“It’s all about building value.” —Margo Crawford
Last Wednesday, Margo Crawford, president and CEO of Business Sherpa Group, shared a fresh perspective on recruiting with the Entrepreneurship 101audience. She laid the foundation for her advice by explaining that, at some point in time, every entrepreneur will exit his or her business, and so company valuation should be a key consideration in the hiring process. For some of us, that advice may be surprising.
What exactly does Margo mean? Essentially, if you decide to leave your business, it’s important that your company remains valuable and attractive to potential buyers, and so having a strong team in place is key. Even if you’re a lifestyle entrepreneur and don’t plan to sell your business in the short to medium term, whoever you hire should truly add value to your venture.
Another way to look at this is through the lens of Welch LLP’s value equation: value = profit that is sustainable and transferable.
I think this is a reasonable approach, and Margo made a few points to support her advice.
People invest in your business because they see future potential
If investors look at your business with an eye to the future, then you need to have a team that can realize that potential and value. Businesses have a couple of major drivers: market (external), operational (internal) and human resources. As such, to quote Margo: “Adding bodies is not always the problem.”
Hire for the long term knowing that your team will not only get your business to the next milestone, but possibly to the next 10 or 15 milestones.
Planning will help you manage inflection points in your business
Every business goes through some level of growth that changes the dynamics and, in some cases, even the structure of its team. These stages of change are referred to as inflection points. By thinking about and planning ahead for those inflection points, you can better manage both your team and your organizational structure.
Planning out your roadmap and outlining it to your team will help you understand where gaps may occur in your business in the future and will create fewer “surprises” for employees when you reassign responsibilities and positions. For example, customer growth in a tech startup can force developers into customer support (sustaining) roles for which they do not have the necessary training or preparation, or even the capacity to handle.
Everybody can tell a compelling story to attract the right hire
Margo shared the story of a developer who worked as just one of many developers in a top-tier tech company. While most people thought he had it made, the developer eventually decided to leave the company. He wanted to see his ideas actually get packaged and shipped to customers rather than only getting to the prototype stage as they had at the larger company.
Margo encouraged entrepreneurs to find their story—and to use it. You do have something to offer to people who will bring value to your company; once you find your story that value will be easier to sell.
In critical times, do not hire through an intermediary
All entrepreneurs must be strategic about human resources. It’s important to understand who your perfect candidate truly is and to know how and when to resource through others. In critical times, do not leave the task of recruiting to those whose objective is to simply staff a role.
Your business is your investment, whether you hold on to it for five years or 50 years. So think about the value you’ve created and make sure that the people you employ to help you carry out your vision can sustain that value.
For more information on what to consider when recruiting, including checklists, scorecards and general tips on effective recruitment, check out Margo’s lecture video.
Next lecture: Entrepreneurial Leadership: Building and managing a team on Wednesday, April 2, 2014
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