[Courses] Running A Business- Starting a Company

[Jacinta Richardson]

Starting a Company  (Pty Ltd for example)

I know that this doesn't fit in at this stage in the course, but I
feel that the content is important in itself.  

You've been a successful business person for some time and you've made
a name for yourself.  Money is coming in and contacts abound.  You've
made friends with a lot of others in the business and some of them are
really nice people.  Your personal workload is even a tiny bit too
much for you to handle, or perhaps you feel that it's time to relax a
little.

Your friends in the industry are thinking of starting a company and
ask you if you'd like to be part of it.  Or perhaps you are the person
to initiate the company, it doesn't matter.  This company has several
purposes a) to help you all get sufficient work
         b) to give you people to work with in larger projects than
            you can handle on your own
         c) to help by reducing the amount of paperwork each person has
            to do
         d) to get a greater name out there so that big companies see
            you as someone they can do business with rather than just
            another small business person.
and maybe a few others. 

So you all start a company and you all get work and it's great.
Here's where my warning comes in.

Back when I was finishing university we were given a large project to
do, over the course of the university year and we were allocated into
teams of 20 students.  We were allocated to groups because the
department knew that a team of 20 friends wouldn't work.

It doesn't always work in the "real world" either.  Think of the
following that you might need to say one day:

        "This code is not sufficient.  It only addresses 2
        out of the 10 requirements you were given.  You're
        going to have to do it again."

        "I'm sorry, but it is not reasonable for you to take
        a full weeks leave at the moment.  If you'd given us
        some warning we could have planned better, but as it
        is I can't approve it."

        "Unless you give us x many days/hours notice it is
        not reasonable for you to skip on attending company
        meetings."

        "Yes, meeting minutes must be done within x many days
        of the meeting.  Where are they?"

	"I don't care that your code works, it's still
	unreadable.  Since we're both working on this project
	we have to use the coding standards we agreed on.
	Rewrite it please."

If you can't feel equally at ease saying this kind of thing to all of
your friends joining the company with you as you would to just another
hired staff member you might need to reconsider.

There's another problem too.  Friends often don't talk through things
as much as relative strangers would.  We don't want to bring up "in
the bad case that you do this" kind of scenarios with our friends
because a) we can't imagine they'd be that kind of person and do that
and     b) because we don't want them to think that we could imagine
           that they'd be that kind of person.
We also tend to think that our friends have similar motivations and
opinions as we do.  If this doesn't turn out to be the case it can
get really nasty.

----

I speak from experience here.  My fiance and I went into business with
some great friends of ours.  It wasn't the usual style company model
with full time work and regular income etc, but rather we each brought
in our own work and paid a tithe (10% of all earnings) to the company.
We each did as much work as we wanted and shared work between whoever
we wanted to. The company then used the tithe to pay for bookkeeping
and other boring stuff like that.

The company went really well, got a small name for itself and
recruited more people under the same rules.  Everyone was happy.
Unfortunately, over time, we each grew more focused on what we
expected of the company and assumed that everyone else expected much
the same things.

That of course wasn't the case, or I wouldn't be telling this tale.
My fiance and I viewed the company as a business and did not expect
anyone to do anything for the company that did not benefit themselves.
So we wouldn't expect people to take on contracts they didn't want
"for the good of the company", or to pay a higher tithe on more
"lucrative" projects "because the company could do with more money for
x".  We wanted meetings over as fast as possible because then we could
do the fun friendship things.

Our friends seem to have viewed the company as an extension of the
friendship.  Meetings dragged on because everyone caught up on
personal stuff in between agenda items.  The word "community" came in
(later) discussions about it a lot.  Work for free to the benefit of the
company as a matter of course was encouraged, as were different ideas
about sharing profits for so-called "lucrative" projects.

We split because our views were so different and it was about as messy
a split as you could get.  I don't feel that either of our views were
wrong, we just hadn't talked through them.  Everyone assumed everyone
felt the same way about stuff.  I've simplified the ideas a lot here 
for illustrative purposes.

We all made the mistake of not talking about what we expected of the
company and each other.  Of not bringing issues up when they first
arrived.  And lots of others that talking more at the start probably
could have lessened.  We didn't have a list of personal
responsibilities, we didn't have contracts between ourselves or
between ourselves and the company.  We did it all the wrong way.

----

So you can take one of three messages from this:

a.  Talk talk talk talk talk through your responsibilities to each
other, to the company, your IP rights and the company's IP/copyright
rights, how money will flow in all the circumstances, who has the
rights of veto, what penalties can be applied in certain
circumstances, (whether penalties CAN be applied...) etc.

or 

b.  If you go into business with friends do it with your eyes WIDE
open and expect there to be issues to come up and expect that dealing
with those issues will be painful (and might damage the friendship)
BUT _deal_with_them_as_soon_as_they_come_up!

or 

c.  Don't go into business with good friends whom you'd miss if things
split up over irreconcilable differences about business opinions.  The
stronger the friendship, the more you'll feel betrayed when you break
over different views of the world/how things should be run.

	Jacinta


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