Hiring Great People Reduces New Biz Risk

New businesses owners need to execute exceptionally well, otherwise they are increasing their risk of failure. Exceptional execution is usually the outcome of hiring exceptional people. As Dan Geller, founder of Gate Guru described it at a Wharton Entrepreneurship panel discussion I recently attended: “10% of start-ups are successful; those are the ones that hire really great people.” Savvy entrepreneurs who lack the funds to hire top people can at least identify their intended team members to potential investors, to reassure them that a strong team will coalesce once they invest.

 

For certain businesses, securing the right people talent is a case of hiring the right service provider.   The most outstanding example of this I ever witnessed was when helping Richard Ellenson with the financial model and competitor analysis for the launch of Blink Twice: he engaged Frog Design, Flextronics and some of the leading linguists in the U.S. for the design and development of the Yakk, a ground breaking alternative augmentative communications device.

 

Strong execution also is the outcome of sequencing the business growth wisely. A second Wharton panelist mentioned the approach at HopStop, where the founder decided he was going to prove the business “in one market, and one use case, before going broad.”   Starting in a single market is the best way to prove that the demand for your product or service is at the level you believe, and that you will have the capacity to meet it at a service level your customers expect and at a cost where you can make a profit as you expand. With those kinds of in-market results to point to, you will have a better chance to raise outside capital for your new business.