Great businesses need both great ideas and the talent to bring them to fruition. So in many ways, a superstar core team is the second most vital asset an entrepreneur brings to the table — and arguably the most important one to get right.
For a young company, a bad hire is worse than no hire. The fact is, your ideas are still being vetted. There will be adjustments, maybe even a 90-degree turn to an entirely different product or business model. Such journeys frustrate some people, and then there are those who understand that change is part of startup life, and in fact it’s their job to pressure-test the proposition.
It can take many hours to make a hire, from deciding on salary to recruiting, screening, interviewing and negotiating. But before looking outward, define your own role within the organization. Will you function as the CEO? Entrepreneurs naturally want to run the show, but what if you’re better at product development than being the public face of the company?
As founder, you can assign yourself any role you like. Make sure it’s one that plays to your strengths. Your great idea deserves nothing less.
You’ve heard the story a dozen times: A person comes up with an idea, a good friend helps flesh it out, and they think, “Hey, wouldn’t it be fun to start a business together?”
Fast forward a year, and one is willing to chew her own arm off to get away from the other.
That’s the worst-case scenario. Best case, both bring unique skills to the endeavor, their roles are clearly defined, the startup is effectively managed and the process is more fun and less stressful than going it alone.
Choosing the right co-founder pays dividends: Research on startup hiring by First Round Capital shows teams of two or more founders outperform solo founders by 163%. The key is to be methodical in choosing a partner. Listen to your gut, but realize this is no place for an impulsive decision.
When considering bringing on a partner to launch an idea, ask:
There’s a reason we listed complementary skills first. Leave ego aside. Maybe your co-founder would be a better CEO than you. That doesn’t mean you’ve given away your company — a partnership agreement can address how important decisions are made.
One note: Don’t try to run the company by committee. If you’ve made your co-founder CEO, CFO or CIO, you’re doing so because you trust her to take on that leadership role. Minimize second-guessing.
If you’re looking to attract investors, a co-founder is a plus. Someone else has vetted and bought into the idea, and there are two people with skin in the game to keep each other motivated. There’d be no Microsoft without Paul Allen or Apple without Woz. Funders also know that if one founder flames out, the other may stay and try to make a success of the venture.
If you decide to move ahead with a co-founder, hire a lawyer with experience in partnership agreements. Include a clause that spells out how disputes over matters not addressed in the contract will be settled. The more complete this document is, the less time you’ll waste arguing down the line when it could be harmful to the business.
Most entrepreneurs are focused on developing their idea or product and getting it into the marketplace. They want to think fast and act fast. Finding, fully vetting and drawing up an agreement with co-founders is a process. But it deserves every bit of time and serious thought you can commit to it.
Once you have a co-founder (or not) and some funding, the temptation is to hire a core team quickly, because the needs are there and you expect continued growth. But scaling too high, too fast is a well-known destroyer of startups. The business must be able to sustain all hires. This doesn’t mean every position has to be a revenue generator, but that the business as a whole must be producing the revenue required to comfortably sustain positions long term that don’t directly generate revenue.
Now, it can be tough to measure the exact ROI for your first customer service rep or accountant. You can see how that’s much easier to do for a sales VP than a CMO. But that’s the point. A high-performing salesperson is a necessity, whereas in-house marketing might be considered a luxury given that the founder is the expert on the product and audience, and there are plenty of PR agencies for hire to fill gaps.
Distinguish between what you need and what you want — we all have trouble with that one — while making sure you consider intangibles. A sales assistant with project management skills can free up your account reps to spend more time hunting, less time generating proposal documents and could pay for himself in a few months.
Whatever the role in play, there are some traits that make for a successful hire.
As you assemble your core team, think about company culture. Eventually you’ll have employees who are just there to do a job and support themselves. They aren’t leaders or partners, no matter how much they’ve bought into the mission. You have a responsibility to be deliberate about shaping their work environment.
You can strategically shape your company culture, or you can let it evolve organically and get what you get. To do the former:
Then, work on an employee handbook that covers topics including:
This list is just a starting point. There are dozens more must-have HR policies to consider. Again, outside firms can advise you until you can hire an HR manager.
Your north star: Every hire is about moving the business forward, and it’s clear to you how each individual will contribute to success.
You won’t always get it right, and mistakes are painful, especially if a wrong hire is part of that initial core group. Even in established businesses, the cost of replacing a rank-and-file employee can be 50% to 150% of that position’s salary, which is why retention is such a hot topic. But don’t get paralyzed with indecision. As the owner of any professional sports franchise will tell you, there is no team that can’t be fixed.
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Your employee handbook should cover the elements of company culture listed above, as well as policies regarding conduct, compensation, employee classification and more.
Connect your HR and payroll data with financial, project planning and budgeting processes from the start, and avoid ending up with a tangle of multiple systems at your business.
One hard and fast rule: Never shoehorn someone into a leadership role they either aren’t qualified for or aren’t passionate about because you want the individual on the team and that’s the only slot available. Do so, and you’re setting them and the company up for failure. Especially in the early stages, every role is precious. If you catch yourself saying, “Maybe they’ll learn to like it,” stop and reassess.
Before identifying a prospect:
When you identify a prospect:
Fractional executives often bring experience and expertise any organization would envy. They are usually former executives and/or consultants who sign on for a designated number of months, with the intention of working their way out of the job. To do so, they establish systems so that a hire can step into the leadership role and run with those processes.
As an entrepreneur, you’re buying time with a contract exec, but you aren’t spinning your wheels. Valuable, foundational work is getting done, without benefits or equity costs. But there’s a catch — or two of them, rather. It’s not easy to find superstar fractional executives who are available to come aboard when you need them. These are people who call their own shots. And they aren’t inexpensive. They tend to charge healthy monthly rates, but remember, this is for a limited amount of time.
If you have a VC funder, look to your contact there to suggest a fractional executive, even refer board members. Ensure you have a detailed SOW and a contract that includes an enforceable NDA, something else a funder will look for.
For companies without a technical founder, signing on with a managed service provider (MSP) is an efficient and effective way to acquire the technology services you need. MSPs with experience in your market will offer solid advice and save you time and the need to compete with deeper-pocketed rivals for expensive technical talent. They can also often negotiate much better deals with large IT vendors and cloud providers than you could.
Critical questions to ask prospective IT service providers center around whether it’s recognized as an expert in your industry, its teams’ certifications and the service-level agreements and pricing structures it offers.
A great idea, even a great product, will get you only so far. The key to success as an entrepreneur will be your repeatable ability to find and recruit a core team of talented leaders who will be fully committed to going on this incredible, life-defining journey with you.