Building the Right Team

An inexperienced entrepreneur will rarely have the mix of skills or the experience to get everything right on their own first time. This is especially true for innovation-based companies. Investors will not put money into a business that could suffer from easily avoided mistakes. They will look for teams of people with a suitable blend of experience who will avoid those mistakes and also add value. If that team is not in place a potential investor will want to see how the entrepreneur plans to build that team.

Where You Need Experience: Michael Porter developed a model in the 80s to explain the ‘Value Chain’ of activities within a business. Primary activities cover the core function of the business, but the support activities are also very important. You will have to consider your strengths and weaknesses in each area, and you must seek to plug any gaps.

Primary Activities
As an entrepreneur, you may not have a deep skill set in any one area, but you will have to balance the activities within the firm throughout the lifecycle of the business. In the early stages, development of the technology is key, while it is marketing and service in the later stages. That is not to say any activity should be ignored at one time or another.

Experienced entrepreneurs will have acquired certain intangible qualities that improve their chances of success, such as:

• Self-belief
• Credibility with investors
• The ability to balance the value chain of the business without pioneering the specialist skills themselves.
• Knowledge of the pitfalls

How This Relates To Your Business

• Initially it will be difficult to recruit experienced individuals into your management team. However, non-executive directors and business angels can add significant value and experience. They can guide the entrepreneur through the issues involved in a start-up business and can help avoid the pitfalls. The management team needs to bring a blend of experience in the areas identified by the value chain. The team’s balance must be suited to the business and its stage of development. Key members need to be attracted through incentives, such as a credible business plan and equity. Equally important is your vision, passion and the pioneering spirit of the firm.
• Investors, such as business angels and venture capitalists, do not expect to see a fully formed team, but do expect to see how an entrepreneur will plug the gaps in the future. Through their network, investors are often able to help out with this.
• If you do not have a team with the right blend of experience, admit where you are weak and communicate to investors how you will build that winning team through an understanding of balancing the value chain