5 Things I Wish Someone Told Me Before I Became A COO
There are a lot of people who have great ideas, but have difficulty getting their business ideas off the ground. My Co-Founders and I started with what we felt was a great idea: applying a proven business model called royalty financing to a new business sector, the renewable energy industry.
In the early days the difficulty was convincing both investors and clients that we could make our idea into a successful reality. The expression “chicken and egg” was one we discussed a lot as we were looking for both financial investors and clients with exciting renewable energy projects.
As the Co-Founder and COO of RE Royalties, here are 5 things I wish someone told me before I started leading my company:
1. Choose your co-founders with care.
This is my third start-up. The first was a great success for everyone and I had 4 great partners. We were pretty well aligned from the start and that was key to our success and key to the great outcome for our shareholders. The second start-up I got involved with was a situation where I came in after the original founder ran into difficulties.
In retrospect, I can say that I did not do my homework on the working style and values of the founders. With RE Royalties, my Co-Founders and I have been completely aligned right from the start; not just with respect to our goals for the business, but more importantly with respect to our values.
Starting a business involves dealing with a lot of uncertainty and a few curveballs, you absolutely need to be aligned with your partners.
2. Which comes first, the chicken or the egg?
RE Royalties is innovative in that we are the first group to apply a proven business model, royalty financing, to the renewable energy sector. We had lots of clients with projects that we knew could use our product but we needed to raise the money to help our clients. Herein the classic question of which comes first, the chicken or the egg.
Investors liked our idea, but wanted to see that we had the keys to the projects before they would invest, and project owners wanted to see that we had the cash in the bank before they would give us the keys to their project. Our solution was to start small and prove the business model, and then go back for more investors. We are now at 84 royalties under contract after starting with 1, so I guess that approach works.
3. It is amazing how little tax you pay when you don’t draw a paycheck.
If you don’t like to pay tax, not paying yourself is an amazing way to reduce your tax exposure. Although we started at zero, we eventually increased our salaries to minimum wage. This gave rise to one really funny story. We were interviewing our first employee, Bryce, and we told him that he could have the CEO/COO pay package. He was pretty excited until we told him that was minimum wage. To his credit, he jumped at the chance!
4. Investors at an early stage are investing in you as much as they are investing in your idea or your company.
We were fortunate to have a group of wealthy entrepreneurs who invested in us during the early days. They liked the business idea, but more importantly they invested in us. They had to believe that we could deliver results, that we would look after their investment, and that we had similar core values. I feel indebted to those who have supported us but more importantly, I don’t want to disappoint them.
5. There are a lot of barriers to getting a start-up off the ground.
You expect some of them, some of them are completely unexpected. For example, my partner Bernard came up with the first name of the Company, Renewable Energy Royalties, but when he went to the BC Company Registrar to select a name, they told him that Renewable Energy Royalties was not descriptive enough. He then tried RE Royalties, and they were fine with that. Now at every investor meeting we have to explain what the RE stands for!
Read the full interview with Peter Leighton in Authority Magazine here.