Monthly Archives: June 2011

To grow a business employ a “great one”.

Whenever I hear advice from successful entrepreneurs the most consistent mantra is “always hire the best people you can afford”.

But how good is “the best”, how do you measure that? Also, if you are in a young company, with very limited resources, how much can you really afford?

Let’s step back for a moment though and examine that advice. Is it really the most important thing that a growing business should do? What about offices, buying equipment and developing the product or service, then there’s marketing, the best product is going nowhere unless people know that it exists.

The answer may be that if you have good people aboard, they will help you get the operating essentials cheaper, faster, and of better quality. When you look at product design the difference between good and average has even more staggering claims.

Mark Zuckerberg, of Facebook, suggests that some programmers and programming teams are 100 times more productive than their more typically talented peers.

This isn’t because they can programme 100 times the number of lines of code, but because they write smarter code. These truly great programmers grasp what is needed quickly and transform that into efficient, supportable, clever instructions that enhance the original concept.

What does this mean for the non IT side of businesses? Well the theory is still valid, if the multiplication factor may be less. Consider the likely results of an inspirational, highly respected and well networked senior figure in any sector of business, such as marketing, PR, raising finance, compared to an industrious but junior practitioner.

Can you measure the impact of the great person against the average worker? The difference may be that you get funding, or not. That you become well known, or not. What is the measure and worth of these?

I think we can all accept that the great person is going to do more for your company than an average worker, the question is what do you give up to be able to afford them?

Do you take out loans, sell your house or divert funds from infrastructure to hire a great employee?

It’s a balancing act, between all the calls upon your limited cash. The advice that successful entrepreneurs have given implies that you do all you can to get these few great people.

If the immensely talented ones can ramp up your business fast, then you can start to readjust the balance so that other areas have cash made available.

It is natural though to hope that even by using a less expensive resource you will still manage to make the break through. The lessons from very successful businesses however seem to speak against that.


Identifying successful businesses

Identifying a successful business start-up
Every experienced Investor develops a sixth sense when looking at potential business opportunities, but even so it can sometimes be difficult to put your finger on what is the key ingredient in making a new venture successful.

Over the years of working with start-ups I’ve seen companies grow rapidly and then fall away, great businesses that not only grew but sustained their position and of course those that never made it.

In all of the great ventures they got 3 basic elements right and I’ve tried to show those essentials on our model of Start-up Success above.

Much of it is common sense, but like many simple things it can often be forgotten and the whole process of identifying a good high growth business made over complicated.

Firstly, yes you guessed it, is the founders of the venture. It’s said many times that the management team is key, but why? It is because they provide the drive, ambition and ultimate quality of the business.

Not only must they have the will to succeed but also the competence to implement the business successfully. The idea is important, but the excellence of implementation of the idea is critical.

Great entrepreneurs have a vision of what they want to achieve based on an insight to a market opportunity and the capability to pull together the resources to address it.

When you as an Investor look at prospects, or perhaps if you are an entrepreneur thinking through options for starting a business, it’s worth remembering the 3 key ingredients and how they interact for sustainable success.