You don't need an MBA to start a business, but you do need to get a few things right if you want to succeed. Whether you're opening a restaurant, starting a tech venture, or producing a Hollywood film, the fundamentals are the same. You need a product that meets market needs, a business model that works, a management team that can execute with precision, and lots of luck.
In my last two articles I talked about what to expect during your product development phase and how to generate a realistic business model (see BW Online, 05/04/06, "Countdown to Product Launch, Part I"). and (see BW Online, 05/12/06, "Countdown to Product Launch, Part II"). The challenge I address in this article is how to assemble a winning management team. Good management can take weak business models and evolve them to perfection. Bad management can sink even the most promising ventures.
Be aware that you don't have to hire an individual for every possible need -- staffers can perform more than one role. You can also hire part-time advisers and consultants and outsource some functions. Here are the seven key roles that at least one member of your full-time management team should be able perform flawlessly, regardless of what industry you are trying to break into:
1. Top leadership. You need a competent leader who can make the final decisions on business strategy, hiring and firing, and resource allocation. The leader needs to take all responsibility for the business's success or failure, motivate the team, communicate with the outside world, build the corporate culture, and ensure that sound ethics and values permeate the organization. The leader doesn't have to be the founder of the company.
2. Operations. Someone has to worry about the operational details. This means watching the bottom line and making sure products are delivered on time, customers are happy, and that your company is meeting legal obligations.
3. Product development. You, the entrepreneur, often fit perfectly into this role because of your passion and vision. Chef, movie director, chief technology officer are all good examples of those in charge of product development in different industries.
4. Marketing. The world needs to know that your business exists and what it offers. You also have to be able to differentiate your products from your competition and figure out how to reach your prospective customers creatively (see BW Online, 12/07/04, "Seduction, Hollywood-Style").
5. Sales. Closing deals is the most important part of any business. Every employee who deals with customers must be able to sell. Bear in mind that your sales director should be able to perfect the sales process and orchestrate the sales team (see BW Online, 07/12/05, "Selling for Survival").
6. Finance. You have to balance the books, pay taxes, build financial forecasts, manage budgets, and collect revenue. It doesn't matter what industry you're in, someone has to able to tell you when you are getting into trouble (see BW Online, 04/11/05, "Lights! Camera! Overruns!").
7. Legal and HR. You have to find good lawyers to protect your interests, and human resource experts to help you hire and manage your employees.
Hundreds of books exist on managing, recruiting, and building teams, but there is clearly no standard way to go about it. There are also plenty of companies and experts that specialize in helping you do just this. So I am not going to offer you a guaranteed model for success. But I will give you nine pointers to consider when making hiring decisions, based on my experience in the trenches at my two startups:
1. Experience counts. In almost any industry, the same principles of building a business apply. I thought that the tech world was unique until I got involved in Hollywood. I found that those with experience generally know what works and what doesn't. They can recommend where to allocate time and resources and what to avoid. Be sure to get experienced entrepreneurs on your team and make it a point to learn from them.
2. Hire the very best. You may be afraid to hire people who are more competent in certain areas than you are. Don't hesitate. I attribute my success to the hard work of competent people I hired who felt motivated to succeed. Distant possibilities became solid opportunities when I had the support of my staff behind me.
3. Hire people who are out to to prove themselves. Those who have already achieved success don't usually feel they have to succeed as much as people who haven't. My best hires had the humility to learn and the hunger to succeed.
4. Don't rely solely on big names. There are many competent executives in companies like IBM (IBM), Computer Associates, and Oracle (ORCL). Yet I've found that my least successful hires have been from large and established firms. These individuals are typically used to a support system and infrastructure that you don't find in startups and they haven't learned to hustle to the degree entrepreneurs do.
5. Pay attention to attitude. You can normally teach individuals new skills, but you can't always instill positive attitude. I've always focused more on the attitude of the people I hired than on their exact skill sets, so that I don't have to deal with personality problems in the future.
6. Check references. Call managers and colleagues of your potential hire and talk to them yourself. Ask what they and others have to say about working with the individual. Check to see if their description of the candidate's responsibilities matches the candidate's. You may be surprised at how forthcoming references actually are.
7. Take a risk. Sometimes you should feel free to make a decision based on chemistry and gut instinct rather than the résumé itself. But don't be afraid to cut your losses fast if the new hire doesn't work out.
8. Ethics and integrity are everything. If there is any doubt about the honesty of a candidate, it is usually better to move on to the next. It is hard enough to create an ethical culture at any company without being handicapped from the beginning with a questionable hire (see BW Online, 11/8/05, "Integrating Ethics at the Core").
9. Don't discriminate for the wrong reasons. You must discriminate constantly, because you need to select the best job applicants. But when discrimination is based on anything other than productivity, the hidden cost is loss of efficiency and morale. And it's against the law. To succeed, you must build a workplace in which only competence, results, and hard work are rewarded.
You'll find that by assembling a winning management team, obstacles your business will surely encounter can be overcome. Next week I'll talk about the final ingredient to launching a successful product -- a concept I call "lots of luck."