Running the show

My friend started a software firm and it went burst recently. The following are the key takeaways from his experience. It is a step by step account on how to start a software business. This is what he has to say about it -

"Go and get a particular name to the registrar of companies.

They will check and see whether it is available and give it to u. This should be done with the Registrar of Companies.

After doing this, file the articles of memorandum and associationship with the government and wait for the sanction.

Once you get the sanction,there will be a form which the government will give you. You can use this to get ur bank accounts opened.

Ensure that your bank accounts are opened from the first day of operations.

Ensure that phone connections, broadband and all other utilities are in the name of the company.

All payments should be done through your bank. This is to ensure that you can keep track of the expense.

STP registration is not required. It is only required and will benefit you if you are a complete exporter and if you dont cater to the indian market and only if you cater to the international market

Say 80% of all your company are exports, by registering in STP u will get tax sops and can purchase hardware . But u must cross the threshold limit. Even software services can be considered under exports

VC funding - U are eligible for it once u have a good tech team, 4-5 people and a good marketing presence .Important-> All VCs look for this. A good marketing presence in addition .

VC funding - it is essential that u run the company for atleast 1 and half years to be considered for a VC fundigng. I dont know how this works in the US. But as far as a beginner entrepreneur, VC funding can be expected only after 1 and half years. If you already have a successful company under u belt the process will be different

VC funding - it is advisable to delay the VC funding to the later stages to ensure that u get a good deal. Otherwise it will not be worth it and u wont be left with any stakes. So try to run the company as long as possible

Accounting - Since you are going to handle the company for 2 years, there must a solid knowledge of accounting . Follow double accounting standards. This is especially necessary if we have to go for a VC funding
This would involve maintaining of journals, daybooks etc.

Web site - Get this outsourced . Unless u want to save every penny and u are literally like us do it by urself . But even if u plan to do it get it done by people who are willing to help. I wud say get this outsourced. Even 20 k shud be a decent to get a unique design.

Server - Get your own server with a public ip on the net. This is mandatory and nowadays it is cheap

Server tools - Try to do something innovative like running a SVN server and sharing code in time part time people work on it. The main aim get as many part time people to help u. This wud help u know how much the part time people are interested in joining you and whether they really deserve a good place in the company in the future

Version Control - As i mentioned above version control is very important and have it in place from day one.

Resource - Start atleast with three people who are ready to face three years without money.

This is important.Since we are not putting in any capital, it is necessary that we alteast sacrifice our salary and not expect too much. keep it to 12 k or something . This may sound silly but ignore people who want to be a part of it to enhance their profile and go for their MBAs. These people dont stick for long and are really not worth it and their loyalty fades

Open source - Get as much open source tools as possible . Try to have one machine with a proper build environment and pay only for this license

Biz plan - Have a good biz plan ready and keep on going to biz conferences and present it even if u dont want funding for the company . It will help u broaden ur links and contacts

Two people with contribution - Other than the minimum 3 people there shud be some person who guides u on the accounting side , bank transactions ( a good CA wud do i guess)
A good marketing person with experience - a marketing person who will fetch u links is necessary. This person is very much necessary for carrying out ur marketing to companies.Focus on mail marketing.

Cash Flow - Cash flow for a company in India provided they have above constraints can be run in say one and half lakh rupees. The project pipelines are equally important and u can disregard cash flow if u have a good pipeline of projects

Tie Ups - The name of the game is tie ups . Have technology partners in the form of solution partners, marketing partners and so on

The board - The board is supposed to be of only people who contribute to the contacts and are influential and can guide its path. No tech people on the board unless it is cofounded by them. Maybe it can be given to people who can adapt to both settings and play the roles with equal ease.

There has to be space on the board to accomdate the VC. No tech people on the board unless the ideas are very unique.

Social circle - A membership in TIE and all the entrepreneurship . An association with all the colleges and their incubator cells. A circle which comprises of other CEOs. Pay attention to ur calling cards. Get as much as possible other people's cards. Start doing this immediately. As far as i know, TIE would not help that much and only in terms of confidence. Once u make the first million u can gain access to the next elite membership clubs where only a select circle is allowed. Business contacts will start flourishing only when u reach this circle.

Shares and capitals - Please split the shares when the company starts. U have to make sure that u have around 35% of the companies for attracting resources. Once the company starts to grow this wil be imporant. Other than the cofounders people who join the company will get 0.5 percent of the company outside the cofounders. Cofounders are those people who are from the inception and who stay stead fast

MBA- A MBA will probably help u especially if you do not know accounting and about capital management. Anyway I feel a US presece woud help more than an MBA.

These are some of my learnings. There may be many things that I have left out. The most important aspect we techies ought to remember is the human aspect of business which is very important. Be it your customers, partners, employees etc., take good care to interact properly with them and be completely honest.

Thats it from me now...Goodluck and Godspeed."