12 Things Aspiring Startup Founders Need to Know

Before Starting a Startup

Photo by Austin Distel on Unsplash

1. Understand the basic financials of your product

The importance of financials cannot be stressed enough. When the business is based on a product or a service, it is important to understand its financials.

The basic financials of a product include:

Cost of Goods Sold (COGS)

Cost of Goods Sold (COGS) is the cost of the inventory sold by a company. It is the cost of the production, which excludes the cost of direct labour.

Gross profit

Gross profit is the difference between revenue and cost of goods sold. It is the profit earned before the deduction of operating expenses.

Net profit

Net profit is the gross profit less the operating expenses. The net profit is also known as the bottom line, and is the amount of profit that the business makes.

Gross profit margin

Gross profit margin is the gross profit as a percentage of the revenue. It is the profit made on every unit sold.

2. Understand the sales funnel

Understanding the sales funnel of your product is very important. It is a measure of how many units of a product or service a company is selling and at what price.

3. Understand the basic marketing principles

Marketing is the process of promotion of a product or service to increase sales and profits.

Differentiate your product or service

Identify the problem your product or service is solving

Determine the target market

Decide on the marketing strategy

Choose the proper marketing channels

4. Understand the basics of human psychology

Marketing involves understanding the human mind. It involves understanding the reactions of a target audience to a marketing campaign.

5. Understand your competitors

Understanding the competition is important in any business. In a startup, the founders should know the competition, and how their product or service is different from the competition.

6. Understand the basics of accounting

Accounting is a fundamental business skill. Every startup founder should learn the basics of accounting.

Know the difference between cash and accrual accounting

Understand the balance sheet

Know the basics of the income statement

7. Understand the basics of legal

Every tech startup has legal concerns. Whether it is intellectual property or company formation, a tech startup founder should know the basics of legal.

8. Understand the basics of intellectual property

Intellectual property is the ownership of a product, service or idea. It is the ownership of a company’s intellectual property, which includes the company’s name, logo, patents, copyrights, trademarks etc.

9. Understand the basics of work culture

Understanding the work culture is important for a startup founder. It is important to understand how to hire, how to manage and how to motivate employees.

10. Understand the basics of organizational behavior

Understanding the organizational behavior of your employees is important. It is important to understand the motivation of your employees, and to know how to deal with them.

11. Understand the basics of human resource management

Human resource management is the process of managing the employees of a company. It is the process of hiring, developing and motivating employees.

12. Understand the basics of project management

Project management is the process of planning and organizing resources, so that a project can be completed successfully. It is about time management, and resource management.

Founder of Cudy Technologies (www.cudy.co), a full-stack EdTech startup helping teachers and students teach and learn better. I am also a mentor and investor.