Optimizing Startup Ops for Early Stage Founders

  • June 17, 2021

What are startup operations? 

Startup operations, like most operations, are difficult to define. There have been, however, certain frequently used frameworks that assist founders in making sense of it.

In a nutshell, startup ops rely on the startup's structural characteristics. However, the essential aim of operations in a startup is just the same as it is in a more conventional or established organization. 

Ops is all about: 

  • Empowering employees
  • Problem-solving
  • Successfully managing resources so that high-quality products/services can be delivered

In practice, this typically comes down to developing policies, processes, and procedures that create efficiencies and facilitate cross-departmental collaboration.

The foundation of a startup's operations is beyond just maintaining organized documentation: finances, legal, compliance, human resources, and administration are all included. Once you're prepared to begin expanding your startup, establishing robust procedures in place for each of them from the early stage itself can come in handy. 

Operations at a startup fall into these core areas:

1. Finance (Operational)

At its core, Operational Finance is about making sure vendors and employees get paid. This seems like basic, hands-on work but it’s critical. It’s critical that these processes and systems are thought through, well designed and scalable. Changing these processes once a company has grown can be painful and time consuming.

This includes activities such as:

  1. Making sure that all vendor payments are made in time
  2. Cash receipts are issued and payments are received
  3. Coordination is timely with in-house/outsourced bookkeepers or accountants
  4. Transactions flow seamlessly and accurately into accounting and billing software (Xero, Paypal, Stripe, etc)
  5. Assessment and reimbursement of employee Expense Claims 
  6. Settling Payroll
  7. Submitting quarterly VAT Claims
  8. Reclaiming R&D Tax Credits (if applicable)

2. Finance (Management)

This is more of a high-level, strategic view into your startup’s finances. This includes:

  1. Setting forecasts and tracking against them
  2. Reporting growth and financial performance to investors and the board
  3. Creating an operating budget 
  4. Managing the startup’s burn rate 

Being lean and efficient is one of the critical aspects to a startup’s success. Setting up these ops correctly and efficiently will go a long way in ensuring  you’re aware and in charge of your startup’s financial trajectory and growth narrative. 

3. Legal

Legal operations involve things like: 

  • Collaborating with attorneys to ensure that agreements with employees, freelancers, vendors, and clients are in order
  • Ascertaining that the startup complies with all regulatory standards (e.g., Auto-Enrollment, Data Security, etc.)
  • Ascertaining that the startup has the relevant insurances in place 

Since early-stage startups are vulnerable to lawsuits, it’s important to protect yourself legally by developing solid Terms & Conditions documentation that has as few loopholes as possible. So, put quality thought into your Terms & Conditions (T&Cs), especially before you make the product available to paying clients. Don't just go with the flow and forget to examine the first principles. But don't go overboard, too: simply have a fundamental structure in place, consider your obligations, and lay the groundwork so you don't end up regretting not doing it sooner.

4. Human Resources

Hiring, onboarding, training, appraisals, compensation, and retention plans, as well as ensuring that the team runs smoothly (making employees interact with one another in a healthy environment) fall under HR operations. 

5. Business operations

The easiest approach to explain business ops for an early-stage startup is that it comprises all significant business operations that aren't strictly customer-facing. That is to say, a Business Ops person is engaged in, among other things, the following:

  • Business Development
  • Startup GTM or Growth Strategy
  • Fundraising

6. Compliance 

Companies that are handling sensitive customer information and/or fall into regulated industries such as fintech, healthcare, or payments should look into becoming compliant with specific security frameworks such as SOC 2, ISO 27001, HIPAA and PCI. Non-compliance runs the risk of losing potential enterprise revenue streams as well as legal repercussions and fines. 

Becoming compliant can often take hundreds of hours and internal resources, but more and more companies are using compliance automation software like Secureframe to help speed up the process.

Best practices for optimizing startup operations

1. Automate time-consuming procedures

If your startup automates time-intensive operations such as accounting, invoicing, and payroll, you'll be able to better concentrate on other business-building activities while resting easy knowing that operational tasks are being effectively handled by automation.

While such time-intensive procedures are crucial to the startup, they divert your attention away from what actually generates value and revenue.

The best part?

One of the most useful features of digitizing or automating your ops is that it allows you to concentrate on the “people” part of your startup, such as communicating with consumers and developing customer experiences that keep users coming back for more.

2. Recruit Talent with Contemporary Skill Sets

You are unlikely to have enough time to develop all of the appropriate skills that your startup needs. 

That's why you should either tactically outsource operations or hire tech-savvy freelancers to manage special / specific projects or procedures that need to be modified to match the requirements of the digital world. It may seem daunting to transform your conventional business model to operate well in the contemporary internet world, but establishing an approach that integrates the two aforementioned methods can help you do so. 

That’s not all...

Strive to make the most of what's already been discovered and accomplished in terms of best practices, resources, and expertise to avoid wasting time and money trying to reinvent the wheel. 

Always keep in mind that your startup will almost certainly evolve and change, as innovation, as well as other external variables, impact the operational environment.

3. Developing a Financial Strategy

In today's service economy, when competitiveness is on the rise, deciding how and when to best fund the startup and also how to carve out pathways for growth prospects are becoming increasingly complex. 

Numbers are (nearly) everything when it comes to operations. You're probably always looking for new techniques to keep your margins sustainable. This is why a sound financial strategy is essential for enhancing operations and expanding the startup. 

4. Outsourcing Operations

At the early stage, outsourcing is often the best way to meet your startup's goals and requirements. This is when you'll locate qualified individuals for certain tasks - or perhaps even a full department (if that’s what your requirements merit). 

Better yet, smart outsourcing is all about using the best of breed tools and best of breed talent in handling your ops. Being scrappy (not sloppy) as we say, is crucial to avoiding expensive and painful mistakes down the line.

As a founder, focusing on operations takes time away from product and customers. While founders can’t afford to ignore operations, there are ways of streamlining and scaling your ops so founders can focus valuable time and energy in growing their startups.

At AbstractOps, we help startups turn their founders into expert Operators — finding the best of breed solutions for your HR, legal, regulatory, and finance ops. If you're looking for help in streamlining and automating your startup operations, we’ve got your back. Sign up here to get started.

And if you're looking to automate your compliance operations, you can schedule a free demo with Secureframe.