The popular image of the startup entrepreneur is Jobs, Gates or the HP guys slaving away in their garage, or back bedroom, lone wolfs, trying to get their businesses off the ground. They don’t hire people until the business is off the ground.
The reality today is different. Startups write business plans, raise money and hire people in various disciplines to do functions like marketing and sales, finance and production.
Odds are you’ve worked with the people you’re launching with. And, presumably you’ve got non disclosures in place for all of them, once they have agreed to their compensation package.
You should strive for diversity, but more important, you want the best people you can find for the price you can pay. COVID status can be one of the screens when you’re interviewing people, but that’s about all it should be. The same with Critical Race Theory but, this topic should be avoided, because it’s so highly charged politically, and you don’t make politics intruding into the workplace.
You do want your people to be socially responsible, which means in this context that they be proud of the company they work for, and your company not engage in socially irresponsible behavior, such as insider trading or overt or covert theft of competitive secrets.
As one of my clients once said, could you discuss your business idea in a cocktail party?
All the employees should be of good character, too, so they don’t engage in socially iresponsible acts, such as sexual harassments. You don’t need a lawsuit to sink your company as it’s getting started, or cost you dearly in legal fees.
Winnowing out bad behaviors, even in your startup, means that you should test your employees for these behaviors, and for Key Personnel Indicators (KPI) which cover teamwork, creativity and various other attributes.
Also, in the COVID era, where more people are working remotely, and probably will for some time yet, you need to test for independence. One of my clients now has 1/3 working from home, 1/3 working from an office, and 1/3 who go back and forth. This seems like a sensible model you can use.
You as the founder need to look inward, too, to ensure that you’re the leader that the company needs. I’ve worked for more than one startup where the founder wasn’t the best person to work for; the marketing positioning was generally sound, but the founder was just difficult to work for. You want to engender loyalty and trust, so you must have those attributes.
One of the areas that is frequently neglected in a startup among people is sales. Your salespeople, or persons should be able to sell effectively and ethically, and should be graduates of one of the sales academies, such as Sandler or Brian Tracy. They should have a proven record of closing deals, too (this is a trait that is often overlooked in sales)….it should be in excess of 25%..
If you have your product or service positioning right, and your promotion is right, sales ought to be relatively easy. You should have an idea of what your sales cycle (the time from sale to money collection looks like so you have enough money to fund sales.
We should also discuss how much space you will need. You will pay a premium if you lease a small space in, say, and Executive Center, but you don’t have much downside risk.
You should allow yourself growing room, but how much may take an educated guess. Your people should be able to help: when I entered manufacturing with one of my companies, I had no clue now much space I needed, but my production manager (and future business partner) did.
We always made sure that we leased from firms that had lots of different properties, because we regularly underestimated how much we would grow. Try to ensure that your lease has options to renew, and relocate. We moved twice in seven years, despite having allowed for growth (we thought) in each of our spaces.
If you need to raise money, you should base how much you need to raise on your worst case business plan (we have advocated doing a best case, a worst case, the odds of each happening, and that becomes the business plans and goals). But use the worst case to raise money, because you never know what might happen. It’s better to have too much money than too little.
As an example when we started the American School of Entrepreneurship, we did so using standard university classrooms we rented from University of Phoenix. It became apparent, with the advent of online delivery methods, that we could actually record the classes and the PowerPoint presentations, put them on a website and there was an international market awaiting. Home run for about three years, until Harvard, Stanford, Penn and Coursera caught on and ran over us.
We recovered our investment, but the change to online needed more capital. We are still discussing how we’re going to reinvent the School; all I will say is that it comes down to people.
So, in reading the last three posts to Entrepreneurial News, you’ve got everything you need to start a business!