Building The Right Team To Scale a Start-Up

 

For first time entrepreneurs, getting the product or service right is crucial. Neglect this and the company does not even make it out of the blocks.

But what do founders need to do when the company gets beyond proof of concept into the “second stage,” when scaling is the goal?

At this point, while the product or the service remains important what ends up driving the ability to scale is not the product or the service, but the team of people that are put in place to serve the clients and build the product or service.

If you don’t build that team with rigor and discipline it dramatically impedes your ability to grow.

Human capital remains an underinvested area—one with the potential to bring large rewards to entrepreneurs and founding teams who make it a priority.

Let Go of the Wheel

During the start up phase of a company, founders tend to have their hands in every aspect of the business, from product development to client relations.

But there is a point when being deeply involved across all aspects of the business fundamentally limits the company’s ability to grow. This is when the founders will have to take at least one hand off the wheel and entrust some of the decisions of the company to others on the team.

As versatile as the founder may be, most founders do not have the expertise, or the time to stay current, in every area of the business.

Find Trusted Advisors … and Listen to Them

To this point, by the time most companies reach this “second stage,” the founders have recruited advisors in the form of funders or corporate boards. Listening to those advisors is very important.

If a company does not have the backing of professional funders and a board of directors it is still important for the company to develop a strong, even if informal, advisory board to guide the transition.

Not many founders are objective enough to know what their limitations are.

A good board will make a management team dramatically better because they force them to think about things they are blind to.

Effective advisory boards challenge the management team’s thinking, prodding them to flesh out their thinking and develop contingency plans.

Of course, even a wise board is rendered useless if its advice is ignored. One of the barriers to advisors being heard is a temperamental founder.

Many entrepreneurial people don’t like rules or supervision. They tend to be passionate and focused, and they tend to think they’re always right.

Hire Deliberately

Entrepreneurs tend to come from marketing, product development, engineering, sales, or finance. Most often than not, not many former human resources practitioners are running new businesses.

Because it is not top-of-mind for most entrepreneurs, mid-stage companies often lack capable strategic HR support.

As part of a more disciplined recruitment process, such a growing company must institute specific competency-based role descriptions and assess the entire team of current employees to determine what competencies and experience best correlate to success.

Timing the rollout of this recruiting process is critical to its success.

Early on, a company might need an accountant to keep the books. As the business grows, however, it needs an accounting manager, then a controller, and finally a CFO.

Hiring the CFO too early and the company will not have the reputation or the budget to attract a capable candidate for that role or get the right person to fulfill the company’s immediate needs.

Such an organization needs to specifically and deliberately recruit people who are going to be able to execute well in the role as it needs to be designed for the business at that particular stage.

This recruitment effort is the first step in consciously building a culture that supports an engaged workforce that is equipped to take on the task of scaling the company.

The right people do all the things that are necessary to get the business to grow: they get the product right; they get the service right; the culture is healthy; they get a motivated team behind them. Everything else falls in line.

If you don’t have this right, the opposite happens. It’s a painful and expensive mess.

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