In the early years, company founders intentionally keep their management structures lean in order to manage spending and maintain control over the key elements of the business. They do whatever it takes to launch the venture, get their products and services to market, and begin generating revenues. It is only after the business has begun to produce substantial cash flows that founders typically start to consider adding senior people in specialized areas, such as finance, sales or operations. This process of expanding the management team can be a difficult one.
Many entrepreneurs have been overseeing their business since the very beginning, and are initially reluctant to delegate responsibilities for their company. Yet no successful business owner can continue to go it alone indefinitely. Building a management team can be a critical step in your company’s transition from a small organization to a mature business with greater stability and increased capacity for future growth. By hiring the right people at this stage, you can lay the foundation for the future, ensuring that your company has the resources and expertise required to realize its full, long-term growth potential.
Many entrepreneurs I have worked with point to the expansion of their companies’ teams as one of the critical factors in their later success. And not hiring an effective team can significantly hinder growth. In fact, a 2012 survey of U.S. middle-market companies sponsored by CIT Group found that business owners’ concerns about attracting and retaining top talent were second only to their worries about economic uncertainty. Approximately 42% of middle-market companies surveyed expected to increase their workforce in 2013.1
Over the years, I have worked with many businesses at this stage of growth, and have found eight steps to help you successfully expand your team:
1. Do not expand too early.
Successful companies often start with one employee, the founder. If you are at this early stage, you do not need a full suite of officers and executives. Only as you begin to grow the business and revenue base can you justify hiring additional people.
2. Look for holes in your expertise.
Take a hard look at your skills set. Are you best at R&D? Are you a natural salesperson? Do you excel at finance? Even if you are skilled in several areas, focus on your expertise. Then hire people for those slots who complement your strengths.
3. Use your contacts.
Based on your industry contacts, you probably know many people you should consider hiring. Those who work for competitors, customers, suppliers and service providers will likely take up much of your short list. During your search process, network with them to uncover other possibilities.
4. Develop talent inside your company.
As you search for management talent, do not overlook your own employees. Hardworking staffers can learn many skills, and are already familiar with your company and culture.
5. Ask your board for help.
As an investor, I know dozens of executives at companies in similar stages of growth. Over time, I have developed pattern recognition to quickly assess if people are the right fit. If you have investors on your board, involve them in the process of identifying, interviewing, and evaluating new hires.
6. Think about corporate fit.
Consider differences in corporate culture, as new hires must fit into your company. People hired from larger firms may need time to adapt to lean company practices. Those who worked in a strict hierarchy may be uneasy in a flat organization, while others may not be able to make the transition.
7. Hire the best...and let them do the job.
This is perhaps the most challenging part of recruiting: give your new team members the autonomy to do their jobs. Since you have hired competent people, step back and let them run their areas, even if their approach differs from yours.
8. Find your replacement.
Once your senior team is in place, start thinking about the next generation of leadership. Do not forget to look for someone who can eventually replace you. Even if you have no plans to leave the company, you need to prepare for the unexpected. By having a strong management team—and a qualified candidate to succeed you—in place, you will be in a position to protect your employees, your customers, your shareholders and, most importantly, your own financial interests in all kinds of situations.
By following these key steps, you can build a team that is deep in talent and potential, ensuring the success of your company today—and for many years to come.
A version of this article originally appeared on Inc.com.
1 CIT Voice of the Middle Market: Perspectives from the Heart of the American Economy, CIT, September 2012.