This is the third article of the “How to build a business in part-time” series.
Creating your team is the critical stage in which you will determine what, in fact, is the most important attribute of your entire business: people.
“If you don’t have the right people, I don’t care how good the idea is, it won’t work.”
And in fact, I would say that pretty much every investor, with whom I’ve talked about what are the key investment criteria in a given startup, refers the team as the number one decision factor in deciding whether or not to invest.
Just as an example, if an investor doubts for a second that the team is not a solid and coherent block of carbon atoms or doesn’t have the required skills to skyrocket the business, no way he will place his credibility by trying to sell internally this company to his colleagues.
Even though not all businesses will require investment, I’m sure you understand that who you choose to work with, will, indeed, have a tremendous impact on your business.
So why is it so crucial to have a solid and coherent block of carbon atoms working with you (it seems I liked this expression)?
As basic as this seems, if you do not have your business’ core skills in-house, you’ll most likely have to increase the upfront investment just to get things going.
Let’s say you’re developing a Software-as-a-Service (SaaS) platform, for instance, and your team is mainly composed of individuals with an economics background.
You won’t be able to develop the necessary code by yourselves, and for that reason you will have to buy it at a higher cost, most likely, unless you know someone who writes code for free, which can happen, but is definitely not usual.
Also, you will only manage to have a first and non-tested version of the product, as all the future developments won’t exist without further cash-out payments. I believe the same will always happen with any other industry.
But for now, let me just stick to this simple idea: in general, you should always have your business’ core skills in your team because these are the skills which, most likely, will be related to a competitive advantage you might develop.
In other words, if you want to be better than your competitors in a given market’s critical factor, there’s a good chance you will find the key to leverage this advantage in the development of internal skills.
Likewise, if you outsource them, you will either pay too much to get things done – which leads to poor financial performance – or it will be tough to develop a competitive advantage – which eventually will also lead to poor financial performance.
Your company’s culture will be defined from the first day you and the other founders start working in the project.
This is something that very often is undervalued by so many companies, as the founders seem to ignore how important their values are in the brand identity of the company and how it touches its customers and every other stakeholder – stakeholder means every player involved with your overall business; at least your employees, suppliers and customers.
Your stakeholders will all be affected by the company’s culture and your way of working, so you better think on this from the scratch and do not let it to chance.
Let’s imagine the company founders are not perfectly aligned when it comes to their values.
What do you think will happen in the future? You see, when you guys are selling, everything will be great, everyone is terrific and the team couldn’t be better. But when things don’t go as planned, a team that doesn’t share the same core values will be easily broken apart by discussions.
As a personal example, I can tell you I was always proud of my team’s culture; each one of us, independently of being separate from each other, would always deal in the exact same way with customers; I guess we all shared the exact same core values.
And naturally, you want to pass those core values to everyone with whom you talk about, from employees to customers, as it is a main part of your brand’s identity and will greatly impact the perception other people have of your brand.
The customers aren’t the only relevant stakeholder, if your employees are unsatisfied with the company values, they will show this dissatisfaction to customers. I’d actually recommend you see your company’s first customers as the internal employees.
Finally, if your contacts’ network doesn’t see coherent values from your company, when they look for a partnership opportunity they might look elsewhere before getting to talk with you. This is also relevant to your business overall performance, since many competitive advantages are born in specific market conditions drove by strategic partnerships.
The team mindset is how each one of you guys will endure and overcome every challenge along the way.
In the second article “Why ideas don’t matter and three keys to success”, we’ve already discussed what the key success factors are:
- Flexibility – the capability to adjust
- Humility – being open to criticism and fostering a learning attitude
- Determination – the will to overcome every obstacle and stay in game
These are the pillars of an entrepreneur and, consequentially, a team.
Without one of these factors, the team will not be able to keep on adjusting, learning and growing against so many challenges.
There are countless entrepreneurship episodes that are marked by team ruptures when a truly difficult scenario is at hand. Even businesses with millions invested by third parties can break easily when one member of the team begins losing sight of the end game.
Recently I’ve read Sumon Sadhu’s story, an entrepreneur and, nowadays, an investor that states the reason why most companies fail is related with internal miss alignment amongst the team members.
He had a company called Snaptalent which had already received more than one million dollars in investment from top Silicon Valley players. At a certain point, the team faced a more challenging period which ultimately led the investors to make an ultimatum.
Even though Sumon wanted to continue the business and overcome this difficult period, his teammates didn’t feel that way. In fact, they decided to abandon the project and for this reason, Sumon shares a lesson he has learned: “You only know with whom you’re working in crises, not in successes”.
Alright, so now that you already know what a team’s key ingredients are, it is time for us to delve into how to actually find a team.
In order to do so, we will analyze in detail the three main doubts related with the process of assembling a team and also some myths that are very common within this practice.
#1 Do I really need a team?
The human being species lives from collective and social interactions. That is how we’ve learned through the ages and developed our brains in order to build remarkable things. Our entire species has survived and thrived given our capability to think collectively.
As Stephen Covey says on The 7 Habits of Highly Effective People ‘when human beings’ minds align in a perfect and synergistic way, 1 plus 1 can become, not only 3 but 10, 16, 500 or 2000’, there is really no limit to what our minds can achieve, when working together.
Thus, I must strongly recommend you work with a team, namely with people you enjoy working with and, most of all, are able to create true synergies.
It will be more pleasant, precisely because we are human beings in need for social interaction. With a team, you will be able to benefit from more working hands, no doubt, but what is most important is the reasoning power you will gain when discussing ideas and brainstorming.
Additionally, the celebrations feel better, and you also suffer less, when things don’t go as well as planned, as you have someone that intrinsically shares your pain.
Nevertheless, I want to let you know that even though finding a perfect team is of great value, if you are having a hard time finding your dream team, please do not get stuck here, this is not an obstacle for you to create a great company.
If you don’t find the ideal team members, one thing I would encourage you to do, would be to start building the business all by yourself, as soon as possible, even though you know that along the way you will be gathering resources to form a team.
Let me give you an example:
Creating Build Your Dream Company was a decision of my own, as this is a topic that fascinates me and I truly wanted to provide value to guys like you.
Fortunately, I didn’t need anyone else to start it, but that doesn’t mean I will shut the doors to be working with somebody else, quite on the contrary.
You see, the number one reason why people don’t begin new projects is related with procrastination supported by the excuses we create.
We’re always waiting for something to be perfect and complete, so finally we can begin executing. Well, my friend, such perfection is a utopia, as there will never be a perfect timing, or a perfect team, and, for sure, a perfect idea.
Do you really need a team? No, you don’t really need a team.
What you need is to start your business and get going. If you want to succeed in business, you must be in business.
Now, if you manage to build your team before starting your project, that will definitely help you (a lot), as long as the team has the necessary skills, values and mindset to create the exponential synergies you’re looking for.
#2 How do I structure my team?
So the questions here are: how should your team be composed? Should you start the business all by yourself? Should you find some partners? And what roles would they perform?
Sure we don’t want everyone doing the same thing, that’s the first insight I have for you. Every time I search for this topic online I find a wide variety of theories doesn’t seem you have a right way to go.
Some authors say you should assemble your team with very versatile guys who can pretty much do anything, because when you have a brand new company, and at least for one year or so, the founders will do everything, from cleaning bathrooms to accepting payments.
Well, but if you select people based on their proximity to you and versatility, you’re building a team with ‘one size fits all tools’ that won’t probably fit the company needs when you start growing.
Actually, there’s a chance that you won’t even be able to grow, at least as fast as you’d like to if you don’t have people with specific areas of expertise, as the business gets more complex.
If you are faced with this situation, eventually you might have to decide whether to find new people and let some of these go. So, it seems to me, that selecting partners that are very versatile and have no specific areas of expertise will most likely lead to the type of trouble every founder hates: having to let people go or having a hard time managing too much carbon atoms.
That’s why I have another way of looking at this subject. I would rather start a business by myself and add new members, that are exactly what I’m looking for, along the way, than to find some versatile people just to start with, who will eventually lead me to trouble later on.
When you’re starting your project, chances are you haven’t yet a clear idea of how exactly will your business run in the future. I mean, you might know that for creating a self-service laundry you need washing machines and a shop.
But I’d like you to go one level beyond. I want you to reflect a little bit on how would your business work in order for you to make money. What functions must be in place for the money cycle to begin?
So, for instance, to maintain and develop a self-service laundry shop business, you would need:
- Money recovery, every day;
- Someone to close the shop, if it isn’t open 24/7, and who can keep an eye on it;
- Machines maintenance, repairing, replacement and procurement;
- Cleaning service to keep your shop impeccable;
- Someone to explore new locations and establish the lease agreements.
Personally, I think this is an overall simple business to implement and manage, so it is very likely that one person alone is enough to run this business, until you start having like 10/15 shops, also depending on the geographical dispersion, of course.
I wanted to show you how would I structure the business in a high-level perspective. If we look at another example, for instance, in the food industry, you will see a slightly different pattern. It is very possible that you will need:
- Logistics management, as you have multiple suppliers and types of products, with different thermal conditions, that you have to manage on a daily basis;
- Point of sale management, in order to guarantee food quality and coordinate waiters, as the food business usually demands the founders’ physical presence at the point of sale;
- All the other business matters such as accounting, recruitment, establishing partnerships, evaluating suppliers, negotiating, etc.
This way, you can clearly see that you might need the following skills:
- One person with capacity to coordinate deliveries and strong arms to carry goods if needed, on a daily basis;
- One guy with food knowledge and previous experience in restaurants or bars, preferably managing people;
- A business developer who understand the economics of the business, usually this would be the managing partner or CEO.
In summary, always start by thinking about your business and how it is composed, what core parts do you need to make money. Then, try to go one next level, try to imagine your business on a daily basis and think on which components of the business will be consuming more time.
Be honest, if you know you need a person with previous experience in telecommunications or a chef for your food business, do not get satisfied with less than that, be clear about what you will be looking for and aim specifically at that.
The process of finding your team members can be scary to many and sometimes will represent an excuse for you not to start your own business. However, I advise you to start by yourself, as soon as possible and to be patient and selective along the way, there is no rush, you just shouldn’t procrastinate because of this issue. When you meet the right people, then you will invite then to join you.
#3 How do I find the right people?
This answer is simple: it is called Networking.
Let’s decompose it into several parts, so you understand perfectly why I mean Networking as the best way to find the right people.
You can’t imagine how often I’ve seen entrepreneurs starting businesses with the wrong team. These are the most common scenarios:
- Too many members – the more doesn’t mean the better, sorry;
- Starting with friends because it is more comfortable and easy;
- Creating a team of people with overlapping skills.
Do you know why I’m so certain about these? In the first place, because I’ve done them all, and secondly, because when you screw up, you will eventually be able to recognize when other people are also screwing up.
So let’s assume you perfectly know what you’re looking for and have no clue on how to get into contact with those guys.
Traditionally, in order to seek your team members, you would have some typical channels such as:
- Look up within the warm circle (friends and family)
- Look up within professional network
- Ask people on Facebook or Twitter
- Place an add on online portals such as Freelancer or Fiverr
So what I’ve found is that the best way to look for someone who is precisely open to work on a new project (many times without receiving any money) and has the necessary skills you’re looking for, is actually by sharing your business idea with as many people as possible and publicly state that you are looking for a partner, with a given set of skills.
It is THAT simple. Just go and ask people.
Whether in your friends, family or professional circle, let them clearly know about your business idea (receive some feedback, by the way) and ask them for help in referring someone to work with you.
Everyone will gladly do that for you. In the end of the day, people love sharing their opinion and recommending.
You can’t imagine how many times I’ve been amazed by how easy it is to get dozens of referrals by your network and how so many well-intentioned people struggle with it because they don’t want to publicly discuss their idea and/or share that they’re looking for someone to work with them.
I’ve also witnessed this reality in my own business.
We had no idea how to find a chef to work with us. We thought we should go to a cooking school and grab a student to work with us.
Then, at a certain point, we just decided to ask people. Literally wrote to friends and asked them ‘Hey, do you know a really good and young chef who is looking forward to being part of a new project?’
We found our chef on the first day.
Now, I understand this advice might sound too trivial, but you cannot imagine how many people are stopped by the fact that they can’t find team members.
It’s really the best I can do for you as I’ve witnessed how this is, indeed, the more effective way to find people to work with.
Typical myths about assembling a team
For many years, I’ve been listening to some really fascinating stories about managing a business.
As in every life’s chapter, you have these common sense assumptions that seem to mold the reality.
However, often the reality proves that what we’ve once acquired as a fact, must be always understood in light of the correct environment. What doesn’t work for the majority, can be the solution for a minority.
In this case, when it comes to creating your own business team, I’d like to share with you 3 myths that I ultimately faced during my previous venture.
These are issues that people with way more experience than me have presented as huge mistakes.
Here’s what I’ve found.
Never work with friends
Creating a business with friends might mean trouble, yes.
It is definitely true, and I’m sure you can agree with me, that when you’re working with friends, there’s a high chance that the team is less demanding than it should be; that it is negligent, as friends tend to be complacent with overall mediocrity and lack of perfectionism, in order to protect their relationship.
Even though I recognize this is a reality for many people, I want to share with you that my business was created with two of my best friends and it couldn’t go any better.
From the get go, we always knew we had to be demanding with ourselves. I told my colleagues, hundreds of times, that I would be really annoying and demanding, there was no room for laziness and negligence just because we were friends.
Because we knew the statistics were against us, when it comes to creating a business with friends, we’ve worked hard to overcome such prophecy. And today, even though the business no more exists, we’re still best friends and I wouldn’t change anything. In fact, I even consider it is a better option, overall, as at least you have high familiarity with your friends, so you can be open and brutally frontal, which with external people tends to be harder.
Never split equally your company’s equity
The second myth is related with how you split the equity. Once again, I’ve heard that the founders shouldn’t have equal equity stakes, as it could lead the company to multiple no-decision scenarios.
Well, I’d like to share with you a conversation I had with Zarar Rana, some time ago. Zarar is this serial entrepreneur with a proven track record of establishing and building technology companies.
He told me that whenever he gets into a new project, he works with a tremendously skilled engineer who develops all the code, and Zarar gives him 50% of the company.
He literally splits the company’s equity equally with his partner, having no concern or whatsoever for the typical issues that many people would raise, such as ‘oh, but that wait you lose control of your company!’
No, he doesn’t care about control, he cares about trust and empowerment. Zarar will focus on business development and the other guy will focus on code development, as simple as that.
He will work as many hours as the hours the technical guy spends writing the code. What matters to him is that there are trust and empowerment within his project.
He wants the other partner to be as committed as he is, and there’s no other way than to give him what he truly deserves: equality.
Set the governance boundaries from the get go
As you might know, when you create a company for the first time, you may define a group of governance rules. Usually these combine subjects such as:
- How is the equity split amongst the founders?
- What happens if someone wants to quit?
- Should the company reinvest the profits or withdraw the money for shareholders?
Well, and when we are specifically talking about creating a business in part-time, we tend to see some really strict governance rules like these, as well:
- Which skills each founder brings to the company?
- How many hours everyone must work per day?
- Possible penalties if someone doesn’t perform as expected;
- How can the majority of the company decide to kick one of the founders?
Yes, this is a more common scenario than you would expect.
You find some experts telling you that you always have to define the governance rules from the beginning of the project, so you won’t have any surprises along the way. This advice is based upon the fact that, as we all know, the contracts are only read when they are needed.
So the argument for defining clear governance rules from the get go of the project exists because some people want to feel safe and want to put some pressure on the other founders, in order to get things done.
And I have to understand that, come on, I know that lots of people who desire to start a business in part-time, begin with high motivation but unfortunately end up going nowhere after a while.
To build a company in full-time is already tough, now imagine in part-time.
It is a huge challenge. You have a day job that consumes your daily energy and focus, family at home, have to cook the dinner, take children to bed, etc., etc.
So, generically speaking, the large majority of part-time wantrepreneurs will not proceed with their original intention of actually creating a business, it is a sad reality.
Because all wantrepreneurs suspect this might happen, people usually tend to write these strict governance terms, as soon as the project starts, in order to feel safe about the others’ commitment.
However, in my opinion, all these governance rules just take all the trust out of the business.
I mean, if you really need to set strict governance terms, in order to guarantee that your founders will work, something is already wrong, don’t you agree? This is entrepreneurship, it is definitely not easy. If you need to put pressure on your partners in order to have them motivated, maybe they shouldn’t be entrepreneurs.
For this reason, my humble opinion and experience lead me to believe trusting people is the way to go.
Trust is the foundation of any relationship and true leadership. If you want to create a successful team, which is able to discuss and generate outstanding synergies, you cannot chain people from the get go, you cannot treat people as if they are machines.
It is true that eventually someone will abuse your goodwill. I agree. But on average, by trusting people and fostering empowerment, you will benefit so much more from life’s, in general.
You will create better and genuine relationships, you will solve big problems and have way more fun doing it.
That is definitely the way to go.
Thanks for reading guys, this was the third article of a series I’ve writing called “How to build a business in part-time”, every week I should be launching a new chapter. This series’ purpose is to provide you with a structured, complete and friendly guide on how you can build your part-time business to a tremendous success, so later on you can dedicate yourself to your dream company.
Feel free to let me know which topics would you like me to address, I’m glad to reply specifically to your question.
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