Are You Building A Company? Stay Away From These Traps
You might make it out alive
It’s great that many young adults are building their own companies. Don’t get me wrong, I strongly support the startup scene. In fact, I’ve worked in a number of small, new companies. I’ve seen my fair share of failed and successful startups.
There are much we can learn from the failures of others so that we don’t repeat them. These mistakes can save you a lot of time and money. So, if you see these happening in your business, take my words with a pinch of salt and improve before it’s too late.
Hiring is a lot harder than it looks. Okay, let me clarify; hiring the right people is difficult. Let’s say you just started your new company and had fundings come in. Now you’re excited about hiring the best people to join your team. In less than a month, you find yourself in an office with 10 employees, without a proper operation plan and a monthly payroll of $50,000.
What mistakes could you have made in building your dream team?
- Hiring talents because of personal ties. This will bite you later in the year when you realise they are dragging you in the dirt rather than bring value to the team.
- Hiring people because THEY SAID they’re good and you didn’t have time to check their references.
- Putting in more budget in the wrong department. i.e hiring a PR team before a development team.
- Hiring too many people at the start and draining your financial resources
When you’re in the ideation stage, plan your course before you hire. Create a roadmap and hire the right people to kickstart your project. But before you hire, you need to understand your strengths.
Are you a good salesperson? Or are you better at handling operations? Can you code your own app or do you need someone else to do it for you?
What are your strengths and weaknesses? When you know the part you win at, hire the needed positions that will eliminate your weaknesses. If you’re building an app for your food business but you’re more of a chef than a coder, find an app developer to work with.
It’s okay to have a small & lean team
You don’t need to show investors that you have 6 marketers working for your tech company that has yet to build a product. Your angel investor will be more impressed by how much progress you can have with an 8 people team than no progress with 30 people team.
The quality of your team is more valuable than the quantity.
I’ve been in startups where my boss and I wear many hats. We did everything from answering customer calls to delivering orders at their doorstep because the delivery service screwed up. It was tiring but enriching. And extremely heartwarming to see how much the startup has grown from a tiny office that could only fit 3 people to a full floored warehouse.
I’ve also been in startups where one person did one thing. And when asked if they could take up more roles, they complain. The quality of your team will determine how far you go as a company.
Culture Trap: Office Politics & Poor Culture
Yes, you founded the company but without the people who build it, your business idea is simply an idea. Here’s a great article about building the culture in Airbnb.
Also, be wary about the employees who bring toxicity into your company culture. They might be your top employee but if they constantly try to negatively influence the rest, your company productivity will go down.
Gary talked about the dangers of having one employee can make a whole team miserable and affecting their performance. Please watch the above 3-minute video above and take action to improve your company’s culture.
Money Trap: Burning Fundings By Focusing On The Wrong Efforts
It’s your company with your vision. You know what you set out to do… So go do it. It’s really easy to get distracted by other shiny goals. But if you’re not careful, you’ll waste a lot of money on the efforts that won’t build your vision. Then, you’ll need to look for more fundings from investors, taking more time away from developing your software.
Back when I still had my EntrepWorld publication, I was always searching for the startup founders who managed to raise huge fundings. I thought that was impressive. But the more I dig, the less attractive it gets. The real MVPs are those who are able to bootstrap their way to success.
Focus on what’s important.
Do you really need a huge team of 30 people or 7 dedicated, committed and talented individuals willing to do what’s necessary? Assuming each person (and founder) takes home a salary of $2,000; having 30 people would mean you’re spending $60,000 each month. Compare that to a small team of 7 ($14,000), you are saving at least $46,000. That’s exclusive of office space because more staff means a bigger office.
I’m not saying you should have a small team forever. When the time comes to scale your business, yes, having more employees helps. But if you’re in ideation stage, you don’t need 10 people doing one person’s job.
Do you need that foosball table and provide free lunch for your employees? Yes, you want to build a fun environment for your company but you are struggling to stay afloat. Many youths look at big companies and want to mimic their office structures. Sorry to burst your bubble but Google has millions to spend (specifically) on welfare and employees well-being; your company only has $3 million to sustain a whole year’s necessary expenses.
Building a company is hard
Nobody said it’ll be easy because if it was, everyone would be an entrepreneur. You have a vision and you should be strategic about your moves to get there. Believe in yourself, understand your strengths and collaborate with the right people.
You’re going to lose sleep and constantly be in a roller coaster of highs and lows. Don’t give up… Just learn from your mistakes.
P.s Watch the Fyre documentary on Netflix to learn about overpromising and underdelivering. Make sure you don’t be like that.