Embarking on an entrepreneurial journey is akin to riding the mightiest of roller coasters, filled with twists and turns, exhilarating highs, and stomach-churning drops. Shawn dives into the heart of startup culture, exposing the raw challenges and tangible triumphs in 'Startup Pain.' From the rush of innovation to the impactful strides in community development, listeners get a front-row seat to the action. Yet, the ride doesn't end there. Sean also navigates the treacherous waters of financial risk and competitive markets, all while juggling the quest for a work-life harmony. With a keen focus on selecting the right business structure and the indispensable role of a sharp accountant, this episode promises a hard-hitting, essential guide for every budding entrepreneur.
As we plot the course through the branding maze, Sean lays out the map from securing investment to stamping your startup's identity in the business world. It's a no-holds-barred conversation, revealing the significance of a brand's visual language and the power of tools like ChatGPT to kickstart the branding voyage. In the thick of it all, Sean doesn't overlook the personal toll, sharing strategies to safeguard against burnout and keep decision-making sharp. The episode wraps with a nod to the guiding stars of mentorship, offering a beacon of support for navigating the entrepreneurial cosmos. To cap off, Shawn teases the next episode's focus on time management, the hidden variable in the startup success equation, ensuring this series continues to orbit around the most pressing startup concerns.
Embarking on an entrepreneurial journey is akin to riding the mightiest of roller coasters, filled with twists and turns, exhilarating highs, and stomach-churning drops. Shawn dives into the heart of startup culture, exposing the raw challenges and tangible triumphs in 'Startup Pain.' From the rush of innovation to the impactful strides in community development, listeners get a front-row seat to the action. Yet, the ride doesn't end there. Sean also navigates the treacherous waters of financial risk and competitive markets, all while juggling the quest for a work-life harmony. With a keen focus on selecting the right business structure and the indispensable role of a sharp accountant, this episode promises a hard-hitting, essential guide for every budding entrepreneur.
As we plot the course through the branding maze, Sean lays out the map from securing investment to stamping your startup's identity in the business world. It's a no-holds-barred conversation, revealing the significance of a brand's visual language and the power of tools like ChatGPT to kickstart the branding voyage. In the thick of it all, Sean doesn't overlook the personal toll, sharing strategies to safeguard against burnout and keep decision-making sharp. The episode wraps with a nod to the guiding stars of mentorship, offering a beacon of support for navigating the entrepreneurial cosmos. To cap off, Shawn teases the next episode's focus on time management, the hidden variable in the startup success equation, ensuring this series continues to orbit around the most pressing startup concerns.
Hello and welcome to Full Circle with Sean. I'm your host, sean, and today is the first episode of what I'm calling Startup Pain, and we'll be talking about from starting your business to direction, perfection, failures, even pitch decks, valuations, contracts, all the marketing, venture capitalists, recruitment I mean, there's just so much we're going to be talking on that I've mapped out for us. So get ready to have some fun. And, in case you missed it, I'm doing two episodes a week. One episode will be on foundations and life lessons, and one episode will be on startups and small business. So here we go.
Speaker 1:
So the first, this first one, is on actually starting the business. Right, you got to start somewhere and we're filled with this excitement and this new challenge that's coming upon us, and we're filled with our own innovations and our own creativity, and that's great, because entrepreneurs get to bring new ideas to life. They get to develop groundbreaking apps or websites or disrupt traditional technologies. You will get autonomy because you are the leader. You get the thrill of being your own boss. You get to make the strategic decisions and you get the potential for growth, because there could be substantial financial rewards and expansion. And finally, you get the community and the impact. So you get the opportunity to build a community and make a significant impact.
Speaker 1:
So let's start with challenges, right? So obviously, startups can be challenging. Starting a new business is challenging. So the first big challenge is the financial risk, right? So businesses have a high risk of failure and if you look at the statistics, it shows that about 90% of startups fail, and this can put you at risk of losing your personal savings or even getting in debt. We look at the challenge of market competition. You may be competing against established players. And then what about work-life balance? So you're the person, you're the one that's started this, you're the one that's running it, and you're going to have long hours, you're going to have very high stress, and that strain can really affect your personal relationships and your health. If you're getting into, say, healthcare or finance, there could be a lot of regulatory hurdles. And then recruitment and team building, where the difficulty of attracting and retaining top talent without the resources of, say, larger or more established companies can be very, very difficult.
Speaker 1:
But you've acknowledged all of this and you've decided to get started. So you need to choose the right business structure, and from one that's experienced it and chosen the wrong business structure multiple times because I chose the wrong accountants for a long period of time and they kept changing me at a cost that was very painful. It is really important to understand the different structures that you can set up and the implications of what you set up, and I do recommend finding a good accountant, because this is a conversation. This isn't telling you. You need to do this right, and different countries might call these different setups different things, or they could have different structures altogether. So let's stick with what I know and we'll start with being a sole proprietor.
Speaker 1:
So what is a sole proprietor? So it's a business owned and operated by one person and there's no legal distinction between the owner and the business entity, which is great because it simplifies the paperwork so minimal paperwork but it's bad because the owner has unlimited personal liability for all debts and actions of the business. The next thing you could choose is a partnership, right? So a partnership is a business owned by two or more people who share the profits and loss of the business. Now, partners share the liability and the management of the business, and it requires a partnership agreement to outline the terms of profit sharing, roles and responsibility and, of course, the minute you have to go back to those agreements, you have a problem, so partnerships can be very difficult. Then there's limited liability corporations. So that's a hybrid structure that provides the limited liability feature of a corporation and the tax efficiencies and flexibility of a partnership. Okay, so basically owners are protected from personal liability for business and claims, so that basically protects your personal assets in the case that business runs into legal trouble.
Speaker 1:
Now there's also C-level corporations or S-corps. C or corpse or S-corps right, and I'll go over those in a second, but it's basically a legal entity that is separate from its owners. So that provides the strongest protection from personal liability for the owners, but with much more complex regulations. It requires extensive record keeping, operational processes and reporting, but it does offer the ability to raise funds through the sale of stock. Now a C corporation is for large companies like Apple, where the corporation can raise capital through public stock and the shareholders are protected from personal liability. And S corporation is a smaller business that qualify under the IRS requirements, benefiting from, say, pass-through taxation while still providing limited liability protection. And again, these structures each offer distinct benefits and drawbacks and the choice largely depends on your needs and risks and actually your goals, and in some cases you start as a sole proprietor, right, and then you might need capital or you end up partnering with somebody, so you could become a partnership and then you grow to a certain point and then you could turn into an LLC or a C-Corp or an S-Corp. So it's definitely not always stay with one and that's it. It can evolve with you.
Speaker 1:
Now, one of the things that I learned in Australia is, I was told, put things in a trust and then you have a company's under the trust and what the trust owns the company. It's a whole way basically to protect yourself. But what happens is, say, in my research facility, if you're not a company and you're a trust, you don't get the tax benefits that they give to R&D companies, and I didn't know that for a few years. So you should really look into the benefits, not just in yourself, but what are the tax implications of it, and so on and so forth, which is why you should really find a good accountant.
Speaker 1:
Now, no matter what you do, you should ensure that there's clarity. So what does that mean? Right, it means you keep distinct records. You keep very separate records for your personal and your business transactions. You need to ensure there's clear financial records. And it's very important later because when you do it first of all, it simplifies your bookkeeping, your tax filing, any financial analysis. You may do. So if you do want to grow into another type of business or bring in partners, it's very important and it prevents confusion to your clients right. It allows you to look professional. You need to be professional and credible. So using your business accounts for business transactions and personal account for personal transaction, it keeps everything really nice and clear and professional. And then when you get into legal and tax implications, when you separate your personal and your business, you are protecting your personal assets from business liabilities. And just in the case that you went with a limited liability, if you are mixing your personal and your business finances, then that could override that limited liability that you have. And what you'll also find is it'll be easier to access business credit or loan. So in the case that you need to grow or you need to buy equipment for your business, if they're separated, it makes it much easier for banks and lending facilities to make a decision to give you that loan.
Speaker 1:
Now, for me, I've always used Xero. Actually, I used Mayo back in the day and then I went to Xero, but Xero is really good for small business and I'm not sponsored by them in any way. I just I use Xero and I really like it and it has grown with me right. So it has payroll and everything. Now when I get into a much bigger business, it might not be the right finance offer for me, but as of right now, it's perfectly fine.
Speaker 1:
So now you've set up your business, you've decided to keep everything separate and you need to do some tax planning, okay. So what kind of income tax will you be faced with? And is there sales tax? Are you hiring people? Is there an employment tax as well? Because you know, for Australia, we do have an additional employee tax if you have it over so many people or at a certain level of wages. So you should be aware of all that. But also, you're probably taking income from the business and you might not be paying that monthly or weekly or however you're paying yourself. You might not be paying that tax because you're taking it as a director's draw and then your accountant at the end of the year is putting that in as pay. So don't be hit with a tax bill that you don't know about, because that can be extremely painful and in some cases, that could destroy your business, right? So you've done all of this.
Speaker 1:
Now you need to decide what's your initial funding. Are you going to fund it yourself? Are you bootstrapping it? Are you going to get loans? Are you getting an angel investment? Are you getting capital from a venture firm? What are your funding options to get moving in your business? And it really depends If you're starting something with a product that's already out there and you might be improving that product, or you might just be selling that product. It's a lot different than you need to build a product and then it's something new, right? So a lot of times, people forget that you need to put away money for marketing, because people don't just take things off the shelf when they're brand new. And how do you even get it on the shelf or how do you find your client base? And these things take time and they take money. That's just the way it is.
Speaker 1:
So what's your plans for funding? And I'll tell you right now, whatever you think it is double it, maybe even triple it, maybe even quadruple it, because there's going to be so much that you didn't think of. So if you're building a new product, there's going to be, it'll be double what you think it is and then it'll be double that entire figure just to get it out there, and that's something that, as I said, most people forget about. So there's, and then do you have? Do you have a backup? So if let's you get your product done, you want to get market share, you run out of money and this is where a business fails, right. So I've seen a lot of great products that have been made that never got anywhere because people ran out of money. And, believe me, the venture capitalists unless you want to sell your soul and sometimes that doesn't even work they'll be adverse to give you money. Period, they're just going to be. It's just the way it goes.
Speaker 1:
These things take years to formulate the relationships to get money. I think the average turnaround from going for funding to getting funding is a year. But that's in the case that maybe you already have a client base or it is not with. Okay, I finally got a product. I might have somebody that says it's pretty cool, but now I need to get it out there and I need to do the testing and I need to do the improvements and I need to grow it in the market, and that will take you time and that will take money. Okay, great. So now you've got all that well in hand and your next priority should be building your brand.
Speaker 1:
You need to build your brand identity and it's important to do that right from the start. Okay, so you need to develop a logo, a company color scheme, an overall branding strategy, and it is something that will follow your product right, so you need it straight away. It really helps to differentiate you in the market, and the market is noisy. The world is noisy. I mean, it takes a lot. You can scream at the top of your lungs and, and you know, only the people around you are going to hear, not not so much the people that you need to hear what you're trying to say, and that's why I always go back to. You can have the greatest product in the world, but you need a differentiator or you need good marketing, and if you put enough resources and money behind some of that stuff, you can bump through it, but it takes time and it comes from good branding and what you'll see is actually pretty cool is you can look at.
Speaker 1:
I have a graphic designer as well that we utilize all the time. He's amazing, but for initial stops and to get going. Chatgpt can do your logo and teach you on color schemes and why you should use certain things. For certain. You know if your product is in a certain area, what colors more resonate with your type of clients and overall branding strategy. So it can get you started, which I think is great. It can educate you on how to do some of these things, because while I have a good designer, there are a lot of bad designers out there and there are a lot of designers that don't understand all the implications.
Speaker 1:
So again, you're the leader. You need to understand the. Again you're the leader. You need to understand the decisions that you're making. So educate yourself on why you need branding, what type of branding you need for your specific market, and then you can understand what's good and bad. So then, if you go out to a designer, afterwards, you understand what's good and bad, you understand what they're talking about or not talking about when you interview them. Because you should always interview all of your consultants. You should always interview and you should have enough knowledge that you've gained through your own research to be able to call out what's good and bad. And again, you're not always going to make the right choice, but at least you'll make a more educated choice, okay, great. So you've got everything down, you're moving right.
Speaker 1:
Be careful of burnout and I talk about burnout on an earlier podcast, so if you haven't listened to that, go back and listen to that, because that's really important. You know you're working mad hours, so be very, very careful to recognize decision fatigue, right. So what is decision fatigue? It's basically psychological, where prolonged periods of decision making can lead to a decreased ability to make really sound decisions, and this is why you need mentors and, again, I've done a podcast on mentorship and the importance of mentors, so you should go back and listen to that one.
Speaker 1:
But there are things you can do right. So you can prioritize and delegate decisions, you can structure your decision-making and you can make sure that you get adequate rest and breaks, and you can even limit decisions right. So simplify your daily life. So reduce the number of decisions that you have to have to make. So as simple as wearing a uniform. So now I don't have to decide on my clothes today, having a fixed daily menu. So I don't have to think about what I'm going to eat today. And I think, if we look at the founder of Facebook. He actually wears the same clothes every day because he says that's not something that I want to decide, I just want to get up and put on some the same clothes. And I I remember hearing that story and for me it's it's, it's jeans every day, and then I pick a jumper that I really like and just it's just a feeling for the day, and I picked that jumper and I'm out the door.
Speaker 1:
But so you know, there is a thing called decision fatigue and you know, as you really get going, you will have disagreements with your business partners, with different stakeholders, and you need to have the emotional acuity to ensure that those don't get out of hand.
Speaker 1:
Remember, you are the leader and if you want, go back and watch the leadership podcast, which I did some time ago.
Speaker 1:
And that's kind of why I did a lot of the fundamentals before I started the startup series is because I wanted to go over a lot of things that you're going to need as a founder and some of this stuff, if you're already a founder, you're going to go. Oh yeah, oh yeah, I know exactly what he's talking about. And just know that you're not alone, right? We're all here with you. We've all been through it or are going through it, and this is the place that we're going to talk about it. So in the next episode, the startup episode, we'll be talking about direction, so the importance of defining a clear vision for your startup or your business, and making strategic decisions. So when you do have to adjust or you do have to pivot, but it's not an everyday occurrence. But before we get into that we're going to be the next podcast we'll be talking about time management. So I look forward to seeing you there and thanks again for joining me on Full Circle with Sean.