James Green| American Express OPEN Forum
Any entrepreneur who has launched a company will tell you that running a startup is stressful, time-consuming and full of high risk. Before a company is truly able to transition into the growth stage of its business, it must pass through many ups and downs. But while roughly 80 percent of startups fail in the first five years, there are a number of things that entrepreneurs can do internally, to help push their company past startup and into phase two. Here are the most important things to keep in mind.
1. Start with a great idea. It might seem simple, but having a great idea—either a groundbreaking new product or an innovative service—is half the battle. If you have a great idea and are able to identify the appropriate market, then the company will grow organically and investors will line up to obtain a piece of the business. But if you find that you’re having trouble securing interest from investors, then something is simply not clicking. Either your idea isn’t as great as you thought it was, or there isn’t enough market potential for it. If this happens, it’s time to take your idea in a slightly different direction. You’ll have to keep doing this until you hit something that works, or run out of money.
2. Find the best people. The team behind the idea is essential to making the business stick. During your company’s time as a startup, the first 10 employees are often people who are specially fit for this phase: They’re well-rounded, flexible and extremely innovative. During the startup phase, you want a team of aggressive generalists who are able to pitch in and do anything necessary at the drop of a hat.
But as the company develops and expands over time, you’ll need fewer generalists and more specialists. You’ll need people who create the technology behind your product, a separate salesforce, an operations department and a management team. And all these people must be excellent within their given area because there’s no room for error.
If a startup idea isn’t compelling enough to secure funding but the team behind the idea is solid, your chance for investment increases. But keep in mind that the first employees who you hire very likely will not be the same ones that you’ll end up with 10 years later.
3. An MBA education is not necessary. At best, an education can be an indicator of ability. However, it’s important to understand that a lack of education is not an indication of the lack of ability. While hiring from top universities is an easy way to identify promising employees, there are plenty of high-caliber individuals who may not have a Harvard Business School degree.
This is especially true in entrepreneurship. Some of the most successful entrepreneurs–such as Bill Gates and Steve Jobs–did not receive degrees from undergraduate or graduate programs. And your clients will not care where you went to school; what they will care about is whether you’re smart, capable and have a great team supporting the idea.