How effective teams help build great Startups?
The key factor behind the success of a Startup business is a great Team
The dynamics of the startup industry are continuously changing in the 21st century, bringing with it more competition and the need for skilled resources. A startup is founded on the foundation of a strong team, starting with skilled co-founders and growing into larger teams, as the startup grows. In simple terms, a startup is made successful first and foremost by a successful team.
Launching a startup can be very challenging especially when one lacks prior experience, a lack of experience can make things seem like they are impossible to achieve. Having an amazing idea but an ineffective team is a guaranteed recipe for failure. This challenge can be handled effectively if you get a better understanding on how to run your operations, how to manage your resources, how to market your brand and most importantly (which we will be discussing) on how to hire a passionate and expert startup team. Having the right people on board can increase your chances of success by many folds. Lack of experience and connections can be countered by having access to a competitive startup accountant, someone who will be able to help you using their industry connections, years of experience and business skills. Read our startup guide to learn more on how to startup effectively.
A startup might fall short of the necessary funds and resources that are required to begin their operations and market their brand, in this case, they should look out for potential venture capital investors. The risk venture capital investors face requires them to carefully inspect the financial aspects of a small business or a startup they have invested in or plan to invest in. Startup accountants who have experience working with startups and new businesses can assist you in preparing your business so that such investors are interested in investing in your business.
Who are Venture Capital Investors?
Venture capital investors are those investors who invest in small businesses and startups after a detailed study of their potential prospects in order to reap maximum future returns on their investment.
Such investors hire professionals to examine every financial detail in order to check how much growth potential the company has? how fascinating the business model is? what is the size of the target market? and whether their investment promises high returns or not? You could look for your own startup accountants, business accountants, accounting firm, online accountants or business advisors who can help you prepare for the detailed due diligence.
Why do most of the Startups fail?
Startups have to advance through the infancy stage and therefore, are vulnerable to many problems and issues that may hinder their growth. Data suggests that 60% of startups fail due to problems associated with the team that they have onboard, this happens mainly because startups tend to ignore the necessary evaluation of the team because of lack of experience, lack of resources, insufficient time or just because the team is built on instincts.
In addition, there are many other factors which can impact a startups performance such as its team’s competitiveness, the network of investors who have invested and the professional advisers on board. A highly competitive startup accountant on board can help you learn more about the issues that you may encounter during the infancy stage of your startup and how to face them.
What are the factors that can predict the success of a Startup?
The success of a startup is dependent on a number of factors but is owed primarily to the performance of its team. Performance of a team depends on how well they utilize the resources available to them and the way they employ the unique qualities and skills of each member of the team, in the company’s favour to achieve the desired goals and objectives.
We start by discussing the impact, experience alone can have in an organization. Experience is a valued resource and can bring about improvements in a team by things such as sharing of expertise with other team members and increasing the team’s effectiveness through tried and tested methods, but it alone does not guarantee the success for a startup. It is however been researched in numerous studies that consensus and shared vision between team members on achieving company goals whilst maintaining a leadership spirit are somewhat important indicators of a team that will impact the success of a startup.
Surveys conducted by venture capital investors on startups found out that most of the times the startup teams that had experienced members on board performed poorly just because they were not motivated enough, did not share the same vision as the company’s and gave preference to their personal goals over the company’s. Surprisingly the teams that comprised of fresh graduates and low experienced members performed significantly better than their counterparts, this was because they maintained high levels of entrepreneurial spirit, were highly passionate, followed a common strategy and worked towards a shared vision.
What is the secret ingredient behind the success of stellar teams?
Stellar teams perform to high standards in an organization, these teams function right in between the spectrum of an exceptional mix of hard and soft skills. The secret behind the success of such teams lies in their ability to communicate effectively, present their expertise and practically apply their knowledge in a highly professional manner, in other words, they are successful because of their ability to manage a perfect balance between their hard and soft skills.
In some cases, a new recently on-boarded startup team may be extremely smart and experienced, but these stellar qualities become irrelevant if the members fail to address a mutual vision and are unable to pursue the future growth strategy of the company together. These differences in passion and vision may result in unproductivity and inefficiency. In addition, team members may also decide not to share their wisdom and knowledge with each other, just because their personal goals are interfering and are not aligned with the company’s goals and objectives.
Experience and expertise will have a marginal to zero impact on the growth of a startup if the team members resist sharing collective wisdom and work towards a unanimous vision.
What happens when team members are not on the same page? (Case of a capital venture investor)
Let’s examine the case of a capital venture investor Rachel (Name has been changed to maintain confidentiality and anonymity), who just discovered a potential investment in a tech company in London, that might promise great returns to her in the future. Rachel holds expertise in the tech sector and has previously worked with a Giant tech firm in the US.
She expressed her interest and excitement to the team after she went through the firm’s literature, and was really impressed to learn about the company’s track record which was flawless and completely up-to-date. She further investigated the executive body of the company and was really thrilled to find out that the CEO had vast experience in the tech sector, the CFO of the firm was a Harvard graduate, VP sales was a former employee in Morgan Stanley and the fourth member of the body was an entrepreneur who had past experience of dealing and managing startups personally.
When the executive body presented their expertise and verbally expressed their vision about the growth strategy of the company in the boardroom meeting, Rachel was quite disappointed. The vision and wisdom shared by the members did not make any sense. The CEO was planning to pursue an expansionary policy in the country, while the CFO wanted to pursue a different strategy just because the company was too busy to pay attention to an expansionary policy at the moment. She also found out that the VP sales ran his own side-business and the CFO was currently searching for job opportunities, it became evident to her that the team did not share a common vision and were not equally motivated to discover and pursue the company’s growth potential.
After some time Rachel contacted the CEO and found out that the team had broken up. This happened because they never shared their knowledge and expertise with one another which resulted in poor and ineffective communication, such disharmony and lack of consensus led to weak decision making and as a result, the team fell apart.
Golden advice for investors:
Investors planning for future ventures should note that while evaluating startups and their teams, it should be undesirable to consider a high profile resume alone as a predictor of great performance. Instead, it should be the persona, passion and motivation of each team member that should be under consideration because, in the end, these are the qualities that are going to help the team, work well together and push the startup to achieve success. It is advised you consult an accountant as well because a professional startup accountant on board can help you identify strong and weak aspects of a startup whilst ensuring that you save your time and receive maximum returns on your investment. They can also be your objective observers and can help flag grave errors or help make decisions on which unanimous agreement is proving hard.
Establishing a successful startup is similar to a long and tiring journey, you have to stay on the road, you may have to stop and rest in between, you may get lost, but you have to continue and find that road which leads straight to your destination. Having a supporting team is like having supportive travellers, those that stick with you through thick and thin, until the end.
Clear House Accountants are professionally trained specialist Accountants in London. Our in-house team of accountants consist of a large number of business accountants who have been trained professionally for years to be able to work as your accountants, business advisers, business coaches and business consultants. Our startup accountants utilise state of the art tools and systems that are specifically designed for startups. Through these systems, we can provide assistance which enables startups to grow exponentially faster while remaining scalable.
Each individual brings with them a vast array of skills and expertise, add them to an effective team and you can have multiple individuals with different perspectives looking at a problem from different angles, improving the time in which problems can be solved efficiently and effectively.
Having the most appropriate people working together with an effective reporting structure and sufficient motivations can enable teams to become more productive. It’s not just a matter of hiring a number of people and putting them in a team, you have to carefully mix and match individuals with relevant skills and personalities to enable the development of an effective team.
Work on leading your team by example
Encourage team members to network
Organise the reporting structure to people know how communication flows
Appreciate good work
Set SMART goals