When things get really tough, it doesn't matter if one has been good strategist managing big companies or if one loves management.
It all comes down to grit and passion, says Satanik Roy.
Photograph: Kind courtesy Pixabay.com
One of the top reasons why start-ups fail is hiring the wrong people.
The people a founder chooses to work with, can either make or break the start-up.
As a result, having 'the right team' beside is as important as having enough funds to run the venture.
If cash is the fuel, the team is the engine that gets the whole venture going.
However, building a good tech start-up team can be a challenging venture.
There are many problems and pitfalls start-up owners should be aware of.
To make sure a team won't wreck the start-up, one has to be prepared to handle the following challenges when building a tech start-up team.
1. Not doing something you love
Even when people may think it is cliché. It really isn't.
When things go well, it doesn't matter what you're doing. But when times get tough, if one isn't passionate about what one does, a founder will not be able to handle all the pressure.
Giving up will seem too appealing at stages the venture will be struggling to scale.
People who leave jobs with years of experience, believe that they can make any business work.
Ultimately when things get really tough, it doesn't matter if one has been good strategist managing big companies or if one loves management -- it all comes down to grit and passion.
It will require a lot more than management know-how. It will require that one takes pleasure from what they're doing every single day.
2. Hiring the wrong people
The hardest thing about starting and scaling a start-up from scratch, is mistakes done when hiring people will stop a founder from sleeping at night.
So, it is to be made sure that twice the time is taken to find the right people and not settled easily, even if the venture is in a hurry to hire someone.
This will mostly depend on how emotionally cold you a founder is and what are the main values of the venture.
But assuming that almost all founders care about employee's well-being and motivation, the toughest challenge will be managing, hiring and inspiring the right folks to walk along side with the founder with equal ownership to the company in the journey.
3. Trusting blindly in people
A founder should always believe in genuineness and transparency.
A founder should strive in empowering people and delegating. And, definitely, believe in trusting.
The entrepreneurial reality is not a fancy corporate office.
In the corporate landscape, we're used to finding very ethical and well-behaved people.
After all, it doesn't suit one well if they are having a major argument with someone in the middle of the corridor. But in the entrepreneurial world, sometimes it really feels like a jungle.
And trusting the wrong guy can be enough to throw the entire venture down.
With mistakes from procurement to social media post or personal misconduct of any team mate, mis-management of cash ultimately becomes the responsibility of the founder.
4. Rushing to scale up
This is another major lesson.
It is such a common belief to think that a start-up has to scale fast to capitalise on the success.
But when we rush to scale up, demand volatility (ups and downs spikes) takes place, most of the times we won't have the financial muscle (cash flow) to face the sudden increase of burn rate (monthly fixed costs, salaries, rents, etc.).
It is way better to give small but solid steps, and work for the long term. A founder should not rush in scaling without proper planning. “Think big, start small, and check the details”.
5. Neglecting bureaucracy
A company is a legal entity, and has thousands of laws with which it has to comply.
One of the major mistakes is neglecting the importance of laws and contracts.
At an early stage, it may almost seem like it didn't matter if we were signing a contract or not, at any time we could just cancel it and find another option -- sadly it is never correct.
Some of us have too much confidence in our own capability to overcome challenges and find innovative solutions.
The problem with legal stuff is that one doesn't manage to solve them with creativity and determination, ever.
When one has to deal with a legal negotiation, one definitely needs a lawyer.
Besides being expensive, a legal process can literally take months, or even years!
And they're focusing a founder with a million ideas at any point of time, on something that doesn't matter at all for the business.
It is crucial that one is extremely structured and cautious about bureaucracy.
In case one is not a very organised person, it is recommend that sooner or later to find a partner or an assistant that is great at dealing with all that stuff, namely taxes, contracts, payments and receivables.
Finally, a venture comprises three types of tasks -- future, present and past tasks.
As a founder, one should try to maximise the time one spends on planning, strategy, selling and developing products -- future-oriented tasks.
Even if one can't do this because one has to attend to some present tasks, what one definitely wants to avoid are the past tasks!
Things like accounting or legal, once neglected, will force the venture to stay in the past and will be a major bottleneck to growth.
It is important to understand how to prioritise and execute tasks for maximum returns and growth.
Satanik Roy is co-founder, HyperXchange, a marketplace for refurbished gadgets.