The recipe for founding a company appears relatively simple. It is easy to learn how to establish a limited liability company. However, many people find that choices made when setting up can be costly or inhibit growth at a later stage. As soon as an organisation number is allocated, company obligations take effect.
These include legal, financial, and administrative requirements that must be followed. Business owners and entrepreneurs often make decisions without knowing the consequences. Some choices are made with a short-term focus.

You have been working with an idea for a new product or business model. This may have been for a short time or over a longer period. Then you decide to jump in and make your dream come true. Some have extensive experience in setting up new businesses, others have no experience. Where do you start, and how do you get your business up and running?

A classic trap

A classic entrepreneurial trap is that the top manager in a start-up company takes on too many roles.
They often act as the "artist" who must develop the company's core idea. In addition, they are responsible for administrative tasks, accounting, and liquidity. They also handle public reporting, salaries, and other operational duties.. Working days tend to get longer and longer. This often reduces the necessary focus on core activities.
Core activities are essential for the company’s development and success.

Wrong choices are often expensive

Many entrepreneurs have little or no experience in setting up a company and realizing an idea. In an early phase, entrepreneurs make many choices without knowing all available options.
They often lack knowledge of long-term consequences. These early decisions can significantly affect the company’s future development and strategy. Later, the company may face costly consequences that limit growth due to earlier decisions.

Here are some tasks that are important to put in place during a start-up phase:

Accounting
The company will need a simple and cost-effective accounting system. At the same time, the system must give management a clear overview.This includes capital and liquidity management. It must also support efficient reporting and follow-up of publicly subsidised projects.. In addition, the system should be scalable as your company develops.

Legal
Already at the foundation of the company, questions arise regarding ownership distribution and regulation of ownership. In many cases, the entrepreneurial team agrees on how ownership should be managed and has often entered into verbal agreements. You don't see the need for a shareholder agreement until a conflict arises between the owners. Another decision that is taken when setting up is whether to own shares directly or through a holding company. Many people make this choice without knowing the advantages and disadvantages of the various structures. As the team settles in, it’s often necessary to distribute shares between founders and/or first employees. Such a redistribution of values can have significant tax consequences. This applies to both the person giving up and the person receiving shares. It is important to be aware of these issues, and the consequences of the choices you make.

We recommend keeping an overview of all non-recorded obligations and agreements. These should be formalised in a clear set of agreements. By structuring the agreements in an archive system, you will save a lot of time when raising capital. You appear better prepared for investors and it builds trust. 

When it comes to contractual documents, there are good and standardized templates for this. They are in many cases, a good starting point. However, we always recommend going through the agreements with professional expertise before signing the agreement. This is to ensure that all consequences are properly addressed.Tax-related and legal aspects must be highlighted and clearly explained. The agreement should be adapted to your company’s specific circumstances.

Legal assistance is often considered an expensive service. Many therefore choose to seek help from other entrepreneurs in the same situation. However, be aware that they may also not have an overview of the consequences of the choices they make. One example is the Kruse-Smith model.
More and more entrepreneurs are starting to use this model. It offers a solution to share-based remuneration challenges. For many, it solves a concrete problem related to equity compensation. It can be risky to use a standardized contract without proper review. The agreement should be assessed by experts familiar with the model. It must also consider the specific court decision on which the model is based.

A cost-effective solution could be to use an available template. Based on this think through what you want to achieve with the agreement. You then confer with professional expertise before the agreement is signed by the parties . It can save you from expensive legal fees or legal disputes later. Already at the first capital increase, missing or bad agreements can become problematic.

Financing
Financing of the start-up phase is for most a combination of public grants and deposits from owners. Navigating the jungle of grantmakers and foundations is often time-consuming. In many cases entrepreneurs spend a lot of their time doing this. You risk spending all your time on non-core activities. These include reading about grants and writing applications. You may also attend lectures, seminars, and competitions. Much time can be spent pitching the company to angel investors.. Many do this with a desire to get as much capital as possible, others' motivation is the least possible dilution. The capital strategy is not based on a conscious assessment.
It lacks a clear view of the capital needed to move the company to the next phase.  In many cases, this means that the company gets off to a slow start. The company's value may be placed at an artificial level early on. Even if the company feels it is succeeding in raising capital, there may be hidden consequences. One common consequence is that later financing rounds become more demanding.

We recommend that the company draw up a strategy for the first development steps with an associated capital plan. Throughout the phase, the company should establish initial hypotheses about customers and the market.
These hypotheses should include a clear value proposition. The company must also create a plan for testing these hypotheses effectively. Investors are generally concerned with return potential and risk. The company should take this into account in its plans right from establishment. m you have capitalized with sufficient funds to manage from start to completion of the project.