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Chapter 8. The Founding Team. Learning Objectives . Explain how to build a founding team effectively Understand how to work with professional advisers Discuss when to add a board of directors

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chapter 8

Chapter 8

The Founding Team

learning objectives
Learning Objectives
  • Explain how to build a founding team effectively
  • Understand how to work with professional advisers
  • Discuss when to add a board of directors
  • Compare and contrast the pros and cons outsourcing with independent contractors versus hiring employees
building effective founding teams
Building Effective Founding Teams
  • Why do teams lead to a better chance for success?
    • Shared intense effort required by a start-up
    • Loss of one member less likely to result in start-up abandonment
    • Team concept permits expertise across major functional areas: marketing, finance, operations
    • Skilled team lends credibility to the start-up
creating the founding team
Creating the Founding Team
  • Benchmark for an effective team
    • Shared vision between lead entrepreneur and the team
    • Shared passion leads to shared hard work
    • Industry experience relevant to the new venture
    • Solid industry contacts with sources of capital
    • Functional areas of the business are represented
    • Team members have solid credit ratings
    • Team members have the time and money to endure start-up constraints
special issues for high tech teams
Special Issues for High-tech Teams
  • Funding is through angel and venture capital
  • Founding team consists of scientists-engineers with little market or business experience
  • The venture requires professional management outside of the founding team
  • The investors help with forming this team
unique issues surrounding virtual teams
Unique Issues SurroundingVirtual Teams
  • Virtual teams function differently
  • Synchronous-asynchronous communication media alleviate physical distance issues
  • Trust is critical to effective virtual teamwork
founding teams for international ventures
Founding Teams for International Ventures
  • Success in the international market depends on the skills and knowledge of the team
  • Successful characteristics include:
    • extent to which founding team members have traveled or worked abroad
    • the number of languages they speak
rules for friends and families
Rules for Friends and Families
  • Friends/family members must possess real skills and expertise required by the venture
  • They need to share the same work ethic as the entrepreneur
  • The advisory board must include outsiders to balance input objectivity
  • All relationships are business oriented and must be stated clearly in contractual terms.
seeking professional advisors
Seeking Professional Advisors
  • Outsourcing solutions for professional help:
    • Attorneys
    • Accountants
    • Bankers
    • Insurance Agents
  • As-needed assistance for information, assistance in reviewing business concept and reality checks.
building a board of directors
Building a Board of Directors
  • General information:
    • Legal form of the business influences the decision to have a Board of Directors
    • Boards provide beneficial expertise in establishing corporate strategy and philosophy
    • Boards of publicly traded companies are elected by shareholders and represent their interests
    • Members assist with business development, act as arbitrators for dispute resolution, and give credibility to the new company’s image
considerations for choosing board members
Considerations for Choosing Board Members
  • Considerations:
    • Do board members possess the necessary technical skills relative to the business?
    • Have they had significant, successful industry experience?
    • What is their experience running a business at the level of the next step for the entrepreneurial venture?
    • Do they have any important industry contacts?
considerations for choosing board members1
Considerations for Choosing Board Members
  • Considerations (continued):
    • What is their expertise in finance, capital acquisition, or IPO’s?
    • Are their personalities compatible with the rest of the Board?
    • Do they possess good problem-solving skills?
    • Do they possess honesty and integrity which engenders mutual trust?
the advisory board
The Advisory Board
  • Consists of a panel of experts interested in the new venture’s success
  • Permits entrepreneur to overcome “tunnel vision”
  • Payment for services is through honorarium
the mentor board
The Mentor Board
  • The entrepreneur’s personal board who serve as a sounding board, coach, advisor
  • A safe haven for entrepreneur’s to air their fears, concerns, hopes, dreams
  • Consists of personal and professional mentors
outsourcing with independent contractors
Outsourcing with Independent Contractors
  • Independent contractors (IC) own their own businesses
  • IC are hired by the entrepreneur to do a specific job
  • Hidden costs can affect the new venture’s business
outsourcing with independent contractors continued
Outsourcing with Independent Contractors (continued)
  • The IRS and Independent Contractors
    • Ensure compliance with IRS regulations
      • Consult an attorney
      • Draw up a contract
      • Indicate only the desired result
      • Verify the IC’s workers’ compensation insurance
      • Verify the IC’s licenses to do business
types of independent contractors
Types of Independent Contractors
  • Consultants
  • Professional employer organizations (PEOs)
  • Manufacturing Support
  • Sales Support
  • Government Agencies
summary
Summary
  • Explain how to build a founding team effectively
  • Understand how to work with professional advisers
  • Discuss when to add a board of directors
  • Compare and contrast…

The pros and cons of outsourcing with independent contractors versus hiring employees