Creating a start-up is a complex process. There are decisions to make. Actions to take. For company founders with a scientific or technical background most of these will be unfamiliar. This generic start-up checklist is for the start-up rookie. It aims to list the steps that every new company needs to take. It does not aim to explain how to take them. Where Denmark has good, free-of-charge services for further information or help, I have included a link. Where there is no link… Google it.
Every company starts with an idea. Maybe it’s a technology. Maybe it’s a method. Maybe it’s a new way of reaching customers. Whatever your idea is, it should solve a real problem.
Before rushing out to incorporate your new company, here are 8 steps every start-up should go through.
1. Decide what you want to sell
What is the real-world problem you aim to solve?
Is the problem best solved with a product, a service or a combination of both?
Does your product or service already exist in another form or do you need to develop it from scratch?
Do you know how to develop it? Or do you need help?
Do you own the idea or technology that could solve the problem, or do you need to buy or license it?
2. Figure out who will buy it
Explain your proposed solution to real potential customers. Or show a prototype or mock-up.
Do they actually need what you want to sell?
Do they know they need it?
Will they pay the price you need to ask?
You may need to rethink your business idea after actually talking to customers
3. Repeat steps 1 & 2 until you:
A. Have identified a problem that is so big that people are willing to pay for a solution.
B. Have figured out a solution that many customers will pay a little for, or a few customers will pay a lot for.
4. Figure out who your competition is
What do they do well?
Why are they great?
How do you become better?
Figure out what makes you stand out
Phrase and practice one sentence that describes the unique qualities of your company and/or product.
5. Make a start-up budget
What are your expenses?
Do you need to buy or rent equipment or materials?
Do you need to buy or license intellectual property? (Patents etc.)
Do you need to rent offices, labs or production facilities?
Do you need to hire staff?
When can you start making money?
What is your turnover and income after one month, six months and one, two and three years?
How soon do you need to pay yourself a salary?
How much of a salary do you need to pay yourself?
6. Make a sales and marketing plan
How do you create awareness of your product?
How do you get paying customers?
7. Build a team
If you are planning to start a business that has a chance of growing, it is wise to team up as soon as possible. It is usually sensible to build a team with three different qualifications. A hipster, a hacker and a hustler.
The hacker has the industry experience or technical insight necessary to build the product.
The hipster has the required understanding of design and user experience to package the product.
The hustler has the marketing, sales or lobbyism experience vital to selling the product.
These core qualifications are especially crucial, if you outsource functions. Co-founders cost you a slice of the company, but sub-contractors can cost you the entire company, if they are handled inexpertly. If you are building a student start-up, you can look for teammates on this platform:
8. Write a business plan
Using the answers to all of the above, your business plan should explain:
What the product is
Who the customers are
Why they will buy your product
Who will build the company
How much money you will make
What steps you need to take to start making money
Once you know what you want to sell, who you want to sell it to and how you will produce it, you are ready for the official parts of building a company. In Denmark, you will need to register for a CVR number if your company will be taxable for VAT and have an annual turnover of more than 50,000 DKK. In order to register, you will need a company name and a bank account.
Decide on a name for the company.
Having a company name is not only practical for discussing it with investors, collaborators and customers. You need a name when you apply for a bank account and when you incorporate your company. A name should be easy to pronounce, easy to remember and appropriate for your type of business. When you have thought of a name, you should:
If your new name is available buy the internet domain immediately and register to virk.dk as soon as you have opened a bank account and decided on a company type.
Get a bank account
In Denmark, you need a so-called NemKonto linked to your company in order to get refunds from tax, VAT and other public interactions. This usually needs to be a business account (Erhvervskonto). A business account also assures separation of your private and commercial economy and reduces the risk of inadvertently committing tax-fraud. Shop around. Costs and service levels vary considerably.
Choose a company type
For a start-up, there are four relevant types of company in Denmark. The two sticky points are about whether or not you are personally responsible for debts incurred in the company, and whether or not you need capital to open it. Choose wisely. Each type comes with its own set of rules, and changing type later is complicated. Read more here (Only available in Danish)…
Register your company
To get started with your incorporation, you need electronic identification. Either a Danish NemID or a foreign eID. When registering, you have to provide:
Companies based on technology will probably need an investor when friends and family run out of money. These come in many flavours. Be sure to investigate whether they can help you with anything besides money. Note that in Denmark, there are a number of public funding bodies, which will take little or no slice of your company.
Banks can lend you money, but usually cannot help you with growing your company.
Private investors can and usually will help. Their help will cost you a slice of the company, but if they are any good, that slice will be worth a lot. To learn more about these, Google the phrases Angel Investors, Venture Capital Investors and portfolio funds.
Vaekstfonden offers a number of different loan-formats. They also supply assistance with finding suitable investors.