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Strategy 101 – A Founder's Toolkit

A quick glance over strategy for first-time founders at startups. This article aims to assist founders throughout their first steps in the strategic field and strategic modeling of their business.
Rafael Guerra

Partner, IMPOX Consulting

NOTE: This blog post should not be taken as legal advice, financial advice, or any kind of professional consultation. It is merely an informative and educational blog post – no responsibility over any kind of actions or results, be them good or bad, are taken neither by the author nor the blog itself. 

Everyone knows startups are not easily manageable in the financial optics: surging or zero cashflows for quite a long period, a highly-questionable source of funds – and the most frightening thing in a startup: pivoting.

There’s nothing to fear about pivoting a business, and nothing to be afraid about financing and managing your startup in a financially healthy manner. Through this article, I expect founders to learn how to manage their startups from the very beginning to designing a growth strategy. Before this deep dive, let’s make a quick reminder: you are not supposed to be an Investment Banker, a Big4 accountant, or a highly-experienced CFO to know how to correctly manage your startup. You just need to be wise, self-assured, and willing to take cold-reviews and start over if necessary.

So, already made all reminders – let’s start by getting acquainted about what your company needs by Day Zero. The first thing you need at all is a realistic plan on what product you are offering to the great public – is it a B2C Cryptocurrents Platform or a B2B Credit Card portfolio aiming on medium-sized companies that offer managers with a certain monthly budget?

Whatever is your business model, you should be familiar with all sources of revenue your company is expected to have – in the other hand, all sources of revenue have a correspondent cost structure, so make sure you are also known to all costs and expenditures your product requires to stand.

Well, after drawing what your product is, with all sources of revenue and cost structures well-rounded, let’s talk about how to make things work – you should keep on record every expense (related or not related to the development of the product, fixed or usage-based) compared with every penny that drops into your account (you are supposed to segregate what is a source of income from expenditures in your product, like a customer subscribing to your streaming service or paying for the usage-based bandwidth corporate control software you offer; and segregate what is a source of revenue coming from investments made by founders, or money coming from other sources that are not operational).

Not every startup experience huge profits in their first months or years of operation, it is reasonably expected to your company to reinvest every single dollar you receive – so make sure you are investing correctly the money your company is making: growth marketing and technology are certainly the best shot. And what if you do not have a revenue? Do not panic, it’s also quite common for startups to not have a good revenue through their first steps – but you should be aware about how much time you are on the market.

Some companies are expected to have a revenue just after launching the MVP, some others are expected to have a revenue after dropping the finished product to the market. Make sure you know your market and what is a prospective view from potential investors or strategic partners.

Managing your company in a timely manner is fairly important to make sure you will not be surprised in the future – make sure you have all financial statements up-to-date; review all performance indicators your market usually uses for measuring your company growth; and keep an eye on your cashflows. Even if you are an early-stage startup, no company lives forever without a stable and predictable cashflow.

Let’s get to know all steps in details:

Coming up with a strategy

A strategy in a startup is nothing more than knowing exactly what kind of product you are offering, who is your “macro-persona”, what is the problem you are about to solve, and how.

When you came up with your idea, you certainly had a problem in mind that was willing to be solved – so, what is exactly this problem? Let’s unravel this problem to its heart and roots – what you thought about it in a first glance? Try solving the puzzle behind it – you should know this problem better than you know yourself (well, not so difficult not all of us are used to know ourselves this good).

Some first moment questions (which you are not supposed to rocket-science-ish answer them in this first moment) are:

· What led me to this problem?

· What shines my eyes about it?

· What is the market opportunity behind it?

· How can I solve this problem?

· How am I willing to solve it?

· What are the potential pathways to solve it?

Just after answering these questions in a simply way (2-3 lines are enough), let’s solve this puzzle. How do you imagine this product in this first moment? Is it a subscription service? A lifetime-access license? A platform brokering transactions? What is it?

Now that you’ve answered these questions, let’s come up with a strategy on it. Whether it is a subscription service or a platform brokering transactions (P2P), all startups should have a first-moment strategy that guides them through the markets’ choppy waters – but what does it mean in the end? Simply, a strategy is a set of plans of action – or policies made to achieve a goal – it heads the company towards a desired state in the future.

At a startup, corporate strategy does not take the desired effect – sometimes it even has the adverse effect. As some corporate strategy are a red-taped box, let’s come up with something that is easy and not so bureaucratic, with some easy steps we can easily understand where we are now and how we can achieve the best in the future:


Whether your product is a subscription, a lifetime license, or a pay-per-use platform, you should now exactly what your product is – both for business purposes and for technological development.

Well, not all products are easily understanble in the technological optics – I mean, some products are easily understandable and imaginable through the business and product management optics – but sometimes are hard to realize in the technological field. So, the first thing out to have in mind when building up your product is to question: Is this product technologically viable? Well, if the answer is NO, maybe you should step back and redesign your ideas; but if the answer is YES, it is time to answer some more in-depth questions about it. (Do not be afraid to be answered NO as you question people in the technological field, it is quite common that some technologies are not financially viable in the first hand, but can be potentially achievable in the future – so do not torn apart your ideas, just shelve them for a while).

Now that you know your product is technologically viable, let’s answer some questions related to what your product is:

– What problem do I try to solve?

– How do I understand it will be successful?

– How do I want people to see my product?

– How do I see my product?

– Is it a platform, an app, a P2P system?

– Is it a free to use app or do I have premium subscription?

At this step, it is way important to draw it on a paper or a documentation system – so you will be able to revisit it anytime you want, and also: always remember to keep a history of any modification on this document.


· Do I know what my product is?

· How do I see my product?

· Is it a platform, an app, or what?


The main characteristic of a target market is that all members in it are homogeneous – which means they all share similar interests and behaviors. As an example:

– Business majors with interest in corporate finance

– Single young adults in Philadelphia metropolitan area

In these two examples, both markets have strong specific similar interests and behaviors – the first sets up exactly the field potential customers are majoring and their deeper interest with not geographic limitation – whether they are in Los Angeles, USA or in Warsaw, Poland; in the second case, it also has a strong specific interest and behavior – they are all single young adults, but this time geographically limited to the Philadelphia metropolitan area. Sometimes it is the best choice to limit your target audience to a certain geographic area in the first moment, whether it happens because you have a deeper understanding of this market (e.g. you are a CS major at UPenn or a MBA candidate at the Wharton School, maybe you have more experience in Philadelphia area than in Seattle or Houston areas). Make sure you are setting your target market in both a business area and geography you understand (but nothing prevents you from entering markets you don’t know – curiosity and willingness to learn has driven humanity through millennia).

It is quite common for startups to elaborate a target market as a marketing strategy, in such a way to concentrate marketing efforts in people that hold a bigger probability to have interest in your business or in your products.

Steps towards building up your target market:

1 – What does this public need? The more specific your public is, more specific your product should be.

2 – What is the demographic information? Here, it is important to bear quantitative data such as average house income, gender, age, education level or occupation, and geographic location. Remember = these data should be related directly to your public, it does not make sense to input information on a public that is not your current target.

3 – Do they have any particular interests? Make a quick review of any particular interests of your potencial customers. Do they like HQs or movies? Do they like music or podcasts? These are perhaps the most important question throughout this whole section of target-audience.

4 – Do they have common behaviors? Some target-markets have common interests but not common behaviors. What are the specific behaviors you want to track and follow? Imagine a situation where you have a certain public with a particular interest in business ideas, now … let’s think about a more specific behavior they may have in common = listening to podcasts? Participating in bookclubs? Well, it is important to know any specific behaviors, but it is not crucial – so, if you do not want to map their behaviors by now, feel free to move to next section.


· What audience am I aiming at?

· Where is the geographic sector I am iniating my efforts?

Setting up financials and business rules

When talking about financials, it is way important to know where your revenues will come from – it is intimately related to your business model and your business strategy, that’s why you should have them at hand before setting up financials (and business rules at all). Well, financials are not that hard as most people usually say, it requires a lot of attention to details and an ability to thoroughly review your models as many times as possible.

After you come up with a strategy and a business model, let’s design your finance – the first step is to understand your sources of revenue: how is your customer going to pay for your services? Is it a subscription model with a freemium module? Or a lifetime license? Or a pay-per-use?

You should know exactly how, and exactly for what, your customer is going to pay – are you going to offer annual plans for subscription with advantages, or just a recurrent monthly plan with a “cancel anytime” policy? Have in mind that each of these strategies come up with different financial strategys – a subscription model gives you a foreseeable cashflow (e.g. imagine you have 10.000 customers paying U$4.99 monthly to use your platform; as churn is also predictable, you are going to have a foreseeable cashflow of U$49.999 a month. But, if you are offering a lifetime license, have in mind you should model your company in such a way – which means all licenses should come with prices for perpetuity (what is perpetuity? simply, imagine if your customer is paying for your services to the rest of eternity and each month prices are dropping by a certain percentage but it never hits zero – perpetuity is the sum of all these periods. We usually set that to 4 or 5 years, a long-long-long period when talking about subscription services). As abovesaid, all revenues come with costs – so make sure you review all cost origins in your current structure (human capital, advertising, and technological infrastructure – cloud, usually are the biggest costs in a startup). Your pricing should reflect your cost of opportunity, your current cost and how you are willing to have in profits (in this first time, some startups sacrifice their profits in order to have more users) – some pricing strategies do not apply to certain types of product strategy, so make sure it bounds with how you are building your company.

Just after you set up your pricing model, let’s go directly to short-term financial management – when talking about startup financials, long-term is 3 months and short-term is tomorrow. You should bear in mind that ALL STARTUPS, when I mean all IS REALLY ALL, are supposed to plan for short-term as cash is scarce and all resources are expected to be wisely applied to support long-term growth. Always remember: you do not have a “motherlode” cheat code that will instantly add U$50.000 to your balances – so be wise and do not use your funds in superfluous things in the first moment (well, not in a second, third or fourth moment – do not ever spend your money in unnecessary things that will not support long-term growth). Usually, most startups spend remaining money (which is not very common) in areas more compromised in bringing more customers – Sales, Marketing and Growth are the biggest shots for an early-stage company.

Let’s review the steps towards a good financial management:

#1 Set up an income strategy – whether the strategy is a monthly payment (subscription model) or an one-time pay for lifetime license, make sure you build your income strategy and bear on mind all potential sources of money your company is expected to have – even if it’s money coming from advertising, transaction or platform fees (in the case of fintechs).

#2 Review all sources of costs – all revenue comes with a cost, so make sure you map all costs your product has (human capital, technological infrastructure, and advertising are some of the biggest sources of costs in early-stage startups).

#3 Track down all churn movimentation – churn is perhaps the most important indicator you shoud keep an eye on. It indicates if your product is satisfying your customers or not. So, track down all churn data and movimentation – even the smallest change in your app should be marked to track the potentiality of churns.

#4 Do not offer discounts or vouchers before making sure it does not disturb your current income structure – all discounts disturb your income structure and destroys economic value, so make sure it is a good choice. Small discounts for a certain group or target audiences are not supposed to be a great problem, but generous discounts and vouchers for all users is well known to be a not-so-easily reparable problem in the long-run.

#5 Build a real-time dashboard with the graphs of historical financial information– have you a controller of CFO or not, you should have a dashboard concerning all financial information centralized in one screen. Bank account balance and historical changes, breakdown of costs and their historical evolution, breakdown of incomes and their respective evolution, your profits and anything related to that.

To condone with your finances, you should also have well-buit business rules – these are a set of specific instructions or “hows-to” in your company day-to-day. Here, we have two different types of business rules to bear on mind – the first one is that one related to business archictecture, and the other one has something to do with processes automation at a technological level. Through this article, we are going to stick with the first option, these business rules related to business archicteture.

Your business rules should be: (1) easily understable; (2) projected to enhance performance; (3) compliant with internal rules and data policies; and (4) connected with different business areas. Now, let’s build up steps towards creating your business rule:

#1 Choose a business process you want to standardize – it could be a sales process related to Pre-sales and Sales teams, or bounding Marketing and Sales areas together with a common business rule that applies for both teams and areas, regarding all their specific necessities and specific deficiencies.

#2 Traceback all processes related to this action you want standardize. E.g. After filling a form on the website, the customer will receive an email from the marketing team and a Pre-sales associate will be notified about this lead – standardizing this process means that there’ll be no way in which this process will be different.

#3 Choose a documentation system to generate a flowchart – make sure each rule you draw has their exact source of action and triggers (e.g. filling a form on the website generates a lead and notifies the pre-sales team).

4 Link all URL and documentation related to the action you are standardizing, which means linking the form URL, the system in which both the marketing team can track their performance, and the pre-sales team receives their notification, and a “central station” where all data is available to compare throughout the pipeline.

Remind: be sure to have a history of all changes to this very rule you’ve created.


· What is my income strategy? (Will I receive this payment monthly like a subscription, or a one-time payment for a lifetime license?)

· What are my sources of revenue? (Will I receive payments for monthly license usage, lifetime licenses, or I am supposed to have complementary sources such as advertising, transactions fees, etc?)

· What are my sources of costs?

· Is my pricing strategy covering at least my current costs?

· Have I tracked down all standardizable processes at my company?

Contracts, documents and PIIA

If you are willing to set up a company, the very first thing is to incorporate it – make sure you have a LLC in the first hand, filling all necessary documents required by law in your state. Each state (and country) has its own governing laws, so make sure you are fulfilling any specific requirement – maybe taking an authorized legal advice is a good choice.

Before any other relevant document, you should have on hand a PIIA.

A “PIIA” stands for “Proprietary Information and Inventions Agreement”, it is fairly the most important contract you are supposed to assign to your employees before they have access to any sensitive data on your company. In most cases, a PIIA also comes as a confidentiality agreement – which means any information your employee has access whiles working at your company is property of your company. The main function of a PIIA is to also build up what is a proprietary information of your company – if you are employing a software engineer, a PIIA will basically says “ok, you were a software engineer working at XYZ but anything you have built there is property of the company, and not yours”.

Why is it so important to have a PIIA? First, a PIIA sets responsibilities and expectations for all employees (even co-founders and solo founders); second, this agreement makes sure all data and all strategies on your company are protected by the power of a private contract with sections prevising potential sanctions and punishing for violations on this very agreement.

After the PIIA, build up a NDA.

NDA is an acronym for “Non-disclosure Agreement” which is quite similar to the PIIA itself, with a main difference: you can set up a non-compete section. Basically, a NDA sets forth the definition of “confidential and sensitive data” and also sets a timespan in which all signatories are prohibited to share this information on public or store it at their personal devices.

With a non-compete section at a NDA, you can set a period, after leaving your company, that an employee will be forbidden to set up or work at a company to be considered a potential competitor – which is a kind of company taking place in the same market, using a similar strategy, or simply a company known to be willing to enter this very market growing through hiring people from already set enterprises.

If you are willing to offer equity or stock option for your early employees as a talent-retenction strategy, make sure you have well-rounded vesting contracts.

When signing documents, make sure all of them are ready for signing at the same time.


· Incorporation



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