10Aug

Entrepreneurs: Your Initial Team Must Match Prior Patterns for Success

Posted by Steven Teo in Entrepreneurs

Entrepreneurs tend to be so focused on getting their initial operations going that they often neglect to fill out their initial management team to align with prior patterns for success. Like it or not, investment companies and their investors are still licking their wounds over errors made during the past decade, even back to the burst of the dot.com bubble. Much of the available capital for startup ventures has unfortunately gone to propping up these mistakes, leaving not only less funding for original ideas, but also establishing a highly risk averse mindset in those still willing to invest in early stage development companies.

It is therefore highly advisable to form a more than adequate team at the outset, not only to meet the expectations of the investment community, but to benefit early on from the additional skill sets brought onboard. Far too often, two partners will come together with an idea, limited funds, and the entrepreneurial spirit to march forward, but are reticent to add new people to the schema. Typically, they each come from similar backgrounds and believe they have all that is necessary to build a great company. Bringing other professionals of comparable stature into the mix seems too much to ask. Why add more overhead at the start? No sense hiring any of those types until we really need them.

This error in judgment has been witnessed so many times that a first impression never has a chance to be made. Investors turn off immediately. If our young entrepreneurs corrected their error by bringing on two junior individuals, they only compound their error for all to see. The number one reason that new startups have failed over the past decade is that they address the need for a strong sales department far too late in the process. The number two reason is that there is not a seasoned financial professional on the scene at the outset. Typically, a commission-based junior sales type person is hired after the initial planning is completed, and the financial person, if hired, tends to be a junior bookkeeper type who adds nothing to early planning efforts.

Sales and related revenues are the lifeblood of any enterprise. The crucial need early on is to have a veteran onboard that understands the market, knows what distribution strategies will work and under what circumstances, and who can provide critical guidance during the development stage to ensure success down the road. The sales process must begin in concert with development in order to be off and running when the final product or service comes off the assembly line. If not, revenues are slow in coming, and more times than not, the product must be completely redesigned to get any traction in the marketplace.

Take a look at any successful marketing or IT development venture and you will find a strong financial person joined at the entrepreneurs’ hip. Experienced financial people are not overhead. They pay for themselves by preventing common mistakes from occurring during the critical start up process. They understand what it takes to raise funding from a fickle group of investors. They understand how to keep everyone focused on the end game and how to prevent distractions from steering anyone off course.

Partners tend to worry too much about diluting their ownership positions when starting their various enterprises. Strong sales and financial people are assets that will only enhance the value of the company from the beginning. More value means more pie to divide, not less. Investors understand this equation. Entrepreneurs would be well advised to understand it, too.

About the Author:

This article comes to us today from Tom Cleveland of Forexfraud, where experienced professionals provide expert advice, educational tools, forex market commentary, and best practices guidance to craft a better online forex exchange trading experience for everyone, everyday.