Summary Chapter 9

Chapter 9

Building a New-Venture Team

A new venture team is the group of founders, key employees, and advisers that move a new venture from an idea to a fully functioning firm.

Liability of newness as a challenge refers to the fact that companies often falter because the people who start them aren’t able to adjust quickly enough to their new roles and because the firm lacks a “track record” with outside buyers and suppliers.

The founder or founders

Founders characteristic and their decisions significantly affect the way an entrepreneurial venture is received and the manner in which the new venture team takes shape.

Size of the founding team: a new venture is started by a team, there are several issue that affect the value of the team

1.      The team have to worked together before as opposed to tens that are working together for the first time, have an edge.

2.      If the members of the team are heterogeneous (that they are diverse in teams of their abilities and  experiences) rather than homogeneous (their abilities and experiences, rather than homogeneous, meaning that their areas of expertise are very similar to one another) ,they like to have different points of view about technology, hiring decisions, competitive tactics, and other important activities.

There are 3 potential pitfalls associated with starting a firm as a team rather than as a sole entrepreneur:

1.      The team members may not get along.

2.      If two or more people start a firm as “equals”, conflicts can arise when the firm needs to establish a formal structure and designate one person as the chief executive officer (CEO)

3.      A hierarchy will have to be developed, and the founders will have to decide who reports to whom.

Qualities of the founders: because of this, new firms are judged largely on their “potential” rather that their current assets or current performance.

Indeed, the results of research studies somewhat consistently suggest that prior entrepreneurial experience is one of the most consistent predictors of future entrepreneurial performance. Because launching a new venture is a complex task, entrepreneurs with prior start-up experience have a distinct advantage. The impact of relevant industry experience on an entrepreneur’s ability to successfully launch and grow a firm has also been studies.

Networking is building and maintaining relationships with people whose interests are similar or whose relationship could bring advantages to a firm.

One technique available to entrepreneurs to help prioritize their hiring needs is to maintaining a skills profile.

A skills profile is a chart that depicts the most important skills that are needed and where skills gaps exist.

To save money, increase flexibility, and mitigate the difficulty in finding good employees, new ventures use four different sources of labor to get their work done:

1.      An employee is someone who works for a business, at the business’s location or virtually, utilizing the business’s tools and equipment and according to the business’s policies and procedures.

2.      An intern is a person who works for business as an apprentice or trainee for the purpose of obtaining practical experience.

3.      A freelancer is a person who is in business for themselves, works on their own time with their own tools and equipment, and performs services for a number of different clients.

4.      A virtual assistant is a freelancer who provides administrative, technical, or creative assistance to clients remotely form a home office.

The roles of the board of directors

If a new venture organizes as a corporation, it’s legally required to have a board of directors ( a panel of individuals who are elected by a corporation’s shareholders to oversee the management of the firm.

An inside director is a person who is also an officer of the firm.

An outside director is someone who is not employed by the firm.

A board of directors has 3 formal responsibilities:

1.      Appoint the firm’s officers (the key managers)

2.      Declare dividends

3.      Oversee the affairs of the corporation.

 An advisory board is a panel of experts who are asked by a firm’s managers to provide counsel and advice on an ongoing basis.

Several guidelines are followed when organizing a board of advisors:

1.      A board of advisors should not be organized just so a company can boast of it.

2.      A firm should look for board members who are compatible and complement one another in terms of experience and expertise.

3.      When inviting a person to serve on its board of advisors, a company should carefully spell out to the individual the rules in terms of access to confidential information.

4.      Firms should caution their advisers to disclose that they have a relationship with the venture before posing positive comments about it or on social networking sites.

A consultant is an individual who gives professional or expert advice.