Make no mistake: Assemble your team

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As previously noted here, it's no easy feat to start your own company. Yet, the nurturing of creativity leads to inevitable economic growth and consequently, the individual urge to make an impact overcomes the very real fear of failing. Complicating matters is the fact that the odds are, one can never do this on his/her own. The idea may have originated in a single individual, but its implementation, or at least its successful implementation, will no doubt require a team possessed of varying expertise. 

One of the challenges an entrepreneur inevitably encounters is trying to attract executive talent to join in the launch of the new venture. It is fairly common to outsource initially some of the development in the making of your products/services, reducing substantially your outlay of cash. Many services can and have been outsourced to China and India in the course of a startup venture's development. Not unsurprisingly, this is now a source of some concern expressed by Intel's former head, Andy Grove, among others. 

Thus, you can get some of your technical work completed and even administrative assistance that will be taken care of by others. However, if you intend to seek venture capital or Angel investing, you will need to have a team whose members include those with respected skills within their industry and credibility in the business area you intend to tackle. Identifying these individuals is generally time-consuming, both in the recruiting and closing process. The difficulties in accomplishing this objective can be overcome through the articulation of the market size, the solution your product or service offers, and how it squelches the pain in that market. With the economy remaining in such a funk, the bright side of the equation is that there are a lot of talented folks now open to risk who, during a more robust economy, would not otherwise be available. In attracting such talent to your venture, it may be that you can take advantage of the situation, but should not of the individual. 

What that means is you should not be parsimonious in sorting out the equity shares in your company. As the leader, you're asking these folks to join you in your venture, work 12 to 16 hours for you nonstop for months on end and to be paid, at best, a quarter of what they are used to making. All in all, that's not exactly an enticing package to present to someone, whether with or without mouths to feed. 

It, therefore, behooves you to understand the talents that you need, which will, in general, include a chief of experts in finance, marketing, technology and sales. To identify successfully these experts requires a fair amount of due diligence on your part, starting with an inquiry directed to those within your professional network. From there, you'll find some names and then it'll be a bit like following the yellow brick road. 

Since the first hires of an organization are likely to be of great importance, as well as the most costly to rid yourself of, you need to ensure that you are comfortable with each member of your team, and then make sure of their compatibility as a group. So many startups fail due to disputes among the founding management team, not to mention the hard feelings that could lead to unfortunate and costly litigation in the event things do not work out. 

With a team in place, you'll need to address how to compensate them while you're still conserving as much cash as possible. The more equity, or skin in the game, you are willing to concede to your four or five top managers, the better you will be served. This is assuming, of course, that you have made the right decision in assessing their talents and personalities, both attributes necessary to have the venture succeed. Many entrepreneurs find themselves struggling with this issue, wondering if they're giving up too much. To be blunt, 20% of an idea, not yet funded or with little funding, is not very much to consider from a talented person's point of view. Nevertheless, if you clearly believe your business can scale and addresses a $1 billion market, then everybody on the team that can get you where you want to go should be well compensated in stock. Through their equity holdings, you're offering an avenue for wealth creation while at the same time serving your own objective. 

So, if you're negotiating with your chief technical officer who, based on your own findings, you trust and enjoy both professionally and personally, then, it pays you to be as generous as possible. In the long run, you'll have a satisfied and a loyal set of team members.