Closing an early round of financing is a major milestone for a company’s owners. But often, before the first bottle of champagne is empty, the CEO is confronted with requirements for a higher standard of company governance and processes that are beyond the company’s current abilities. Or worse yet, the CEO isn’t even aware of the processes that need to be in place. Fear not - here’s a checklist some of the more common needs that come with “growing up”:
Maintaining adequate HR and payroll processes has become much more complicated over the last 20 years, and the consequences for not following local, state, or Federal statutes can be severe. Companies need to have documentation and processes on the following:
Recurring meeting of company management, with an agenda circulated before the meeting. Sample agenda items:
With a significant funding round, the new investors most likely will have been given seats on the Board, and those meetings will now need to be something more than hallway conversations (and if your company is organized as a C-corporation or S-corporation, your state probably requires documented Board meetings). Boards typically meet every quarter, with an agenda comprised of a mix of recurring items (reviewing financial statements and financial analysis, progress against strategic initiatives, etc.) and topical items (answers to questions previously raised by Board members, recent changes in regulations, response to industry news, discussions about raising capital, etc.)
Many of these needs can be facilitated via software and platforms that our clients have found to be useful. However, software is only as good as the people operating it, which means you’ll need people with experience in HR, Finance & Accounting, and Operations (and especially early on, finding people who can “wear several hats” at the same time is ideal). Hiring administrative experts will be a significant investment for the company, and many CEOs choose to outsource many of these functions in the short term while they carefully choose their permanent team.