by Patrick Sutton
As a start-up founder, you will be working very long hours, possibly seven days a week, and managing all aspects of the business. As time moves on, you begin to build a team around you to fulfill certain roles such as admin, finance, technical, production, or sales. After you’ve assembled a solid core team and started to get traction in the market with your products, you may then find yourself at the crucial stage at which you are ready to scale the business. One of the most important milestones is hiring your first executive. Depending on the stage of development and the business you’re in, that senior executive could have a title such as chief executive officer, chief operating officer or managing director. The hiring of that first executive if you get it right can really fuel the growth plans, but it is expensive and hugely risky if you get it wrong.
It’s often said timing is everything, and this is never more true than when hiring your first senior executive. Those with proven track records don’t come cheap, so is your business ready for the acceleration? Is your product ready for scaling? Are you properly financed? Are you ready to let go?
Prepare and update your cashflows, discuss them internally and with your advisers. Stress-test the cashflows and prepare for contingencies if growth is not as quick as you would like. Share the cashflows with the proposed new executive and get their buy-in that it is achievable.
What do you need?
Prior to hiring an executive, have a good look at yourself and the skill set of the existing team. Understand where the most critical skills weaknesses are in terms of scaling the business. Some founders are born salesmen but can’t run a business, others are technical geniuses so need help with marketing and selling, others simply may not understand the target market so need an experienced industry executive to open doors and lend credibility to the business.
Investors and professional advisers
It’s difficult to evaluate an executive for a position if you’ve never done the job before or if you’ve never worked in a similar position. When under pressure to hire, it’s very easy to get so focused on a candidate’s impressive resumé that you fail to ask the hard questions to truly understand if they were effective at their job. Investors and advisers will have been down this road many times before and will have a good understanding of the pitfalls. Make use of their expertise.
Every start-up is different so it is difficult to generalise as to what is a perfect executive candidate. However, you need to identify the must-haves and deal-breakers for your first senior hire. In addition to having the right experience, they need to be passionate about your space and what you’re building. You want the candidate who isn’t afraid to roll up their sleeves, take responsibility and be an individual contributor. If there’s excessive discussions around title, perks, severance, time off, working conditions, working hours, minding the kids etc, these are bad signals. They should be secondary to the opportunity to make a significant impact and the potential upside of joining an early-staged company. Three good references from previous similar roles are essential.
After selection, the ideal scenario is to try out the arrangement for a period of time before either party commits long-term. Of course, this is not always possible so it is important the candidate is brought in on a probationary period. This trial is a two-way selling process. It’s an opportunity to see how the executive works and for them to get to know the team personally. During the trial period, everything should be more or less done together, from important client pitches to spending time in social settings. Without the trial period, it is difficult to understand if someone is a good culture fit until you interact with them on a day-to-day basis and deal with adversity together.
Once you’ve selected the executive, you now face a major personal challenge as to how you will work with that person. You’ll need find the balance of working closely with them yet not micro-managing. Your start-up is your baby and it’s difficult to let go and delegate, but you have to trust your team members. In order to attract and retain great leaders and managers, give them the opportunity to execute.
Hiring your first executive is an important step in scaling your business. It needs to be planned carefully and not rushed. Our experience shows that it takes three to six months to find and hire an experienced executive. Once the right person is on board, you should see the business grow and scale up just as you imagined it would.
You can email Pat Sutton of O’KellySutton at email@example.com