organisational structuring

R.L.Narayanan – 360 Degree [email protected]

Founder / Director for 360 Degree Interactive & 360 Degree Consulting

Avid Market Watcher, Financial Strategist & Capital advisor

Part of The Knowledge Foundation with events like Proto.in, Barcamps & Elements 5

Blogger, Tweeter, Columnist Graduation in Economics, Finance &

Advertising 14 years of experience in sales & marketing,

financial control and top level management2R.L.Narayanan | [email protected]

Why you need to structure? Story of a “Pottikadai”

Ownership Management Risk Management Scaling of Operation Strategic Thinking

3R.L.Narayanan | [email protected]

Legal Structuring Its about the place you live & operate abiding

to the law of the land. Team Structuring

Building a team from scratch. Moving from an one man idea to a diversified team


One man army – Sole Proprietorship Individual driven Individual Ownership & Liability Personal attachment for Liabilities No greater legal validity No external investment opportunity Very narrowed Scaling Possibility


Partnership – 2+ More Partners driven Partner Ownership & Liability Personal attachment for Liabilities for defaults No greater legal validity Limited, in-formal investment opportunity


Private Limited – 2+ More Legal Entity Promoters absolved from individual liability Stipulated Laws of operation Greater audit control & Governess Easy for External Investments to flow in Greater unlisted Opportunity Liked very much by professional investors –

Angels, VCs, PEs


LLP – Limited Liability Partnership (near future) Best of Both the worlds (Partnership & Pvt. Ltd) Legal validity with clear laws Flexible ownership for micro / small operations Greater unlisted Opportunity Less cost of Operation on compliance Very much in line for professionals (Chartered

Accountants, Doctors, Lawyers, Architects )


Essentials for a legal entity in India Memorandum & Articles of Association Incorporation Certificate Director Identification Number (DIN) Permanent Account Number (PAN) Tax Deduction Account Number (TAN) Service Tax Registration Professional Tax Registration An external Auditor to audit your accounts Current Account in a Bank


The Birth of an Idea Friends / Relatives in the game

Black Stories about Friends Horrible Stories on Relatives (Reliance, Bajaj)

Personal Relationship Vs. Professional Relationship – the divider line

Own Money Vs. Friends / Family’s money Need for structuring the finances


Single Head Vs. Multiple Head Size of the founding team – Preferably 2-4

[Ex. Microsoft, Apple ] Its not mandatory. Infosys had around 8+

co-founders Why you Need for a Co-founder

Complimentary skills Different PoV of the business idea Division of Work Contacts & Networks


What qualities you need in a Co-founder ? Believing in the business idea Honesty & Transparency Willing to go the extra mile for the firm Flexibility in face of changing circumstances

Is a friend / relative can be a co-founder? It depends Build the dividing line clearly Don’t mix personal & professional relationship


What qualities you need in a Co-founder ? Believing in the business idea Honesty & Transparency Willing to go the extra mile for the firm Flexibility in face of changing circumstances

Is a friend / relative can be a co-founder? It depends (TVS Group, Murugappa Group, DLF,

Google) Build the dividing line clearly Don’t mix personal & professional relationship


Building a team is essential in any entrepreneurial activity

Every company is started with promoters and few first employees

Scaling up slowly but effectively 5 Core Areas of a successful company –

Strategy / Top level management Operations Sales & Marketing Finance HR & Administration


Great businesses are built with sound advice & strong Board with absolute Corporate Governance (Ex. Enron, Tyco, Worldcom, Satyam)

Considering a Mentor first Putting together a Board A Board is not an old boy’s club. It

provides strategic direction & put forth goals for the management team to achieve


Without a destination, the journey is not complete

Be clear with what you wanted to achieve eventually

Are you for “Build to Last or Built to Flip”? Flipping is build a business and sell Lasting is to build a business for generations

Both the models are right with its pros & cons

Without a clear exit option, Investors won’t be interested in your business


Be humble to your customersBe genuine to your vendorsBe gentle with your employeesBe straight with your investorsBe clear with your teamBe specific with your BoardBe clean before the Law


Disclaimer: I am not a chartered accountant or corporate lawyer. Do clarify any details with specialized professionals before taking your decision.

R.L.Narayanan | [email protected] / [email protected] | +91-98401 08007

Its’ your turn to Drill me down!


organisational structuring

Business

friend relative

liability

clear exit

pros amp

professional

naraingmail

firm flexibility

changing circumstances