Growing Pains

I decided to take a look today at a series of business related ‘core conversations’ (a format where 4/5 different panel talks/debates take place in a large room, a bit like “Open Space”). Subjects included “Growing Pains”, ”Start-up Management”, to “Keeping your team motivated, productive and happy and “When to Sell Up”. 

So many choices…

Core Conversation - “Growing pains - Your Web Company’s Getting Big” As your web company has grown, do you have a bunch of headaches you never imagined? Let’s talk about problems and find some solutions.

I thought that I could probably contribute more to this one than any of the others and it’s also a topic that I really want Bristol Media to focus on this year as it seems to be one of the subjects that keeps cropping up again and again from speaking to a lot the other Bristol digital agencies.

Two guys chaired the discussion, Allen Mandelsohn who runs a biggish digital design agency called Plank Design http://www.plankdesign.com/en/ and C. Eric Smith who was founder of a rapid growth software house called UnWired Nation.

About 100 of us had gathered around the table, the majority business owners with between 10 – 100 staff so the context of the main conversation was based around ‘you’ as the founding entrepreneur wanting to take your business to the next level and the challenges that you were likely to face!

Here are the edited highlights:

Recruitment – No.1 headache for all businesses – especially in the digital space.  You’re growing which mean the teams going to get bigger.

Finding really good people is hard and you’ll probably get it wrong – lots.  But when ‘rockstars’ (explanation below) do walk through the door for interview – make sure you hire them.  Pay over the odds if they’re really good, it’s better they’re within your company than have them go to your competitors for just £5k more!  

Rockstars – definition: the guys you employ that will make your business famous!  Designers, developers, producers – whoever.  Keep them happy, look after them but don’t let them rule the roost.

Recruiting Managers and Senior Peopel - you probably wont find another ‘you’ – so stop looking!  In other words someone who lives, breaths and sleeps the business in the same way you do.  Don’t be too disheartened if you can’t find your clone – as they’d be running a business – not working for one!  And besides two entrepreneurs with similar characteristics working within the same business will usually end in tears.  It’s your vision, you started it and are driving it so find ‘managers’ and senior staff who compliment your skills and can help turn your vision into reality.

Recruit people that are better than you - A start up entrepreneurs aim should be to make him/herself redundant!  Controversial – but you have to put the ego to one side and realise that if your ‘baby’ is going to grow you need to surround yourself with good people.  People who probably know more about your sector and have deeper industry knowledge than you do.  Don’t be threatened by this, embrace it and feel proud that they want to be part of your vision.

Staff and Share Schemes - You’ve launched, your excited and you want people to be part of it all – a word of warning!

Incentivising staff is important in any business but as you grow it can be problematic and actually end up pissing staff off so plan carefully and don’t rush into anything.

Usually when you start a business you offer shares to the founding members.  This is a great way to make them feel part of what they’re growing and to take ownership in moving the business forward.

We’re not Google - structure the equity deals very carefully and always  manage expectations from day one about the potential exit value.  In otherwords make sure staff know that the chances of them walking away with millions in their back pocket is, probably highly unlikely and they can’t ‘cash them in’ until the company is sold.  If your in agency land – even when you do sell, chanses are they’ll probably not (after tax) equate to a life changing amounts.  So, they’re in it for the long game and if they’re lucky they might pay off a wedge of their mortgage but probably not buy them that ‘house in the Hamptons’ or (local reference) the 7 bedroom pad in Clifton Village.

Get it right from the start because unpicking it later – hurts.  Don’t give it away.  Offering shares is easy and is usually a way to compensate not being able to pay market salaries/packages at the beginning.  After 4 solid years of 16 hour days and weekends when you’ve worked your socks of to build value you’ll might wish you hadn’t given 10% to the guy that ‘hasn’t really done anything’ other than ‘turn up’.

Also beware that if they’re ‘proper shares’ (not phantom schemes) they come with voting rights and minority shareholders can influence the direction of your company which can be dangerous especially if you want to exit and sell, but Mr.2% doesn’t because he thinks that of he holds out he’ll get more in his back pocket.