Journey of a Serial Entrepreneur

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How to get from where you are to where you want to be

5 Steps to Manage Startup Risk

“I think that only daring speculation can lead us further and not accumulation of facts.” Albert Einstein

In the first post of this series, I added a video which stated life = risk. If we shield ourselves from all sorts of risks by staying in our small comfort zone we will not be living life fully. It is our perrogative to find a balance to ensure that we live life to its fullest. The points below relate how to find that balance when starting a business.

1. Market Risk: Our world is in a constant state of flux and with mind boggling technological advancements taking place, we have to be constantly aware of the changes taking place around us. This requires us to monitor our competitors, be in touch with our customers and suppliers, and watch for trends which could potentially make your business extinct. To read more about how to manage market risk please click here.

2. Operational Failure: All companies operate on a set of processes. These processes drive all avenues of business, ranging from Internal operations, business development, sales, marketing and execution to name a few critical functions. When these processes are not optimized or closely scrutinized a business will not be able to scale effectively and reach its target goals. To read more about how you can avoid operational failure please click here.

3. Financial Risk: Without financial controls a business loses its foundation and is on shaky grounds even when the company is making steady profits. Ensuring that you have sound and reliable financial controls in place will allow you to minimize your exposure to financial risks and allow your business to grow more effectively. To read about how you can add financial controls to your startup please click here.

4. The People Risk Factor: You hear it all the time, “Our people are our most important asset”. Its like a mantra that has been wedged into our sub conscious and is constantly repeated from board meetings to your daily staff meetings. However, I am always surprised that though this is such an important asset, very few steps and measures are taken to mitigate the risk associated with this asset. To read more about how you can add effective control measures to mitigate these risks please click here.

5. Lessons in Risk: Having been in this line of work for some time now there have been several risk factors which I have witnessed or experienced first hand. These cover the time you should start, what the risks of starting without a plan are and the kind of risks you have to deal with on a daily basis. To read more about these lessons please click here.

In life and business, if you stop taking calculated risks, or if you let doubt  paralyze you, moving forward becomes close to impossible. It is only when you make mistakes that you learn from them and eventually move forward. Along the way we have to manage the types of risk faced and ensure that we take precautionary measures to avoid risking it all if we do not know where we are headed. Once you know what you want and how you want to get it, take action , because thinking ‘what if’ is just about the worst thing you could do to yourself!

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Personal Experiences With Risk

“Be brave. Take risks. Nothing can substitute experience.” Paulo Coelho

The risks mentioned in prior posts provide a framework on mitigating risk in various divisions of business. Some of the risks and counter measures mentioned in this post are general and some those I have personally encountered during my journey as an entrepreneur. 

1. Start as early as possible: The younger you are , the lower the  risk level when embarking on new startup ventures. This is a point in life when you do not have many personal responsibilities and can hence take on greater leveraged risks, for greater payoffs. There will never be a right time. If you wait around for it, you drastically reduce the level of risk you can take . 

2. Don’t start without a plan: Starting a business is a lot of fun and very exciting, however, if you do not have a solid business plan which has been well researched and developed, get working on that first. I am not a fan of shotgun startup ventures who are clueless about where they want to go and how they plan on getting there. 

3. Learn to trust your gut: There will be times when the plans looks too good to be true on paper, but your gut feeling is to be wary. On the other hand ,there are times when the pieces do not fit into place initially, yet, your gut says this is worth exploring. Learning to trust your gut allows you to hone into your inner guidance system and intuitive capabilities.

4. Don’t forget your core values: We are constantly faced with challenges where compromising on core values could lead to substantial benefits. However, going down that path poses great personal and moral risk . I have personally known someone who went down this path and ended up losing everything that mattered in his life. It was an incident which left a deep impression. Compromising on core values is one of the greatest risks you can take and one where the consequences are long lasting & long term.

Some of the concepts mentioned in this posts have many counter arguments. Such as the first one, which is to start early. Some argue that it is better to get some work experience before venturing out into the startup world. Others believe in just starting a business and hoping to eventually make some money. I would really like to hear what your thoughts about this are. Look forward to hearing from you.

 

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The People Risk Factor

Our mission statement about treating people with respect and dignity is not just words but a creed we live by every day. You can’t expect your employees to exceed the expectations of your customers if you don’t exceed the employees’ expectations of management.” Howard Scultz

You hear it all the time, “Our people are our most important asset”. Its like a mantra that has been wedged into our sub conscious and is constantly repeated from board meetings to your daily staff meetings. However, I am always surprised that though this such an important asset, very few steps and measures are taken to mitigate the risk associated with this asset. As a startup this is one of the most dangerous sort of risk we are exposed to, due primarily to our size. When a critical team member or employee leaves, the entire business can be brought to its knees. Listed below are a couple of risk control measures you can use to protect this asset .

1. Strict selection policies: At early stages, startups are usually 2-3 individuals who know each other and are comfortable spending days on end locked up in an office, working on the next big idea. Adding new partners or employees represents a large undertaking, and requires serious looking into . If you make the mistake of adding the wrong individual, productivity in the office takes a nose dive and the cost of replacing the employee is high. So use this list along with your own requirements to ensure that you select carefully.

2. Ironclad contracts for new employees: A lot of private data is shared regarding costing, pricing and internal processes with new employees. Many startup companies fail to get employees to sign non compete and confidentiality clauses. The risk of losing an employee to a competitor with your trade secrets represents a phenomenally large risk against which you should take counter measures .

3. Quarterly one of one reviews: I usually have quarterly reviews with most of the individuals whom I work closely with . This is an open and candid session where I learn about their level of satisfaction, frustrations and other problem which may be hindering them from performing up to mark. These sessions provide critical feedback and allow you to take precautionary measures to ensure you do whatever is necessary to retain your most talented performers.

4. Provide training and development: Most startups run on strict financial budgets, however if they have used strict budgeting controls as stated in my previous post, a budget for training and development should be in place to provide your team with training ,which will help improve their productivity and skills. This helps in creating stronger bonds between management and employees. It also increases the overall morale and productivity levels of the organization.

5 Fair rewards & recognition: If your team is generating high levels of growth for your organization they need to be compensated fairly. In some startup companies, which are not heavily venture backed this can be a challenge as funds are usually very tight. However, management needs to ensure that performance and rewards are tightly linked. If they are not, you stand a high level of risk to lose your rainmakers. To read more about rewards and recognition please click here.

We have to do whatever is necessary to ensure that we cater to our team wherever possible. It is a difficult juggling act to manage expectations and requirement, at the same time maintaining an environment where productivity and morale is high. If not correctly maintained there can be nasty repercussions which can bring your organization to a standstill and expose it to extremely high levels of risk. However if it is correctly managed, this asset becomes your organization’s competitive advantage, and paves the way for greater achievements.

 

 

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5 Steps to Hiring Better

“Hiring good people is hard. Hiring great people is brutally hard.” Jack Welch

Hiring great people is very difficult, however we have to make sure that we do all that is possible to make the process as streamlined and efficient as possible. Once you achieve that, it will be much simpler for you to identify the good from the bad and more importantly the good from the great. Outlined below is a framework to help you get started:

1. Company Frameworks: Before setting out to hire someone to be part of the team you need to analyze the current environment of your organization. How is your workplace structured? Next identify the personality traits of the people who succeed at your organization? Lastly map out how this new resource is going to be integrated into the current environment. To learn more on how to setup a framework please click here.

2. Job Descriptions: Using a framework we need to put down a structured format about the position, responsibilities, experience and educational background. Job descriptions are very important to make clear to the candidate what is expected of them. It also helps the company to put in place certain benchmarks to measure performance in the future. To learn more on writing a job description please click here.

3. Sourcing for talent: Once a job description is created we need to source for candidates who fit the role. Depending on the budget allocated to this, there are a variety of options available. What is important is to select the options intelligently to target the kind of talent you are looking for. If you are looking for highly specialized skill sets, public job boards may not be the most effective method as compared to say head hunting or industry related networking sessions. To learn more about some of the sources available please click here.

4. Interviews and Psychometrics: In my opinion use structured interviews whenever possible. Compared to traditional interviews they provide the interviewer a host of advantages from keeping control of the dialogue to providing an objective measure to benchmark every candidate against. If you can use psychometrics to evaluate personality types, you will get a better understanding of the candidates work place preferences. To learn more please click here.

5. Final Selection: Before you make a selection make sure you run some reference checks on the candidate you are about to hire. This provides additional insight into the candidate and may even be the deciding factor when the decision between two candidates is very close. To learn more about the steps for the final selection please click here.

This is a basic framework which should provide your organization with a more structured approach when wanting to recruit. Over time the framework will get refined to incorporate steps and stages which you consider may be necessary in the selection of talent in your organization. What is important is that you put a process into place for recruitment as it is the most critical factor in any organization. Who you hire in your firm is a clear reflection of the type of organization you are wanting to build. Make sure you send a signal which communicates those objectives.

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Final Selection

“You’re only as good as the people you hire.” Ray Kroc

After setting up a framework and job description, conducting structured interviews and tests you arrive at a pool of short listed candidates . Before making any final decisions, there is just one last step which is almost always overlooked and that is, Reference Checking. This is a critical step which must be followed up on to get a better understanding of the candidate. In an ideal situation I usually request for references from superiors, colleagues and subordinates if any. This helps assess whether the deductions from the recruitment process are correct and gives deeper insights about the candidate. 

Once you have successfully carried out the reference checks you now have all the data required to make an informed decision. If you are recruiting someone who is going to be working with the rest of the team it is a good idea to have the candidate meet the team. Make everyone in the core team a part of the recruitment process and get their opinions about the decision to be made. In the past I have come across teams which ran into trouble when an autonomous decision was reached for hiring without a collective accord .

When the team reaches a collective decision about the candidate they want to hire, you need to get the paper work in place and make an offer to the candidate. Another round of negotiations usually ensues on the terms and conditions of the contract and I recommend getting help from a lawyer when you are drafting this agreement for the first time.

After the negotiations are complete and you have signed a contract, it is time to celebrate. Not only have you hired your first employee you have successfully created a process which will help streamline your hiring in the future into a more effective and efficient process.

 

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Interviews and Psychometrics

“”I had a job interview at an insurance company once and the lady said “Where do you see yourself in five years?” and I said “Celebrating the fifth year anniversary of you asking me this question”” Mitch Hedberg

After the sourcing exercise is complete, you have to select a list of candidates having the correct skill sets and background to succeed at your organization, based on their resume. Resumes should be used as a reference point to form your own image of the candidate. In my opinion, interviews which have a structured format give the employer an upper hand to navigate the conversation. This is in comparison to unstructured interviews where the candidates navigate interviews based on topics they are more comfortable with.

Creating a structured interview requires creating a set of questions to be asked of each candidate. This allows you to document information in an objective manner as well as make comparisions between candidates easier . They key quality to be looking out for is passion, willingness to learn and honesty during the interview process. Use the questionnaire to devise questions to test for these. 

We have recently introduced psychometrics into our hiring process. Psychometrics is a tool used to evaluate a candidates cognitive abilities and personality traits. It provides an in-depth evaluation of the candidate and allows us to determine if he/she will fit into our workplace environment. Used together with structured interviews it provides an infinitely more comprehensive overview of the candidate and makes hiring more objective and transparent.

Interviewing candidates becomes a whole lot easier, the more you do it. In the beginning, especially if you are hiring for the first time it can be a little intimidating. By using a structured methodology and tools such as psychometrics you can drastically cut down the learning curve until you develop the ability to read people more accurately.

A tip I was given by one of my mentors when I was setting off to hire for the first time was: “Always trust your gut, if it doesn’t feel right don’t hire him/her.”  The one time I did not follow this advice, got me into a lot of trouble, so just go with your own instincts and you will do just fine.

 

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Sourcing for talent

“Time spent on hiring is time well spent.” Robert Half

Sourcing for quality talent at a startup is not an easy task. The obvious reason is that we have to convince candidates about the future prospect of our organization and how they are going to benefit by being part of the process. These candidates usually have other offers through the corporate world and are, in my experience usually tempted to stick with the tried and tested path. However being an entrepreneur you need to be out there convincing just about everyone about the growth and prospect of your organization. It could be to a potential customer, a potential employee, your core team and friends and family. You have to have your selling mode always on to create a buzz about what you are doing.

Since we have a prepared job description, we now need to spread the message. There are many options available to you depending on your budget.

1. Advertising in Schools: If you are still based in university advertise your openings on the university job posting boards, if they have any. Attend as many entrepreneurial networking mixers and ask for the opportunity to pitch your company and openings to the audience. In my first couple of ventures on campus I found these to be effective mediums to get the word out.

2. Social Networks: We have recently started using Linkedin and facebook to scout for potential talent in the core teams network. We have had more success using facebook by advertising positions on dedicated company pages. These networks are powerful mediums to get your message across to your second and third degree networks which are difficult to reach otherwise.

3. Corporate site & Blogs: You should do your best to allow your website to post job openings and accept structured resumes to help you continue to grow your resume bank. This will help you to minimize the time it takes to fill positions in the future. If you or your company have a regularly updated blog I would definitely use that medium to attract talent as well.

4. Referrals: This is how we carry out most of our hiring. When we have the job description ready I send it out to friends in the industry to get it to individuals who they feel may fit the role we are looking for. My friends realize how we work and are able to scout intelligently for talent.

5. Job Boards: Whether you use paid ones or free ones, in my experience, the selection process takes a lot longer using this medium. Firstly there is much sorting to be carried out, the quality of candidates is not the best and without any references it is more of a risk. However if the options mentioned above are not available to you this medium has the capability of getting your message out to a large number of individuals.

6. Head Hunters & Executive Search: This is an expensive option which becomes necessary sometimes if you are looking to fill a key role in your team. This is used as a last resort and only for very critical job roles. Selecting the right recruiter is a subject which I will write about in the coming weeks.

This is a preliminary list of tactics that you can implement to start your talent search. Avoid making rushed decisions and do your best to find talent through referrals and references whenever possible.

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Job Descriptions

“It is all one to me if a man comes from Sing Sing Prison or Harvard. We hire a man, not his history.” Malcom S Forbes

Once you have developed a framework for your organization, you are now equipped with the knowledge needed to develop a simple job description to help attract the talent that you need in a more focused manner. Job descriptions are often overlooked or not given enough attention at younger organizations. Since growth is organic and structure is often not in place  this is often disregarded. Say you are looking for an associate web developer to help support your core team of developers with some flash developmental work. In your mind you are perfectly clear about the sort of resource you require. However, later on if you tell the individual to help you out in your php developmental cycles and other administrative functions there may be unpleasantness. 

First we need to map out the main areas of a standard job description. 

Position: The title of the opening at your organization. Keep the title simple and avoid fancy titles which only cause confusion about what the role actually entails.

Responsibilities: This is where you outline in detail all the tasks which the resource will be responsible for. At startups, this should include a broad spectrum if your team is small because we all have to wear multiple hats at the beginning. If you are already at an established stage and are taking on a specialist then you make sure you have covered all the areas of responsibilities. 

Division: You will need to outline which department the resource will be under and the departments main role and functionalities. This will help put the responsibilities into context and bring clarity to the actual job requirement. You can also include details covering who the person will be reporting to and working with.

Education and Experience: Depending on the level of candidate you are looking for, you can fill this category likewise. Any relevant industry experience that may be required should be highlighted here.

Workplace environment: You can refer to the framework list to gather details to fill in this section about the working environment of your organization.

Personal Attributes: If you require any particular attributes which you think will be critical to succeeding at the job then this is the section where they should be highlighted.

These points will help you create a short job description which will help convey your message effectively to potential candidates. It will also help you benchmark performance against responsibilities assigned for the future , making it a critical document in your hiring and talent management process.

Related Posts:

Hiring Revolution: Job Descriptions

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Frameworks

“Hire people who are better than you are, then leave them to get on with it. Look for people who will aim for the remarkable, who will not settle for the routine.” David Oglivy

Your startup is growing fast and you need more helping hands to take you to the next level. Congratulations on reaching this far on your journey as an entrepreneur, it is going to get a lot more exciting from here on . Hiring is perhaps one of the most critical as well as the most difficult functions that any company has to undertake. There is a reason why Jack Welch has stated that Head of HR should be at the same level as the CFO at a company. What a lot of startups end up doing when things are in a tizzy with growth is to hire the next guy who looks good on paper. We did the same in a couple of ventures earlier on  and suffered as a result. This is not a process you want to rush, each hiring decision you make is going to have a impact on your business and the smaller your organization the larger the impact. 

The entire objective of hiring is to find a resource who possesses the skill sets, abilities and personality traits which match the opening position. To identify skills sets and abilities is relatively straight forward. If you are looking for a web developer you will require proficiency in certain programming languages and cognitive abilities which can be gauged through the applicants resume, portfolio and ability tests. The tricky part comes when you are looking for specific personality traits. Not every web developer will be suited for your team. If you are a highly structured and analytical team and you find a brilliant developer who however has a strong preference for unstructured working environments you are most definitely going to have a problem very soon.

When I am consulting clients on hiring these are three factors that I ask them to identify prior to the development of a job description ;

1. Work place preferences: Some workplaces thrive in unstructured environments while others require a routine to function in. Other places value team work more than solo operations. You need to correctly identify what preferences have been put into place by your current team. This will allow you to define and clearly communicate to the applicants the environment they are going to be working in.

2. Intellectual capabilities: This is where you identify what sort of intellectual capabilities you are looking for in the designated role. Will the resource have to be involved in creative development work or heavy research position or in a position where he/she needs to be making many decisions. Each will require you to keep a look out for particular characteristics.

3. Personal Attributes: If your position requires the resource to motivate and energize teams then you will require someone who has high levels of energy and the capability to energize. They will require them to have immense passion and the ability to infuse it into the organization. If your position is research heavy and it doesn’t require the individual to be in such a position this attribute will not be necessary. Other attributes such as personal drivers are very important. Some individuals are purely driven by monetary compensation while others require less and more personal satisfaction. 

Formalize your list into a framework and you will be clearer as to what sort of individual you need to succeed at your organization.

Related Posts:

8 characteristics of ideal business partners

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Hiring your first employee

“I am convinced that nothing we do is more important than hiring and developing people. At the end of the day you bet on people, not on strategies.” Larry Bossidy

The day your company is ready to hire its very first employee is an exciting one for any startup company. It is a sign of growth and a sign that things are moving in the right direction. Talking about hiring may be fun but when startup companies actually get down to doing it, thats when they realize that it is much harder than it appears to be. Over the years I have been through this cycle many times and am constantly refining the process, to get it right. 

What starts out seemingly as a simple cycle of sourcing, identification, interviewing and hiring requires a lot more groundwork to get the process right. In my earlier ventures our recruitment methodology was very sporadic and unstructured. This resulted in the hiring process taking much longer , it was more expensive, we didn’t get the right people and through it all lost business opportunities while searching. Recently, in one of my companies we have initialised the hiring process which has been a much more efficient and cost effective approach. I will share it with you this week.

Startups need to realize that hiring and building their team is going to be the most critical exercise to ensure the future success of the company. If you hire and work with people who do not have the passion, spirit and ‘need to win’ approach, your chances of succeeding are greatly diminished. By hiring the wrong people you slow down the company, decrease morale, incur heavy tangible and intangible costs. You must be cautious that you limit the entry of such people to your core team. During the course of the week I will touch on the 5 basic steps we take to identify and recruit employees. I hope it will be of some benefit to all the readers who are thinking about hiring in the near future.

 

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