142 ◾ The Guide to Entrepreneurship: How to Create Wealth for Your Company
Do yourself one favor when starting your company. Initially, get the
right people on board to get the product developed, delivered on time, and
secure your initial critical mass of customers. Then, as you gain feedback
from the market, gure out your next hiring needs. Don’t worry about titles;
instead, focus on building an insanely great product. Having too many chiefs
and not enough Indians will burn a lot of dollars and will surely scare away
potential investors in subsequent rounds.
7.5 Accountants and Lawyers
“Half of this game is 90% mental.” —Yogi Berra
Accountants and lawyers are cost centers. Necessary, indispensable, and cru-
cial, but cost centers nevertheless.
The founder must carefully select the proper accounting/legal team. By
proper, I mean professionals who are familiar with the special circumstances
surrounding startups. Engage only those individuals who are “specialized” in
the intricacies of startups.
7.5.1 Accountants
Neither accountants nor lawyers academically “specialize” in startups.
However, in practice, the representation of startups becomes a de facto
specialization for both professions. For example, a small-business accountant
will (1) help you with your business plan, (2) set up an inexpensive account-
ing system such as Quickbooks
©
, and (3) patiently guide you through the
intricacies of accounting jargon and Generally Accepted Accounting Practices
(GAAP). You will need all of this for your initial funding, plus all the neces-
sary periodic reports to your investors.
7.5.2 Lawyers
The small-business lawyer will help you navigate the process of incorpora-
tion and representing your small business during legal negotiations. Perhaps
the lawyer will agree to be paid in installments tied to specic milestones.
Bob Loblow, a small-business lawyer, blogs that lawyers should be selected
based on three criteria: local, right sized, and startup focused.
6
Organizational Structure ◾ 143
The Walker Corporate Law Group listed the “top 10 reasons why entre-
preneurs hate lawyers”
7
as follows:
10. They don’t communicate clearly or concisely.
9. They don’t keep me informed.
8. They are constantly over-lawyering.
7. They have poor listening skills.
6. Inexperienced lawyers are doing most of the work.
5. They spend too much time on insignicant issues.
4. They don’t genuinely care about me or my matter.
3. Their fees are through the roof.
2. They are unresponsive.
1. They are deal-killers.
7.6 Managing Managers
“Be a coach, not a referee.”
As founder, one of your most pressing goals should be to make sure that
your managers have all the tools necessary to perform their jobs well.
Managers need to understand not only the “what” but also the “why” behind
your business plan. Give them a sincere sense of ownership in the organiza-
tion and its future (Figure7.6).
7.6.1 How Is Managing Managers Different
From Managing Projects?
“We must all row in the same direction.”
You will nd that effective managers need to know less about “how” and more
about “why.” Managers should be evaluated primarily on team-based nancial
success, rather than products, schedules, or activities. Their opinions should
carry extra weight along with responsibility and corresponding authority.
7.6.2 A Roadmap for Managing Managers Effectively
“Don’t bring me problems; bring me solutions.”
144 ◾ The Guide to Entrepreneurship: How to Create Wealth for Your Company
Bruce McGraw listed the following important leadership skills for
senior managers:
8
◾ Set the vision. It is essential that you communicate the long-term goals
of your department or organization to your managers clearly and often.
A shared vision provides the touchstone to help your managers make
decisions and solve problems.
◾ Network with other managers and technical resources to get things
done across your organization.
◾ Set straightforward, measurable objectives for each manager and proj-
ect under your authority. Have short-term and long-term goals for each
person who reports to you and reinforce those goals in monthly or
quarterly meetings.
◾ Talented management-hiring gives effective feedback, and develops tal-
ent for the project work.
◾ Demonstrate accountability and hold team members and project manag-
ers accountable.
◾ Inuence others up (your leaders), across (your peers), and down (your
project managers and team).
Managing Managers
Committed
Passionate
High
performance
Alignment
with owners
Managers
Purpose
Teamwork
Discipline
Hiring and
promotions
practices
Intended impact
Markets served
Product
development
Manufacturing
Distribution
channels
What?
Why?
Who?
When?
Where?
Recognized
authority
Recognized
responsibilities
Recognized
areas of
expertise
Ethical behavior
Open book
management
Reward
success
Mission Vision
Strategy
Empowerment
Values
Figure 7.6 Managing managers—Empower your managers to perform their duties.
Organizational Structure ◾ 145
◾ Facilitate problem solving. It may be tempting to jump in and solve a
problem yourself. You have been there and solved that problem suc-
cessfully before. However, your managers need to learn and they need
to put their own stamp on projects.
◾ Do not micromanage. Rather, offer advice and ask leading questions to
help clarify a situation and your subordinate manager’s options. You are
also in a better position than before to break down barriers to solving
problems by using your position and inuence.
◾ Be a role model. Social learning theory, also called social cognitive
theory, supports the idea that people learn new behaviors and change
existing ones based not just on their experience, but also on their
observations of signicant others, such as senior managers. Your values,
priorities, and even your mode of dress may be copied.
7.7 Selling Your Vision to Your Team
“Delegate to motivate.”
Entrepreneurs must communicate their vision statement (Figure 7.7). For
example, the Johnson & Johnson mission statement (the J&J “Credo”)—chis-
eled into the wall of its New Jersey headquarters—was written in 1943 just
before the company became publicly traded. Communicating it to J&J’s mul-
tiple subsidiaries, so that each company lives it, is one of the J&J Chairman’s
major responsibilities.
Selling your Vision
Mission
(purpose for
our existence)
What?
Clear
Explanation
by founder
Vision
(intended impact)
How?
Mission:
1. What do we do?
2. What is our target?
3. What is our benefit?
Vision:
1. How will the future look?
2. How do we accomplish our mission?
3. How do we impact the market?
Figure 7.7 Selling your vision—Communicate your vision clearly and succinctly.
146 ◾ The Guide to Entrepreneurship: How to Create Wealth for Your Company
We believe our rst responsibility is to the doctors, nurses and
patients, to mothers and fathers and all others who use our prod-
ucts and services. In meeting their needs everything we do must
be of high quality. We must constantly strive to reduce our costs in
order to maintain reasonable prices. Customers’ orders must be ser-
viced promptly and accurately. Our suppliers and distributors must
have an opportunity to make a fair prot.
We are responsible to our employees, the men and women
who work with us throughout the world. Everyone must be con-
sidered as an individual. We must respect their dignity and recog-
nize their merit. They must have a sense of security in their jobs.
Compensation must be fair and adequate, and working conditions
clean, orderly and safe. We must be mindful of ways to help our
employees fulll their family obligations. Employees must feel free
to make suggestions and complaints. There must be equal oppor-
tunity for employment, development and advancement for those
qualied. We must provide competent management, and their
actions must be just and ethical.
We are responsible to the communities in which we live and
work and to the world community as well. We must be good
citizens—support good works and charities and pay our fair
share of taxes. We must encourage civic improvements and better
health and education. We must maintain in good order the prop-
erty we are privileged to use, protecting the environment and
natural resources.
Our nal responsibility is to our stockholders. Business
must make a sound prot. We must experiment with new ideas.
Research must be carried on, innovative programs developed and
mistakes paid for. New equipment must be purchased, new facili-
ties provided and new products launched. Reserves must be cre-
ated to provide for adverse times. When we operate according to
these principles, the stockholders should realize a fair return.
7.8 Fail as Fast as You Can
“Learning quickly why something failed is the key to rapid success.”
When stakes are high (such as company survival), it makes sense to “fail
fast.” As an example, in the biotech eld, startups need to go through a
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