is developing an innovative product should be very wary about taking out a traditional loan when they do not yet have revenue.
  • Importantly, new money may not want to invest in your company if it’s paying for old debt. They usually want to see their money going towards development. Further, the presence of old obligations increases risk.
  • In addition, it’s doubtful if any institution will want to provide a loan to you since your company has so little tangible value apart from your IP.
  • Unfortunately, not taking on debt generally means you can only develop your product as you procure the funds from investors. This can be frustrating but not as anguishing as having unretired debt that you cannot pay and is keeping you from new investors!
  • Convertible loans are potentially useful debt instrument for startups. More about this loan type in a future blog.
  • In short, you must decide for yourself what is right for your business but be wary of debt and assure that you have the means to repay it (1,2).

Small business

  • In the case of a service business such as a law firm, which can produce a revenue stream in the short-term, a loan might be considered to begin your business. This makes since in cases where the loan allows you to create a revenue stream. If you do take a loan check your projected cash flow carefully to assure that you can afford the monthly payments. Bootstrap if feasible.

Please speak with your banker and/or broker, financial advisor for greater detail or any questions about debt.

Thanks for visiting and please join us again next week as we continue to discuss money management for your new business.

  1. http://www.citibank.com/transactionservices/home/oli/files/invest_corp_cash.pdf
  2. https://venturebeat.com/2012/06/09/debt-vs-equity-which-is-right-for-your-startup/
Disclaimer: This blog is meant as a general educational tool and not for advice for any specific startup or issue at any company. Dr. Stewart is an entrepreneur and advisor to ophthalmic start-ups for general development plans and goals. He is not trained specifically in any one area of development or in entrepreneurship. Specific development questions should be directed to appropriate experts in the field in question. In addition, Dr. Stewart assists start-ups in identifying sources of potential investment funding for companies. Dr. Stewart is not a financial advisor. This blog does not promise financial or professional success. Each potential entrepreneur should do their own research and gather information from multiple sources and use appropriate attorneys as well as financial and trade advisors to make informed decisions on their own product and company.

Copyright © 2017 PRN Pharmaceutical Research Network, LLC. All rights reserved.

Making the most of every saved dollar

Welcome back to my startup blog. Thank you for taking the time to read it!

The last few blogs we discussed people who might help you fulfill your dream of being a successful entrepreneur and how they might best be engaged. In this lesson we continue to discuss the establishment of your business regarding the financial matters.

Importantly, keeping good records is vital as a startup especially if you are accepting other people’s money for investment. Here are some basic issues to consider and establish in your company.

MONEY MANAGEMENT

  • Banking – Generally, as the founder of a startup, limited assistance might be expected from the local bank. Unfortunately, they typically view startups as too high risk in which to invest. Certain types of small business may do better obtaining a loan, if it is a known service such as accounting or a medical practice. However, personal collateral may need to be provided. Typically, the lower the risk the better the chance for a bank loan. Banks of course are useful for basic financial services such as checking and saving accounts.
  • Cash Investments – If you have money in reserve in the business these should be invested in safe instruments that do not risk loss of people’s invested income, but do gain some interest. The following generally can be considered secure:
    • Bank checking account – Federal Deposit Insurance Corporation (FDIC) guarantees $250,000 per account holder (all the holders’ accounts and investments combined at one bank).
    • Bank savings account – These accounts are insured and typically accrue a low interest rate, recently just above 0%. FDIC guarantee is $250,000 as noted above.
    • Bank money market funds – These accounts are liquid and insured but interest rates usually are just slightly better than savings accounts.
    • Certificate of Deposit (CD) – These may be issued by the bank and would be insured by FDIC. Watch the maturity date so you have money available to you when you need it. They have low interest rates, near inflation rate, for short term (3-6 month) maturity dates.
    • Treasury bill (T-bill) – These are federally issued instruments and are secured by the US government. Again, watch the maturity date. They have low interest rates, near inflation rate, for short term (3-6 month) maturity dates. They may be purchased typically through your personal or discount investment broker.
    • Exchange-Traded Funds (ETF) – Several money market ETFs provide liquid access to funds that are typically low risk. MINT and GSY are NASDAQ ticker symbols for two commonly used money market ETFs. They offer similar or slightly higher interest to short-term T-bills. However, the underlying equity may adjust slightly over time, changing the return. These funds are typically traded through a broker.

Note: Other investment instruments such as: stocks, bonds, or commodities generally have the potential of large changes in equity which risk your invested funds, although of course the returns may be higher. Such investment instruments for a startup’s purposes are typically not advisable because of risk.

Please speak with your banker and/or broker, financial advisor for greater detail or any questions.

Thanks for visiting and please join us again next week as we continue to discuss money management for your new business.

Disclaimer: This blog is meant as a general educational tool and not for advice for any specific startup or issue at any company. Dr. Stewart is an entrepreneur and advisor to ophthalmic start-ups for general development plans and goals. He is not trained specifically in any one area of development or in entrepreneurship. Specific development questions should be directed to appropriate experts in the field in question. In addition, Dr. Stewart assists start-ups in identifying sources of potential investment funding for companies. Dr. Stewart is not a financial advisor. This blog does not promise financial or professional success. Each potential entrepreneur should do their own research and gather information from multiple sources and use appropriate attorneys as well as financial and trade advisors to make informed decisions on their own product and company.

Copyright © 2017 PRN Pharmaceutical Research Network, LLC. All rights reserved.

 

Your Team #2

Welcome back to my blog. Thank you for visiting!

In these blogs we are discussing the exciting topic of establishing your own business. We have considered key individuals in creating your development team.

This week let us consider other potential personnel and organizations with whom you may considered as employees and/or contractors depending on your individual needs.

  • Product testing Contract Research Organization (CROs) – Typically a product under development needs to be tested for efficacy and safety. Early in the life of a startup, the CEO and or the chief scientific officer often might perform rudimentary testing. Ultimately, efficacy testing may need to be more formal and controlled, requiring an outside individual contractor or a company dedicated to testing in your product area. Alternatively, testing might be performed internally with the expert technical help inside the company developed and typically managed by the Chief Scientific or Technology Officer.1
  • Manufacturing CRO – The startup often might create a rudimentary product themselves internally. However, as their product is developed and a more controlled product production method typically is needed. The CEO will need then to hire a team to develop internal manufacturing facilities. However, developing all the manufacturing resources and personnel in house can be expensive for a startup. Therefore, a company may choose to use an outside company which is familiar with your area of business to make your new product. In contracting out manufacturing, however, assure that the CRO can: meet any applicable government regulations, can scale up to production levels required for commercialization and provide excellent quality assurance in their plant construction and their production methods. You may need an outside assistance (a QA person) most likely to assess any potential CRO.
  • Packaging CRO – This may be needed apart from the manufacturing CRO. These companies help in packaging, labeling, distribution, stability, and collection and disposal of toxic products in a regulatory compliant manner.2,3
  • Professional/administrative team – Although the startup needs generally to conserve cash as able, one area of wise spending is to provide at least part-time administrative help to the CEO. This alleviates time dedicated to organizing and communicating minutiae of the business. Administrative assistance helps preserve the CEO’s valuable time for activities in driving development and fundraising.
    • These professionals include a bookkeeper, and administrative assistance according to the needs of the startup. Prior startup experience would be a plus.
    • Accountant – This professional should be a Certified Public Accountant who also is familiar with options, and stock distribution and their associated tax consequences. They should have startup company experience as clients.
    • General Counsel – This type of lawyer would help with contracts or CDAs, hopefully at lower cost than more specialized attorneys.
    • Patent attorney – This specialty of lawyer would lead in writing and submitting patents, freedom to operate analysis, etc. They should have specific expertise in your product area.
    • Startup attorney – This type of lawyer should assist you with issues related to the startup and stock options, term sheets, licenses and any issue specific to startups.4

Thanks again for reading my blog and I hope the content is helping you!! Next week we will continue vital topics in how to start your own business. Please join us then.

  1. https://www.inc.com/encyclopedia/testing-laboratories.html
  2. https://www.entrepreneur.com/article/245271
  3. https://www.contractpackaging.org/files/CPAQuickTips_ChoosingContractPackaging.pdf
  4. http://www.jdsupra.com/legalnews/blog-choosing-a-lawyer-for-your-startup-39870/
Disclaimer: This blog is meant as a general educational tool and not for advice for any specific startup or issue at any company. Dr. Stewart is an entrepreneur and advisor to ophthalmic start-ups for general development plans and goals. He is not trained specifically in any one area of development or in entrepreneurship. Specific development questions should be directed to appropriate experts in the field in question. In addition, Dr. Stewart assists start-ups in identifying sources of potential investment funding for companies. Dr. Stewart is not a financial advisor. This blog does not promise financial or professional success. Each potential entrepreneur should do their own research and gather information from multiple sources and use appropriate attorneys as well as financial and trade advisors to make informed decisions on their own product and company.

Copyright © 2017 PRN Pharmaceutical Research Network, LLC. All rights reserved.

Your team, beyond the CEO!

Welcome back to my blog. Thank you for visiting!

In my blogs we are discussing the exciting topic of establishing your own business. We currently are considering general hiring principles in creating your development team. Last week, we finished discussing vital traits of the CEO.

This week let us explore other key potential employees and/or contractors vital to your product development. As mentioned before, these positions will vary depending on your product needs both currently and over time

  • Chief Scientific or Technology Officer – This is often the scientist or technical expert who originally developed the product. They are used typically as a resource for, among other activities, and they usually are a cornerstone person on your team.
    • Continuing development of the product
    • Answering scientifically based questions from investors and staff
    • Fundraising
    • Developing new intellectual property
  • Research personnel – If you plan to perform your own efficacy, safety or mechanism research in house, you will need to develop the technical expertise and laboratory personnel to support these studies and may include: a project manager, a study quality assurance person, data management, statistics, technical personnel to perform the study and their supervisor. Needs will vary depending on the study protocol and the product. Further, you may need outside research sites to assist you. Make sure these sites are qualified by any applicable government regulations, well managed and have the appropriate knowledge and experience to do your research. An example of this or clinical trial sites for evaluating new medicines.
  • Manufacturing personnel – Similar to research studies, manufacturing outsourcing for a young company is an important option because of the cost and difficulty of developing the physical facilities as well as hiring and training the personnel to manufacturer a new product even at initial low levels of production. Manufacturing is beyond the scope of these blogs and individual consultants and contract research organizations can help with further information.
  • Regulatory affairs – These key professionals assist in regulatory advice, liaison to appropriate government offices, as well as regulatory document development and submissions, as applicable.
  • Quality assurance (QA) – The QA contractor may be needed to qualify the testing and manufacturing CROs to assure that they function in a regulatory compliant manner. In contrast, the startup may elect to perform their own oversight and qualifying of the CRO per regulatory guidance.
  • Business Development (BD) – Fundraising for a young startup is key especially since funding after the friends and family round can be difficult and a long process. If the CEO does not have sufficient contacts in your target investment communities, then engaging a BD person may be worthwhile. Care should be taken that compensation is in accordance with federal laws but also provides incentives for success. BD people can be helpful but may not always be successful.
  • Chief Financial Officer – This contractor oversees accounting, finances, cash flow, and investing. A young company may wish to handle these needs initially through their accountant.

Thanks again for reading my blog and I hope the content is helping you!! Next week we will continue personnel topics for your startup team. Please join us then.

Disclaimer: This blog is meant as a general educational tool and not for advice for any specific startup or issue at any company. Dr. Stewart is an entrepreneur and advisor to ophthalmic start-ups for general development plans and goals. He is not trained specifically in any one area of development or in entrepreneurship. Specific development questions should be directed to appropriate experts in the field in question. In addition, Dr. Stewart assists start-ups in identifying sources of potential investment funding for companies. Dr. Stewart is not a financial advisor. This blog does not promise financial or professional success. Each potential entrepreneur should do their own research and gather information from multiple sources and use appropriate attorneys as well as financial and trade advisors to make informed decisions on their own product and company.

Copyright © 2017 PRN Pharmaceutical Research Network, LLC. All rights reserved.

The CEO: Part 3 – External traits

Welcome back to my blog. Thank you for visiting!

In these blogs we are discussing the exciting topic of establishing your own business. We have considered general hiring principles in creating your development team. Last week, we discussed the vital internal traits of the CEO.

This week and the next, let us consider some ideal external characteristics of the startup CEO should possess (1-7).

  • Good communicator – The CEO should be one who can converse efficiently without needless repetition of their points or ideas. They should not be given to anger, jealousy, or talking negatively about other people, but able to give appropriate praise and gratitude. They should be able to build a positive and supportive atmosphere within their development team. They should be a good listener!
  • Passionate cheerleader – The CEO should be an unashamed, persistent and consistent cheerleader for their product to any and all who will listen.
  • Humble – Although the CEO should be the product’s best and loudest cheerleader they also must realize they do not know everything about development or science and be willing to listen to appropriate advisors in a humble fashion.
  • Organized – The CEO should be an efficient administrator not only in maintaining company documents but in their ability to plan, strategize and execute operations efficaciously (8,9).
  • Engaged – The CEO should become knowledgeable and active in all aspects of the business including: technical details of the product and it function, product testing, manufacturing and regulatory issues. They should not be distracted by too many outside interests or other professional duties that would keep them from pushing their product development.
  • Able to delegate – Although the CEO must be actively engaged in the company and oversee their team, there are just too many details for one person to manage. Therefore, the CEO should be able to delegate appropriate tasks to their employees or contractors, and they should not be too involved in performing lower-level tasks and decision making. It is a fine balance that will differ between CEOs and development programs.
  • On the job learning – As mentioned, hardly any startup CEO will enter into their position knowing all aspects of development. Regardless, assume that your CEO will need to learn on the job in the areas they do not know or understand. Therefore, be careful to hire somebody humble enough to learn and adjust as they direct the business.
  • Fundraiser – Perhaps the most important and persistent job of the CEO is to raise funds, not only for the current funding round, but future rounds all at the same time. This takes patience, ability to hear ‘no’ multiple times without being discouraged, and the capacity to build trusting and quality relationships.
  • Full-time – The CEO of a startup might best be described as a conductor orchestrating all the moving parts to develop the product or company. This is generally a full-time job! Being the CEO requires sufficient time to direct the company and troubleshoot problems. Part-time CEOs may have difficulty providing sufficient and timely management effort, resulting potentially in product development delays or failure.

In summary, the choice of CEO is foundational to the development of a successful startup product. Assess him or her carefully as a vital component in your due diligence and your decision to invest.

Thanks again for reading my blog and I hope the content is helping you!! Next week we will continue discussing the CEO and their external characteristics. Please join us then.

  1. http://www.businessinsider.com/traits-of-the-best-startup-ceos-2014-3
  2. https://www.inc.com/jessica-stillman/top-6-characteristics-of-the-best-startup-ceos.html
  3. https://scalefinance.com/14-ways-to-be-a-great-startup-ceo/
  4. https://www.forbes.com/sites/georgedeeb/2014/02/12/the-must-have-skills-for-a-startup-ceo/#25cff8177104
  5. https://www.inc.com/jessica-stillman/top-6-characteristics-of-the-best-startup-ceos.html
  6. http://www.businessinsider.com/traits-of-the-best-startup-ceos-2014-3
  7. https://earlygrowthfinancialservices.com/8-essential-traits-of-a-rockstar-startup-ceo/
  8. https://www.reidhoffman.org/article/2169
  9. https://www.entrepreneur.com/answer/229769
Disclaimer: This blog is meant as a general educational tool and not for advice for any specific startup or issue at any company. Dr. Stewart is an entrepreneur and advisor to ophthalmic start-ups for general development plans and goals. He is not trained specifically in any one area of development or in entrepreneurship. Specific development questions should be directed to appropriate experts in the field in question. In addition, Dr. Stewart assists start-ups in identifying sources of potential investment funding for companies. Dr. Stewart is not a financial advisor. This blog does not promise financial or professional success. Each potential entrepreneur should do their own research and gather information from multiple sources and use appropriate attorneys as well as financial and trade advisors to make informed decisions on their own product and company.

Copyright © 2017 PRN Pharmaceutical Research Network, LLC. All rights reserved.

The CEO: Part 2 – Internal Characteristics

Welcome back to my blog. Thank you for visiting!

In these blogs we are discussing the exciting topic of establishing your own business. We have considered general hiring principles in creating your development team. Last week, we progressed to the vital role of the CEO and what he or she is not!

This week and the next, let us consider some general characteristics the CEO should possess for any startup (1-3). Let us start today with some important internal characteristics (4-7).

  • Executive experienced – Prior executive experience in your product area is probably helpful in knowing how to manage a startup. In a study recently performed by our group we found borderline significance (p=0.04) associating successful exit for an ophthalmic pharma company with CEOs with prior ophthalmic executive level experience (8).
  • Motivated – The CEO should possess characteristics of a self-starter who can persist with a challenging task over a long period of time.
  • Startup experienced – Many CEOs are brought in from larger companies (9). Although this may afford them some level of experience in product development, leading the team in a startup environment offers a particular challenge requiring a very positive, persistent, patient personality. Therefore, some prior startup experience, at some level, might be helpful so the CEO candidate has some sense of what the job and team management entails. However, there are no set rules and choosing the person best for the company is most important (10). 
  • Goal oriented – The CEO should demonstrate an ability to set goals and to pursue them in a focused, undistracted manner.
  • Ethical – The CEO should be honest and principled, not only in their relationships with employees, contractors and investors, but also the treatment of research data and finances. Open and honest communication, as well as upright management, will help create a quality development program with less chance of legal problems.
  • Good judge of character – The CEO should be a person who can judge the honesty, integrity, capacity and credibility of people who might assist the development program including the board of directors, employees, contractors and investors.

Give careful consideration of the characteristics of a CEO you may hire for your new startup. You will have to live with this person for the next number of years and work closely with them to develop your product. Your relationship with them must be very smooth, productive and efficient. Hire the right person.

If you are the CEO then consider carefully your own personality and how you can change to better fit the role of the startup CEO. As we have said, the CEO is a learner and this is a good place to start.

Thanks again for reading my blog and I hope the content is helping you!! Next week we will continue discussing the CEO and their external characteristics. Please join us then.

  1. http://www.businessinsider.com/traits-of-the-best-startup-ceos-2014-3
  2. https://www.inc.com/jessica-stillman/top-6-characteristics-of-the-best-startup-ceos.html
  3. https://scalefinance.com/14-ways-to-be-a-great-startup-ceo/
  4. https://www.forbes.com/sites/georgedeeb/2014/02/12/the-must-have-skills-for-a-startup-ceo/#25cff8177104
  5. https://www.inc.com/jessica-stillman/top-6-characteristics-of-the-best-startup-ceos.html
  6. http://www.businessinsider.com/traits-of-the-best-startup-ceos-2014-3
  7. https://earlygrowthfinancialservices.com/8-essential-traits-of-a-rockstar-startup-ceo/
  8. http://www.prnorb.com/wp-content/uploads/2013/09/Acta-Ophthalmol-201391-496-497.pdf
  9. https://www.reidhoffman.org/article/2169
  10. https://www.entrepreneur.com/answer/229769
Disclaimer: This blog is meant as a general educational tool and not for advice for any specific startup or issue at any company. Dr. Stewart is an entrepreneur and advisor to ophthalmic start-ups for general development plans and goals. He is not trained specifically in any one area of development or in entrepreneurship. Specific development questions should be directed to appropriate experts in the field in question. In addition, Dr. Stewart assists start-ups in identifying sources of potential investment funding for companies. Dr. Stewart is not a financial advisor. This blog does not promise financial or professional success. Each potential entrepreneur should do their own research and gather information from multiple sources and use appropriate attorneys as well as financial and trade advisors to make informed decisions on their own product and company.

Copyright © 2017 PRN Pharmaceutical Research Network, LLC. All rights reserved.

The CEO: Part 1

Welcome back to my blog. Thank you for visiting!

In these blogs we are discussing the exciting topic of establishing your own business. We have considered general hiring principles in creating your development team. This week, let us progress the conversation to discussing the CEO.

The CEO is obviously most important position in the company. However, as mentioned in prior blogs, every CEO needs professionals around them to help them develop their product. The specific types of people with whom you contract will differ per the specific product.

This week and the next several weeks, let us consider some general characteristics of the CEO for any startup (1-3). Let us discuss first what the CEO of a startup is not:

  • Trained for the job – Unfortunately, there is no Startup CEO University to learn this important and detail-oriented job. CEOs may have prior experience in your product area and maybe startup experience. However, no combination of experience will teach a person exactly how to direct a startup.
  • Someone who knows everything – Based on the first comment above, it follows that a CEO candidate will not know everything about developing your new product. If the CEO candidate thinks they have all the answers about development, consider running to the nearest exit! Overconfidence is not a quality you are seeking.
  • Scientist/CEO – The CEO is obviously the most important member of the start-up team. It is often tempting for the scientist who has worked so hard in developing a new potential medicine or product to take the role of CEO. After all, it is their idea and equity! Amazingly, the scientist ultimately may gain more equity by relinquishing the role of CEO to someone who is better trained to build the young company (4). In addition, freed of the role of CEO, the scientist can continue to contribute patents and technology surrounding their invention to build even greater value for the company.
  • However, the scientist functioning in a CEO role may be a mistake because they usually do not possess the knowledge and experience needed to carry a new product through the myriad of developmental issues.

Thanks again for reading my blog and I hope the content is helping you!! Next week we will continue discussing the CEO and their internal characteristics. Please join us!

  1. http://www.businessinsider.com/traits-of-the-best-startup-ceos-2014-3
  2. https://www.inc.com/jessica-stillman/top-6-characteristics-of-the-best-startup-ceos.html
  3. https://scalefinance.com/14-ways-to-be-a-great-startup-ceo/
  4. https://hbr.org/2008/02/the-founders-dilemma
Disclaimer: This blog is meant as a general educational tool and not for advice for any specific startup or issue at any company. Dr. Stewart is an entrepreneur and advisor to ophthalmic start-ups for general development plans and goals. He is not trained specifically in any one area of development or in entrepreneurship. Specific development questions should be directed to appropriate experts in the field in question. In addition, Dr. Stewart assists start-ups in identifying sources of potential investment funding for companies. Dr. Stewart is not a financial advisor. This blog does not promise financial or professional success. Each potential entrepreneur should do their own research and gather information from multiple sources and use appropriate attorneys as well as financial and trade advisors to make informed decisions on their own product and company.

Copyright © 2017 PRN Pharmaceutical Research Network, LLC. All rights reserved.

Do not forget the paperwork!

Welcome back to my blog. Thank you for visiting!

In the last several blogs we have discussed the exciting topic of starting your own business. We have considered general hiring principles in creating your development team. This week, let us progress the conversation to discussing vital paperwork for your new team members, whether employees or contractors.

CDAs

Assure you obtain a CDA with all potential contractors and employees, before speaking with them about your company. After hiring or engaging their services, CDAs should be on file. Sample CDAs are on the internet. Create a standard CDA for your company and have your corporate attorney review it.

EMPLOYER/CONTRACTOR CONTRACTS

Everyone who works for you should have a contract. All the details about contracts are beyond the scope of this blog but sample contracts are on the Internet (1-5). However, here are several key points:

  • Legal review – Ask your lawyer to help finalize your standard contracts for employees and contractors and review any changes for each individual contract.
  • Cash – If you need to preserve cash then arrange an equity deal with the contractor or even potentially a contract research organization. Many contractors have long experience and perhaps see the equity as an investment and advantage. Any percent split between money and cash might be acceptable. Make an offer! If your contractor does take equity, then place a vesting schedule in the contract to help maintain loyalty. More about vesting in future blogs.
  • IP – One key provision for a startup is that the employee or contractor will assign all intellectual property rights to any inventions automatically to the company. This is vital so that when the company comes to sell or license or product the buyer or licensee can negotiate with just one partner. This greatly simplifies the negotiation process.
  • Several other general hiring/contracting points:
    • Prior knowledge – Try to hire contractors or employees who you knew before and you know are experienced professionally and would work well as a team. They obviously should have experience in the area for which you are hiring them.
    • Recommendations – If you do not know a good job candidate, seek names that come highly endorsed by others you do know and trust.
    • For the experienced contractor specifically who lives remotely and has worked virtually for a while, a personal meeting although desirable, may not be necessary.

We will discuss the all-important CEO next week. Thanks again for reading my blog and I hope the content is helping you!!

  1. https://sehub.stanford.edu/sites/default/files/SampleEmploymentContract.pdf
  2. http://fitsmallbusiness.com/employment-contract-template/
  3. https://thestartupgarage.com/tsgwiki/sample_employment_agreement/
  4. http://www.technologyemploymentlaw.com/wage-and-hour/five-employment-law-pitfalls-start-ups-should-avoid/
  5. https://www.forbes.com/sites/allbusiness/2013/11/11/negotiating-employment-agreements-checklist-of-14-key-issues/#a00313f24c64
Disclaimer: This blog is meant as a general educational tool and not for advice for any specific startup or issue at any company. Dr. Stewart is an entrepreneur and advisor to ophthalmic start-ups for general development plans and goals. He is not trained specifically in any one area of development or in entrepreneurship. Specific development questions should be directed to appropriate experts in the field in question. In addition, Dr. Stewart assists start-ups in identifying sources of potential investment funding for companies. Dr. Stewart is not a financial advisor. This blog does not promise financial or professional success. Each potential entrepreneur should do their own research and gather information from multiple sources and use appropriate attorneys as well as financial and trade advisors to make informed decisions on their own product and company.

Copyright © 2017 PRN Pharmaceutical Research Network, LLC. All rights reserved.

 

Who to hire!

Welcome back to my blog. Thank you for visiting!

In the last several blogs we discussed the exciting topic of starting your own business. Last week we considered several general hiring principles in creating your development team.

As part of the discussion last week we mentioned a method of limiting costs was to engage contractors versus hiring employees. This week, let us expand on using contractors and the potential advantages and disadvantages to your new business.

Advantages – These go beyond limiting costs but also to adding flexibility and reducing HR issues for your new company. Some examples are:

  • You pay contractors only when they work, saving costs.
  • They require no company benefits.
  • They keep their own work space, insurance and equipment.
  • You save on unemployment taxes and workman’s compensation.
  • When their tasks are done for your company you can quit using them.
  • They generally have lower expectations from the company because they know they are contracting and are temporary.
  • Contractors typically like their limited status and role and want the freedom not to work for somebody full time. Generally, they gained their knowledge and experience inside a large company and know they do not want to return. Warning! Occasionally a contractor is really just between jobs and will quit when they find fulltime employment. Assure their Curriculum Vitae reflects someone dedicated to contractual work.
  • You generally avoid Human Resources issues.
  • Contractors typically are not dependent on your workplace or you for their identity or happiness.
  • Contractors are experienced and generally you do not need to train them.
  • If they do a bad job you simply do not use them again or terminate the contract.

Disadvantages – Of course, there is a downside to contractors which might include:

  • Their prices are higher per hour. However, they should be charging only for actual time worked, not being at the coffee maker or in the restroom.
  • You do not have the control as you would an employee. This may be counterbalanced in that they generally are service-oriented and you avoid HR issues.
  • They may not have capacity for your project when you need them.
  • The Internal Revenue Service (IRS) typically does not like contractors. Consequently, rules must be followed for your relationship with a contractor. These are online and many important rules will be noted in the upcoming YES! course in starting your own business. Please discuss these rules with your accountant.

We will discuss the employee contracts next week. Thanks again for reading my blog and I hope the content is helping you!!

Disclaimer: This blog is meant as a general educational tool and not for advice for any specific startup or issue at any company. Dr. Stewart is an entrepreneur and advisor to ophthalmic start-ups for general development plans and goals. He is not trained specifically in any one area of development or in entrepreneurship. Specific development questions should be directed to appropriate experts in the field in question. In addition, Dr. Stewart assists start-ups in identifying sources of potential investment funding for companies. Dr. Stewart is not a financial advisor. This blog does not promise financial or professional success. Each potential entrepreneur should do their own research and gather information from multiple sources and use appropriate attorneys as well as financial and trade advisors to make informed decisions on their own product and company. 
Copyright © 2017 PRN Pharmaceutical Research Network, LLC. All rights reserved.