Setting up a company? Ask the right questions!

Source: Trends (26/01/2017); Author: Veroniek Collewaert

Sometimes entrepreneurs are too naive. I’m saying so with a lot of affection, because we need them, you know, those entrepreneurs who jump into their start-up adventure with a truckload of enthusiasm. That said, they are sometimes so enthusiastic that they forget the rationality, patience and objectivity they need to succeed. I often see this with our students. A group of friends comes up with a genius idea over a pint of beer and all of a sudden, they are convinced that they are going to conquer the world. Regardless of how valuable the idea in itself may be, in the heat of the moment some questions are branded as needlessly complex. A few examples? Are these the best people to successfully put the idea into practice? Who will do what exactly? Who will be in charge? How will we tackle conflicts? How will we divide shares? These entrepreneurs later realise that the questions that seemed so pointless to begin with actually have a major impact on the operations and success of both the team and the business.

One of the first decisions entrepreneurs need to make is whether or not to embark on this adventure alone. If not, who will they team up with? Every person you welcome into your founders’ team brings potential difficulties as well as new opportunities. After all, you need to discuss and coordinate matters with more people, the decision-making process will inevitably last a little longer and not everyone will agree all the time. On the other hand, every additional team member can bring in more money, contacts, know-how and simply extra support.

In reality, entrepreneurs rarely weigh up the pros and cons. Do a person’s skills and knowledge justify the extra costs they will create? Furthermore are those the right skills and do we need them right now? These are just a few questions every entrepreneur should ask.

‘More of the same’? That’s just what a good founders’ team should avoid

Research shows that company founders are more inclined to join forces with co-founders who have their same skills and experience. This phenomenon, called homophily, is not just limited to a company’s founders. We all feel more attracted to people who are similar to us. Just think of your best friends. However ‘more of the same’ is just what a good founders’ team needs to avoid.

Complementary skills are the ultimate recipe for success, but our Rising Star Monitor results show that we generally do not choose a dream team with a set of perfectly complementary skills. 62% of Belgian scale-ups have a founders’ team made up of friends and family. And since we tend to bond with kindred spirits, the chances are slim that you will be able to form a perfectly complementary team with these people. Similar backgrounds and experiences also increase the chance of overlapping skills and knowledge. With that in mind, teams made up of former colleagues are a better alternative. That’s not just my personal opinion. Harvard professor Noam Wasserman has proven that with every social contact you add to your team – so every family member or friend of another team member – you increase the risk of a co-founder leaving the team by a good 30%. The first few years are the honeymoon period, when everything is going smoothly. But fast-forward four years and you can see a clear difference between teams made up of family and friends on the one hand, and more diverse teams on the other. The former are a lot less stable.

So does that mean you should never set up a company with friends and/or family? Not at all. There are some wonderful examples that prove it is definitely possible. REstore, for example, was founded by cousins Jan-Willem Rombouts and Pieter-Jan Mermans in 2010, and it has been conquering the world at lightning speed ever since. The bottom line is: take a careful and critical look at your strengths and weaknesses, and force yourself not to shy away from difficult discussions.

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