by Matt Straz, founder & CEO of Namely
You may have been told if you’re passionate enough about your idea, your startup will be successful. It’s an easy trap to fall into, especially in hearing the success stories of so many.
In the latest issue of the Harvard Business Review, the article “For Founders, Preparation Trumps Passion” talks about a study of 522 projects on crowdfunding site Indiegogo. The study found that projects with high expressions of passion – using terms like “devoted” and “enthusiastic” – were about three times as likely to raise the funds they needed, despite the level of preparedness.
The general public (and sometimes us, too) are easily sold on warm fuzzies like passion, optimism and dedication. But, the world of investors and VC funding is very different. Passion means very little if you don’t have hard evidence of planning to back you up.
Investors are becoming more privy to the red flags that signal investment fraud. Though a quarter of 194 investors surveyed in June by North Carolina State University have been a victim of fraudulent companies, the study also discovered what careful investors look out for to protect themselves.
When an investor reviews a startup, it’s not all about word of mouth. Investors who are concerned about fraud rely on financial statements rather than sources like advice from professionals, friends, or media sources.
Don’t get me wrong, you do need passion to help keep your spirits up as you fight to get your business off the ground. But, you can’t start a business on passion alone. You need to have a solid business plan with a clear understanding of the product, your market, and projected financial statements.
In the same way, having passion won’t automatically make you a great people manager. While it may help you engage employees, without a plan to help you hire and manage them, you’ll burn out fast.
Here are some people management aspects of running the business for which you should prepare:
1. Hiring and onboarding.
More than 58 percent of employers have implemented onboarding programs to engage new hires and help them “settle in,” Aberdeen’s 2014 21st Century Onboarding Report shows.
As a small business owner, engaging and helping new hires acclimate quickly should be a top priority. The faster they reach top productivity, the faster your business will be able to grow and keep up with market demands.
Welcome new employees with a customized plan for each role. Help them set goals and show them how they will impact the company’s mission right from the start. Give new employees visible access to company news feeds, updates and happenings so they feel in-the-loop.
Even if you’re just starting out, consider providing employees a small benefits package. Sixty-eight percent of employees surveyed by SHRM in November 2014 said benefits were a very important factor in overall job satisfaction. Benefits will help keep the team feeling cared for, especially during the long, grueling hours you’ll all spend at the office.
A benefits package doesn’t have to break the bank, either. The trick is to customize benefits to your organization’s specific needs. For example, if no one on your team needs vision coverage, you could choose to provide medical and dental only.
To keep peace of mind in the face of those unforeseeable disasters, purchase worker’s comp insurance. But choose a pay-as-you-go plan to avoid hefty premium costs and make sure the plan automatically adjusts based on your payroll.
3. Payroll and taxes.
Running a business, you won’t have much extra time on your hands, so making administrative tasks like payroll as simple as possible should be a priority. When it comes to paying your people, you don’t want anything to fall through the cracks.
Use a payroll system that fully integrates with your HR and benefits programs to reduce time spent on data entry and potential errors that could occur during data transfer. Also, take the headache out of tax compliance by using a program that automatically calculates, deposits, and files your payroll taxes.
4. Tracking and reporting performance.
You’ll always want to know exactly what impact your employees have on your bottom line, but having a way to track this from the very beginning is crucial. The sooner you know which employees are making the most impact where, the better decisions you can make when it’s time to promote as the business grows.
Choose a system that allows you to see the full picture of employee performance — one in which you can import goals and core competencies. This will help streamline performance reports so you can provide accurate, tangible feedback to employees.
You’d be surprised at how easily plans for people management can be pushed off to the side when starting a business. Yet, a company’s people are its most important asset. Even if you’re the most passionate entrepreneur with a brilliant idea, it will likely fail without a plan for both the business and keeping your talent happy.
What are some other people management aspects of a business for which startup founders need to plan?