Will Your Team Take You to Victory?
While the stages of business development are important to understand, the concept of making assumptions versus validating them is critical to your long-term business success. The real key to long term success comes from understanding the various components of your business as well as possible, and better than your competition: Problem Definition, Solution Definition, Opportunity/Market, Competitive Advantage, Business Model, Culture/People/Structure, and your Business/Financial Plan. Let’s discuss the Culture/People/Structure.
These are not things simply defined by a paragraph of your thoughts. Like all of the other components of your business you must make assumptions, test them, and validate them before you can fully define any of these three critical components of your business. These are things that must be fairly well defined before you launch a business, otherwise they will never be defined until you have a problem. As a result, this chapter of my book is going to be a little longer than most and, therefore, I have split it into two blogs…you will have to wait until March for the second half, sorry.
The components of your culture/people/structure definition include the following: Team, roles, skillsets; Ownership structure & documentation; Procedures, processes, contracts and other legal issues; Stakeholder relationships (customer, vendors, employees, financing, etc.); Vision, mission values and culture. Please re-read that list. Can you think of any of these that are not a critical component of your business? Of your business development? From an investor’s perspective the answers you provide are a window into who you are, who your team is, and what you want the future to look like. While not always easily defined, they truly are the walls and roof around your business.
Team, roles, skillsets…simple. Who do you have, what are they responsible for, and what experience do they have to support their responsibilities? That’s the easy part. The hardest part is being honest about the team’s skillsets and their match to their roles. That is quickly followed by the difficulty in admitting that your early/current team probably won’t be your long-term team. In fact, if you are the inventor/idea guy and leading the development effort there is a great chance that you should not be the CEO of your own business in the long-term.
In addition to being honest about your current team, you need to look at your financial pro forma in detail and determine what skill sets you are going to need to add over time. That includes what type of people, how many and when they will be needed. While business development is not the same as marketing which is not the same as sales, early on you may have someone responsible for all three. That individual may truly only have deep experience in one aspect, say branding, yet you need them to step up in the near term to handle it all. Does that really make sense? If not, that is ok, then answer the question what is your plan to change the situation?
Ownership structure and documentation. While you are in the concept stage you should not even think about this, but as you move into your early development stage you want to start looking at your competition and how they are structured and financed. You should not form a legal entity until you either need to form an entity for legal reasons or you are well into your early development or later. But starting to make assumptions about where you want to be and testing those assumptions needs to be done in conjunction with the rest of your development. If you need to form an LLC, you need to file the proper documentation and understand the various options. Defining your structure, preparing and filing the proper documentation and applying for the proper state and federal licenses, etc. is not something that should be taken lightly. Hiring a lawyer to help sort through this is a must. Consulting a tax advisor is also strongly recommended.
In addition to your organizational structure you need to consider your management structure, now and in the future. This task should be based early on the key skills you think you need for long term success. If there are no real operations, do you need a Chief Operations Officer? How many layers of management will you need? Should you need? All of these answers will help inform your financial pro forma development. While they are sure to change as you move forward, having a defined structure will help you set goals and drive success.
Your challenge this week is to take a serious look at your organization and determine if you have the right people in the right place with the right skillsets to succeed? Is your ownership structure blocking you from moving forward? If so, plan for change now!
Mitchell Bolnick – The Excel Consulting Group