Some basic rules can be applied to any emerging start-up. You need a good team of entrepreneurs. You must keep an eye on expenditures. A company’s team of employees is responsible for product development – and it helps if they’re truly enthusiastic about the product or the idea behind the company. One advantage that newcomers enjoy over established players is that they can operate on a low cost basis.
Some additional rules require more conscious efforts, and it’s tempting to relegate them to the periphery of company policy. When a start-up commences its operations, many decisions must be made, often under considerable time pressure. In the heat of the moment, concessions are made: because of the circumstances, because of time pressure, because of the constraints imposed by life or the cosmos. But it’s important to stay demanding and constantly seek better solutions.
A good example for the rule that “good isn’t good enough” is the selection of employees: let’s assume that the team of founding entrepreneurs has formed. Now they’re looking to hire. The selection process takes time: job descriptions must be written, applicants must be screened and invited for interviews, the interviews must be conducted and de-briefings must be organized. Sometimes the founders might find themselves opposite applicants who fit 90 percent of the requirements – but questions remain. What should be done? The clock is ticking, after all.
It’s important to stick to the requirements and keep looking, if necessary. “Good isn’t good enough” also means: committed to excellence. If this sounds like a university slogan, so be it. Experience shows that excellent employees are important, especially for an emerging and active company. Employees must be able to think and act independently, they must share the company’s vision and master their job. If you settle for a B+, you’ll come to regret it in the long run.
But how does a company find excellent employees? It’s no surprise that most start-ups cannot pay the salaries that competitors from the old economy offer. Different options exist: employees in leading managerial positions can be compensated through a fixed monthly income, an annual bonus and company shares. Other managerial employees might receive a fixed income and a bonus. And even regular employees who receive “only” a fixed income usually enjoy a much greater degree of freedom and the ability to shape the business than in any company of the old economy.
The same degree of scrutiny can also be applied to other decisions (about marketing, or about distribution). The goal is to move beyond the most apparent thought, to demand more, to want more, and to realize more.
Newconomy is the new weekly column for the start-up industry. It focuses on the intersection of classical and new economies and of politics and entrepreneurialism. Newconomy is sponsored by Factory, the new start-up hub in Berlin.