Business 101 with York’s student entrepreneur

I had an idea during my first year at York studying business management. It wasn’t a particularly good idea, nor was it something I had thought of before, but my first proper company came to me at the age of 19.
At first it was a website where stock traders could test investment strategies using historical financial data. But over the next two years it evolved into StockRender.com, a website used by other traders for gathering financial information to be interpreted by applications and developed by traders.
The first thing that any entrepreneur needs to know in order to make their business successful is the importance of having a team of people who are willing to work together to develop the business and the idea, for equity in the eventual company.
This is the experimental phase where you figure out what it would take to build the product or service you want to provide.
But before you introduce a new partner or employee to the company, have them sign a nondisclosure agreement. This prevents them from disclosing plans or information to anyone who is not part of the company.
The amount of people and the skills involved vary from business to business, but each person should have complementary skills. For StockRender, I initially started with myself and a close friend who was well-versed in programming.

During the first year of StockRender, I attempted to expand the team multiple times by finding programmers that understood my vision for the company and were interested in learning how to do the involved programming. However, I ended up firing eight people in that first year, some people twice, including my first partner and best friend.

Building a team when the company had no revenue and no real product happened through trial and error. Ten months after the initial idea, we were able to build a Minimum Viable Product and gain the confidence that we could actually implement what we were planning.
By then we had established a team of four partners, including myself. Once we built our MVP we scrapped it and began working on the production version of StockRender. With an MVP, it became much easier to raise capital from investors and convince more developers to join the team.
The second thing that any entrepreneur needs to know in order to make their business successful is having a proper legal structure. With any software company, and generally any scalable business, the only choice is to incorporate the company, which costs $200 in Canada.
Investors generally won’t invest in any business structure unless it’s a corporation and you don’t want to change the business structure later on just to secure investment.
Other agreements worth understanding and using are the independent contractor agreement, which gives the company ownership of work done by a non-employee or partner entity, and the intellectual property assignment agreement, which legally transfers work by the founders to the company.
Generally these agreements can cost hundreds or thousands of dollars each, which is what I paid for mine. I later found out that all of these agreements and more are available on sites like MaRS Discovery District as free templates.

However, the most important document to have is the shareholders’ agreement, which outlines how much of the company each partner owns. Since a shareholders’ agreement is the foundation the company will be built on, I suggest hiring a lawyer to create a specific agreement for your company.

Be warned that shareholders’ agreements can cost a few thousand dollars because they are long and detailed.
Before you get to this step, it’s very important that you discuss with everyone on your team what the requirements are for getting equity in the company, and how much equity they will be receiving. I would have this discussion once every couple of months to make sure everyone is on the same page.
After you incorporate a company, you must keep track of all of your cash inflows and outflows for tax purposes. I like to take pictures of all my receipts and keep a spreadsheet showing what is being spent, along with the revenue and grants received.
The hardest thing about building your own company is finding the time to manage everything. While I was building StockRender, I was also managing a full course load at school.
There are two things that help make it possible for me to run my company and study.
Firstly, I managed to fit all five courses into two to three days in the week. That way, I had four to five days that I utilized by working to fund StockRender, or working on StockRender itself.
Secondly, I have a great team that could do tasks that would have taken me obscene amounts of time to accomplish alone, such as designing the website and coding the mock-ups that I created.
When delving into the career pathway of being an entrepreneur, be sure to remember that specialization and division of labour between partners is the key to success.
Inspired to start your own business venture? Check out these recommended resources geared to help you become your own boss.

 
Mykyta Ponomorenko, Contributor
Featured image courtesy of Gabriel Mazzitelli