Picking Business Partners
People are as important as products, services, or markets in building a significant business. Sometimes owners and managers spend too little time assembling and cultivating a proper team made up of people with proven, complementary skills. Expediency pushes aside thoughtfulness in hiring, and the results are predictable. Talent voids and/or duplication of effort hamper the development and execution of sound plans. Expediency in terms of people is not a formula for long-term business success.
Enterprises that grow in a competitive environment require a lot of energy-physical as well as mental. While one or two key individuals often set the pace in the early going, the complexities of our times make it difficult for founders working essentially alone to construct companies of any size. Once again, a proper team is important for lots of reasons. A complete team usefully consists of two rings, one inside and one outside. The inside ring is made up of people with strengths in the various operating functions required by the particular business-sales, science, accounting, manufacturing, software, etc. It is desirable to have qualified people in this ring who can work hard together, day after day, toward shared objectives.
The outside ring consists of advisors who bring specialized know-how to the operation, often on an as-needed basis. Directors, CPAs, attorneys, insurance brokers, advertising experts, and bankers or investors are candidates for this ring. Such people should be selected with the same care as the members of the inside ring. To the extent they are picked carefully, the chances of business performance meeting expectations are improved. There are two basic rules for picking members of both rings-your business partners: 1. Let the needs of the business drive your choices. 2. Hire proven, not potential, performers.
Needs of the business. A business selling home-sewing products via catalogs and the world wide web needs key people who know data-base management, catalog production, purchasing, the internet, and sewing, of course. An aqua-business growing abalone requires senior people with direct experience in marine biology, seafood sales & distribution, and farm management. The nature of each specific business dictates the skill set required of its people.
Proven, not potential, performers. There are many reasons people seek to join attractive businesses in either the inside or the outside rings. Applicants or candidates for all levels-including boards of directors-can (and do) tilt their experience records to match the target enterprise. In fact, resume experts encourage position seekers to "tailor" their resumes and applications. The challenge to a business owner or manager is to ferret out the real accomplishments of the candidates for either the inside or the outside ring. Few smaller companies can afford extensive training periods. Such companies need key people with proven records of success at doing precisely what it is that needs doing. Don't proven people cost more? Yes, they may cost a premium in terms of their direct compensation. But in terms of the results such experienced people produce, the total cost to the business is likely to be lower than if you hire rookies. Leave to your giant competitors the hiring of people with only potential to offer.
Pitfalls to avoid. There are five common mistakes business
builders tend to make as they piece together their staffs:
· Key people are assembled spontaneously. For example,
suppose a company president, call him Joe, is at a party. Joe
runs into an old friend, Sam, he hasn't seen in years. They get
into an animated conversation, and before the party is over Joe
has made a job offer to Sam. Suddenly Joe's company has a new
employee on the payroll. This convenient combination of souls
may be just what the business needs; then again, it may not be!
Success depends on the needs of the business and the real track
record of the newcomer, whether or not Joe and Sam are old friends.
Neither factor-needs or track record- is likely to receive its
due in a spontaneous hiring.
· Harmony is sought at the expense of creative conflict.
We all tend to hire in our own image. It's human nature.
And doing so certainly makes life more comfortable-at least in
the short run. But friction is the source of heat that makes
fresh ideas germinate. Too much friction, of course, is debilitating.
Too little, and all we get are echoes of our own thinking. As
we use the word, a team is not a collection of clones, it is
a collection of complementary skills.
· Any board of advisors consists primarily of insiders-company
officials, spouses, friends, and relatives. This is an everyday
variation on the harmony pitfall just above. An insider board
is often dysfunctional in terms of adding any real value to a
growth-oriented enterprise.
· Family attorneys, CPAs, and bankers are automatically
used for the business. Here, again, actual needs should drive
the makeup of the outside ring, not convenience. For example,
an attorney skilled with wills, trusts, and family relations
may not be the best person to help an entrepreneur build a business.
· People with widely-varying ambitions are mixed together
in the same financial lifeboat. Lifeboats make progress when
all the oars are pulled in sync toward an agreed destination.
Dig to find out what drives various candidates, what makes 'em
tick. It's too late to inquire about crew-member aspirations
when your tiny boat is tossing around in the sea!
Business builders need the right number of right people. Too few results in weakness; too many creates chaos; the wrong people produce dissension. Pick business partners with care.
Copyright © 1999, 2003
Steven C. Brandt
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