The best team to get you through rough patches might not be the easy team of like-minded friends you think, says Louise Rogers, member of Tenzing’s Entrepreneur’s Panel.
Typically, a private equity deal will go wrong five times during its lifetime. Half the time you can blame external events, the other half you’ll be kicking yourself for a self-inflicted own goal.
Because problems are inevitable, you’re going to need a first-class management team to push through. You need a team that’s resilient and committed enough to drive the business out of trouble.
Assessing what motivates each person
The true test of your team comes when times are tough or when you’re growing super quickly.
Build time into your process so you can understand someone’s short- or long-term goals. And consider using personality assessments to understand more about a person’s strengths and weaknesses.
Honesty is the best policy throughout this entire exercise and the success – or otherwise – of your team is closely linked to this. Think about what deep-seated truths about your business, your market, and your customers you could share with candidates. Use it as an opportunity to dispel any myths that may well be in your marketing spiel.
Striking the winning balance
- Find your Eeyore. After a PE deal, everyone is focused on growth, risk-taking and pushing things. It’s exciting, but that’s why I like to balance things out with an Eeyore character. While it can be somewhat annoying and a little demotivating to have someone at the table who is cautious and negative, like Winnie-the-Pooh’s grumpy donkey friend, it will reap the rewards. Agreeing is easy, so having a counterpoint is essential.
- Diverse teams solve complex problems best. Even in 2020 I see so many teams that are made up of people who have the same skin colour, gender, religious beliefs, educational backgrounds or contain people of a similar age. It’s natural to want to hire people similar to ourselves because working with someone like us is easy, slick and feels good. But there is loads of research and evidence that diverse teams perform better at complex tasks. And running your business is a complex task. Plus, your customers are likely to be diverse and you need to align with them.
- Have a long-term mindset. Every private equity company might tell you that they have a three-year plan for your business, but the reality is the deal might take longer than that, given that things, often outside your control, will cause delays. Hire people who you can rely to be with you until the next exit, through thick and thin.
Don’t be greedy with equity allocation
By now, you’ve put in the leg work and found the right people to take with you on the next stage of your journey. Next step: close the deal. But how do you stand out in a candidate’s market?
A solid management team should be able to drive growth faster, so don’t be greedy. Owning less of more, yourself, will lead to a bigger opportunity.
Rowing in the same direction
Once your team is in place and people are all rowing in the same direction you can zip along at high speed. When everyone is wholly aligned, an organisation will accelerate and rise well above the base level of expected growth. It’s unbelievably satisfying when that happens, though there will be plenty of missteps before you reach that summit.
Even the best planners get things wrong and hiring senior talent is far from straightforward. You should know within six months if someone is a good hire or not. As soon as you know they’re not, don’t wait, be afraid of being judged or too proud, to admit your mistake. Face up to it, re-recruit and move on.