The Startup Checklist — Book Summary

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Introduction

The book TheStartup Checklist is a must-have tool for all business founders. This invaluable guide provides you with a series of steps to help you get a strong start to your new business. You will learn how to avoid the risks of early implementation, management, and legal issues, and learn the processes for the early stages of development and the key risks that will jeopardize the foundation of your business. To be an expert, this book explains exactly what you need for the best startup and what tools you can use to be a great entrepreneur. If you're ready to do big things, this book covers everything from the first business card to the last departure for a successful business.

Interesting quotes from the book

Summary of the book The Startup Checklist

In the book The Startup Checklist, Daivd S. Rose discusses many necessities for businesses to "start smart" with the help of 3 significant steps.

Part I: Prepare to Launch

In the first part, the author explains eight key action steps that we must know before launching a startup.

1. Translate Your Idea into a Compelling Business Model

David Rose explains "a compelling business model" is about the benefits your customers receive. First, think if you can create benefits by selling a product or service. Is the product right for a large pool of potential customers? Would customers buy it for a higher price? Can you profit enough from the sale of individual units? Is the viability of the company increasing?

2. Craft a Lean Business Plan to Serve as Your Venture's Road Map

David Rose explains "a lean business plan" requires focusing on your business plan to create value. Focus on lean efficiency and economy. Analyze and optimize costs, responsibilities, and desired outcomes. Your business plan is not permanent. As the business grows and changes, you need to modify it based on the results.

3. Find and Know Your Competitors

David Rose explains about "your business competitors". Understand your competitors and their strategies. Take feedback from potential customers. Monitor the campaign activities of your competitors. Sign up for industry events to meet people who run other companies in your area. Visit your competitors' businesses and buy their products. Interview former employees and customers of your competitors.

4. Build Your Dream Team

David Rose explains about building "your dream team". If you can pool the skills, knowledge, information, networks, and assets of a group of qualified people without relying solely on yourself, your chances of success will increase. Decide if you have the skills and willingness to take on the role of entrepreneur. Decide what kind of co-founder you need. Before you begin, you and your team members must realize that you may face failure or bankruptcy. If you make friends in your team, prepare yourself for events that could harm your friendship.

5. Allocate the Equity in Your Startup

The author discusses "allocating the equity". How do you share equity with your new partners? If you do it smartly, you can help your business grow. If you don't, you can ruin your company. Value creation is a method of equity allocation. Think about the "entrepreneurial value" that you and your partners are producing. Consider the costs of "re-establishment". How much does a person pay for the work you do yourself?

6. Build a Minimum Viable Product and Validate Your Plan with Customers

The author discusses "minimal viable product." At some point, you need to make your product or service available to your customers. Show it to users and get their reactions. Do product upgrades and ask again. Repeat for a few iterations, until most of the test users are satisfied with the product.

7. Establish Your Brand with Online Public Profiles

The author discusses "establishing a brand with an online public profile". To build your brand while in the process of starting your business, use resources which are available on the internet. Set up a website. If you want investment from venture capitalists, create a profile on Gust and AngelList.

8. Network Effectively Within the Entrepreneurial Ecosystem

The author discusses networking. Search for support from a large community. Connect and communicate with different people, including people who run other startups, those who finance them, and those in government organizations who are interested in the welfare of your organization.

Part II: Launch and Build Your Company

In the second part, the author explains "how to launch and build your company" with the help of the next ten key action steps.

9. Incorporate Your Company for Protection and Investment

At this stage, Rose explains "mergers" and that there is much you can do before setting up a legally incorporated company. However, if you wish to continue to include structures, you must accept total legal liability for everything in your business. Start looking for partners, staff, and investors, until you need to set up a bank account. The benefits of a merger limit your liability. You can also create shares to divide the ownership of the company.

10. "Lawyer Up" the Right Way

Rose explains the term "lawyer up". Most entrepreneurs who start a new venture don't think they need a lawyer, but often they do. Lawyers know the correct requirements to start a company. Most startups try to save money in this area and then regret it. They often have to repeat their initial work. In some cases, the absence of a lawyer's help or suggestions can threaten the existence of your company.

11. Recruit Your Boards of Directors and Advisors

The author suggests "Hiring Your Guidelines and Hiring Advisors". Establish a board of directors. Legally, the board of directors protects the interests of each shareholder. Look for wealthy directors who are ready to invest in your business. Also, look for people with specific, supportive skills. Look for a director who has the knowledge and insight to guide your company's leaders. You may find lots of skilled advisors in the market who provide the right direction to your company.

12. Select an Accountant and an Accounting System

The author argues to "choose an accountant and an accounting system". A lot of startups fail because of an absence of accountability. To help prevent that loss, contact an accountant. Ask them to set up a financial plan and accounting chart. Select accounting software. Keep surveillance on cash flowing in and out. Get help in converting your business data into financial statements.

13. Establish and Manage Your Credit Profile

The author explains that in order to "establish and manage your credit" you should review your credit history. This involves examining how often you obtained a loan and then satisfactorily paid off your debts. The higher your credit score – a figure that suggests creditworthiness – the easier it'll be to receive credit. To keep your business credit profile healthy and your credit score high, pay your bills and taxes on time.

14. Open Bank, Credit Card, and Merchant Accounts

The author explains that in order to "open bank, credit card, and merchant accounts" businesses need credit. Unfortunately, many bankers consider it too risky to lend to startups. When your company shows a history of revenue and profit, banks can finance certain activities, such as buying new equipment. Focus on dealing with bankers who will work with you and assess your business prospects. Banks want you to be able to guarantee your business loan, which can hurt your assets if it is your initial default.

15. Choosing Your Key Technologies, Platforms, and Vendors

The author suggests to "choose your key technologies". In the past, setting up the infrastructure for a fast-growing company may have required a lot of effort and investment. With the rapid development of technology, you can set up a foundation that mimics the most prominent companies from your desk at almost no cost.

16. Measure Your Business with Data Analytics

Rose evaluates the role of "data analytics". As your business succeeds, it can be challenging to gain insight into your processes. Depending on the nature of your business, decide what data and metrics you need to monitor. For genuineness, you can only track, work, and analyze data which you can estimate.

17. Round out Your Team with Employees and Freelancers

The author refers to "employment and freelancers" in this section. As your startup grows, you may interact with more clients. Lex Sisney, the author of How to Think About Hearing, suggests that people who sign up are better suited to your business. Hire candidates who can help you build a fantastic team rather than hiring a person who doesn't like to work with you. Put your current members or people you want to keep in one of four quadrants. " Team Leaders" are well suited to their roles and have a high level of expertise. They can earn elsewhere, but they choose to work with you. You can hang on to them. " Team players" may not have the capabilities of team leaders, but they share your vision and do not cost much compared to the market. Grow them up. "The experts" do not share your vision but have the skills you need. They may lack skills and fail to share your vision.

18. Establish a Stock Option Plan to Incentivize Your Team

Rose describes the role of "stock operation," when talented startup employees frequently pursue the opportunity to gain equity in the company they trust. If the company performs well, the value of their shares will increase significantly. Establish a mechanism to provide investment to the people you want to hire. Consult a lawyer who understands startups. With your board approval, establish an employee stock option plan.

Part III: Raise Funds, Collaborate with Investors, Plan for Your Exit

In the previous part, the author gave a brief introduction about launching and building a company. In the third part of this book, the author explains the next seven key action steps that guide us to funding and collaborating with investors, which helps a startup to transform into a well-built business.

19. Understand the Funding Process and What Investors Want to See

Rose refers to "what investors want to see", requiring less initial capital for those that start small businesses or provide professional services. However, most companies need funding for their development. Since banks are unlikely to give you loans, look for investors who can fund you in exchange for equity. Investors will consider the quality of your management team, the eligibility of your potential business opportunities, the specificity of your product or service, the industry you're entering into, and how you market your product. Potential investors expect you to have a complete business plan.

20. Nurture Your Investor Pipeline

The author promotes researching "your investor pipeline". Only 1 out of 400 startups can access venture capital funds. Investors frequently think that you need money for investment in your company. Prepare well before every meeting with potential investors. Be active in the startup community. To reach possible funding, use social networks like LinkedIn, collect pitches of startup competitions, and give presentations to the Angel Group.

21. Crowdfunding and Online Platforms

In this section, the author refers to "crowdsourcing and online platforms". Under Title I, companies can stay private and choose to go public when they think it makes sense. Title II allows startups to advertise for funding, but this limits the types of funds they can collect. Title III, which came into effect in May 2016, allows startups to raise funds from those who do not qualify as "accredited investors" by working through a "controlled online platform." Raising money under Title III means you must comply with laws that require additional work. Your accounting practices must comply with generally accepted accounting principles. In the USA, you must file an annual statement with the Securities and Exchange Commission (SEC).

22. Survive the Term Sheet Negotiation and Investor Due Diligence

In this step, the author describes the "conversation of the term sheet and the diligence of the investor". You'll be happy if investors are ready to invest money in your company. However, you'll probably need to work more efficiently to get your money or funding. You must show unique interests in how the transactions relate to each other and what rights and responsibilities there are for you and your investors. These deals need documentation work ranging from 3 to 120 pages. Your lawyer and investment attorney will create these agreements. The right package includes a term sheet that summarizes all the documents you need to sign. When investors are evaluating their funding plans, they insist that you include critical information into part of your business' due diligence screening. They will reevaluate your argument about the nature of your actions, including profitability estimates. They will also consider the legal structure of your business.

23. Get the Most from Your Investors, Now and in the Future

The author refers to the "relationship between your investors and your future". When investors invest money into your business, you connect with people who want you to succeed. It is your responsibility to develop your business and promise your investors that their money is fully protected and secured. Understand the major investor and maintain a systematic, transparent dialogue with all your investors. Hold meetings every six months to inform investors about ongoings. Use them as a resource for sales referrals.

24. Understand Your Company's Valuation

At this stage, the author states that it is difficult, but essential, to find "your valuation" for your startup. Do this from scratch as you collect money from family and friends. As one of the founders, you want to pay a premium to outside investors based on the future value of the share. Most investors prefer to pay less than the current value of the stock. How you deal with your initial investors can significantly impact your ability to raise money from other investors later. Don't set too high a price as it can make it harder to win capital from venture funds and angel investors.

25. Keep Your Eye on the Exit and Reap the Benefits of Success

Finally, the author discusses the "success benefits" that you may one day redeem. You can build your own large-scaled businesses. However, it can be achieved more quickly when investors are readily funding your company. Above all, you can accept investment from venture capitalists and choose trusted investors for future growth of your company.

What are the Key Lessons from the book The Startup Checklist?

Lesson 1: Startup skills are needed to succeed

Many people want to start a new business, but they don't realize that a lot of skills are needed for a good startup. This book describes 25 of the fundamental skills to convert your startup into a well-developed company.

Lesson 2: Understanding the role of investors and crowdfunding

In this book we can learn some basic resources to raise our profit rate. Investors and crowdfunding have enough power to make your growth graph strictly increasing.

Review of the book The Startup Checklist

The book is well structured, with an emphasis on clear steps and lessons. It is easy to read for people who are not familiar with business terms.

I have learned so much about the potential pitfalls and the best process of establishing a legitimate business by reading this book. As I want to start my own business, this checklist and knowledge may help me avoid many unnecessary mistakes in the future.

Conclusion

The book The Startup Checklist is recommended for all entrepreneurs, especially for those who want to create a successful startup business.

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