When you're starting a business, you have what feels like an unlimited to-do list, but only limited time, energy and money. Every day you must make decisions about how to deploy these scarce resources. The choices you make will depend on your assessment of what's important and what's not.
Unfortunately, founders often get this wrong. That's according to a thought-provoking post from investor Boris Wertz that recently appeared on the blog of his firm Version One Ventures. “When you're in the midst of building a company, it's hard to fully assess the significance of various activities and decisions,” he writes, before offering a list of areas whose value founders either underestimate or overestimate, in his experience.
What business realities often get less of an entrepreneur's attention than they deserve? Wertz names five:
1. A great hiring process
Wertz isn't the only investor warning startups not to ignore the importance of HR issues. It might be easy for founders to hand hiring to someone else or put establishing procedures and processes off to some later stage, but that's a usually mistake. “Your company won't survive if you've got a great idea surrounded by a mediocre team,” Wertz warns. So put lots of thought into who and how you hire.
“Founders should stay involved in every hiring decision for as long as possible. When you've reached the scale when it's no longer possible to be hands-on in each decision, you need to make sure you have strong hiring methodologies in place,” he continues.
2. Reference checks
“I'm always surprised at how often people still get hired without extensive reference checks. When you've got a good feeling about someone, it's tempting to just move ahead without any kind of due diligence. But informal reference checks can be very revealing, particularly if you can talk to people that weren't provided by the candidate, but know him or her very well,” Wertz explains.
3. The importance of culture
Nope, your culture won't just evolve organically. Nor can it be magicked into being with free haircuts or other lavish perks. So underestimate the importance of crafting the culture you want from the very beginning at your peril. “From the start, you should be thinking about the type of company you want to build and then make sure your systems and decisions support that vision,” Wertz advises founders.
4. The right advisors and investors
Every dollar has equal value. The same cannot be said of the investors you get those dollars from. Acknowledging that the point might seem self-serving, Wertz writes: “Too often I've seen founders look at investors as checkbooks. Money is important but over and over again I've also seen just how important great investors and advisors can be in shaping an early stage company.”
“Your company and your product will never be all things to all people,” cautions Wertz. Underestimate the importance of focus and try to do too many things, and you'll probably end up accomplishing none of them well.
If these are the things founders generally worry about less than they should, what areas of the business usually take up more attention than they really warrant? Check out Wertz's complete post for his list of things entrepreneurs waste time worrying about excessively.
What else would you add to Wertz's list?