Make Sure You Have a Diversity of Experience on Your Side
Most people think money is the most important part of a business plan, but even more important is the management team.
Of the five elements that you must outline in your business plan--management and organization; the product or service; marketing and distribution; operations; and finances--the management team is probably the most crucial.
A good management team will help you get the money you need and implement the plans you have created. If money, time and people are the basic resources needed to start and run a business, human resources are the most critical, said USC Business Expansion Network director Debra Esparza.
A “B” business idea with an “A” management team is more likely to get investment money than an “A” idea with a “B” team. Excellent managers with experience and a track record of success are more able to turn a “B” idea into a money-maker or wring other value from it. A “B” team might miss opportunities or lack the flexibility to adapt to changing business conditions.
When putting together your management team, look for advisors who do more than simply adopt policies and guidelines, Esparza said. Your management team should be able to assess variables and cope with business as a dynamic process. They must be knowledgeable about your industry and make up for weaknesses and gaps in your own skills.
For example, if you’re starting a marketing or sales business and have experience in that area, you don’t want to choose only other marketing or sales types. Include financial or operations experts, too.
Also consider where your product will end up and bring on those who can help you with that. If you manufacture car parts and want to sell to auto dealerships and service garages, include advisors from those two industries and from other retail outlets, such as discount and auto-accessories stores.
Try to include advisors from outside the industry in which your business will operate. For example, a restaurant owner might seek experts with knowledge about consumer spending patterns or someone with entertainment experience. The idea is to find people with different points of view, experiences and backgrounds willing to share their insights with you and help you redefine and broaden the scope of your business.
Many small-business owners make the mistake of surrounding themselves with advisors just like them. Sales folks find other sales folks as advisors because they like to work with people like themselves. But they can sabotage their success with a one-dimensional management team that might be shortsighted and miss opportunities.
When creating your first management team, you typically have an informal advisory group or a formal board of directors. But as the business grows, you may find yourself hiring independent consultants to provide paid advice as your management team.
If you grow enough, your management team may become part of your paid staff, such as a vice president of marketing or a chief financial officer. You may also opt to create paid or unpaid advisory councils, boards that meet to provide direction and ideas.
Finding advisors is not difficult as long as you don’t forget what they will get in return, Esparza said. The arrangement has to be of mutual benefit.
For paid advisors, compensation might come in the form of fees, salaries or stock options. Unpaid advisors might be satisfied adding to their resumes, getting experience in a new field, keeping abreast of new business developments, serving the community or keeping active during retirement.
Often, individuals are simply flattered to be asked for their advice, especially if their words are acted upon and they receive thanks and credit. But flattery works only for a short time. There should be a deeper benefit for their participation.
Before you ask someone to be an advisor, talk with that person to make sure he or she offers some of the experience listed above. But it’s also important to get along with him or her. Compatibility with your management team is essential.
Once you have found these key people and they agree to serve as your advisors, they become part of your business planning and can be listed on your business plan.
Exercise: Identify individuals who could serve as pro bono or paid advisors to your business. Take them to lunch and explore the opportunities available.
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ENTREPRENEURSHIP 101
Chapter 1: HOW TO CHOOSE A BUSINESS
Chapter 2: HOW TO START A BUSINESS
Chapter 3: HOW TO DEVELOP A BUSINESS PLAN
- Know the Value of a Plan
- Create a Management Team
- Define Your Products or Services
- Develop a Marketing Plan
- Master Operations
- Draft a Financial Plan
Chapter 4: HOW TO FINANCE YOUR BUSINESS
Chapter 5: HOW TO GROW YOUR BUSINESS
The Bottom Line
“Entrepreneurship 101” is a tutorial on how to choose, start, finance, plan and grow a business. The program, written by Times staff writer Vicki Torres, was developed by Debra Esparza, a faculty member at the Entrepreneur Program of the Marshall School of Business, USC. Esparza also heads director of the USC’s Business Expansion Network, a community and economic development project. USC’s BEN that has counseled more than 5,000 small business owners in the Los Angeles area over the last six years., BEN provides helping them with financing, business planning, accounting, marketing and other aspects. The tutorial also can be found on The Times’ small-business Web site at https://www.latimes.com/smallbiz.
