Startups | Sherrie Suski | Startups

What do most start-ups have in common?

September 18, 2017 by sherriesuskimissionviejo

There are as many types of start ups as there are investors to invest in them but most have a few things in common. Knowing what these are, in advance, will help you to stay one step ahead of your investors, your market and your competition.

VC’s are an impatient bunch

Venture Capitalists, commonly referred to as VC’s, are those that invest dollars in multiple start up business enterprises with the hopes of hitting it big in 1 out of 10, in my experience, although different VC’s may tell you otherwise. Various VC’s play in different niches established by the stage of the business. For instance, idea generation, proto-type product, mature product, revenue, growth and profitability. However, they share at least one thing in common which is impatience. Impatience to get a product to market, to show profitability, to attract later stage investors at higher valuations and to make a very profitable exit.

Fail fast is a fact worth remembering. You are less likely to burn investor bridges with $1M in when you determine that your idea or product has little chance of success than after you have $10-20M in.

Don’t underestimate the marketing spin

No matter how good your product is, whether it be software, SaaS, or shoes, it needs to be marketed effectively. What will you brand around and how will you differentiate in the marketplace should be the first questions you ask yourself and your team. Keep your head in the sky and think about the ways you want people to “feel” when they hear about your product. Stay away from long lists of functionality. People buy, for the most part, on emotional reactions.

Shelter your employees

Start ups are volatile and not everyone needs to know every brutal truth. There will be times when you are putting payroll on the execs credit cards, but you don’t necessarily need to share that with everyone in the company. Trust me, I have been one of those execs floating 1,000’s of dollars for a couple of weeks before funding closed. Some who join your start up will be true entrepreneurial types and for those the uncertainty will not matter. Others, however, will be employees looking for stability, with families to support. You don’t want to shrink your candidate pool any further than is necessary. Portray a positive, stable and growth oriented environment.

Act bigger than you are

Allocate a few dollars into presenting a professional image. Maybe that is the receptionist in the lobby who doubles as the AP specialist. Maybe that’s a phone system where you can look like you have lines for a variety of different functions. To some extent, it follows the old adage of “Fake it till you make it.” If you have 20 employees and someone asks the response is still truthful if you say “we are still under 100” but send a very different signal to a potential customer.

Start ups are, by their very nature, challenging in many respects. Knowing a few of the most common pitfalls can help to guarantee yours is that 1 in 10 that everyone is looking for to hit it big!

Acquisition Considerations for Human Resources

March 22, 2017 by sherriesuskimissionviejo

You have just been told that your Company will be acquiring another Company. Although your first question could be “How will this impact me?”, your first question should be, “Is this an asset sale or a stock sale?” There are many implications for Human Resources in any type of an acquisition, but some will depend on which type of acquisition it will be. You and your team are likely to catch the first wave of questions and work that will follow.

Stock Sale

Let’s talk first about the definition of a stock sale versus an asset sale. A stock sale is when your Company is acquiring all assets and liabilities of another company. In a Stock Purchase, all of the outstanding shares of stock of the business are transferred from the seller to the buyer. The buyer in effect steps into the shoes of the seller, and the operation of the business continues in an uninterrupted manner. Unless specifically agreed to, the seller has no continuing interest in, or obligation with respect to, the assets, liabilities or operations of the business.

Asset Sale

On the other hand, in an Asset Sale, the seller retains ownership of the shares of stock of the business. The buyer must either create a new entity or use another existing entity for the transaction. Only assets and liabilities which are specifically identified in the purchase agreement are transferred to the buyer. All of the other assets and liabilities remain with the existing business and thereby the seller.

Organizational Structure

In both cases you need to begin to build out your organizational structure of the combined entities as soon as possible. This will act as your guidelines for interviewing and assessing employees for future roles. The employees who will be, as well as your existing employees, will be anxious to know about any changes in the organization, their positions, location of their work and/or the reporting structure. You also need to have your people, particularly the top-level of the new organization, in place quickly. Frequent and early communication from leadership will reduce anxiety on both sides.

Policies and Procedures

In both situations you will need to figure out what the company being acquired has in place for their policies and procedures and how they align with those that you have in place. Frequently there can be a meeting of the minds where you can take the best of both worlds and adopt new P&P’s. Not only does this give you an advantage but is a nice show of collaboration to the employees being acquired. Especially, understanding the differences in both leave policies and having a transition plan before the close date is critical to reducing employee disruption and managing expectations.

Benefits

In most cases, when it is an asset sale, you will be able to choose which liabilities to exclude from the sale, such as the 401(k) plan provided by the seller. In a stock sale, you will be required to assume all the benefit plans, at least for a period of time, and may not exclude any up front.

Other benefit considerations, which we will explore in more detail next time, include how to handle FSA’s, LOA’s, 401(k) account balances and outstanding loans, bonuses and medical deductibles and out of pocket maximums.

Acquisitions bring a lot of uncertainty but also a lot of excitement around the possibility of building a bigger and better entity…….. almost overnight!

Why Internal Bid Programs Yield the Best Candidates

March 22, 2017 by sherriesuskimissionviejo

Internal bid programs have long been considered to be one of the best sources for hires and promotions. In fact, some sources indicate that existing employees make up over half of all successful candidates that filled positions in 2016 in some of America’s larger companies.

Even though the average posting may only attract 4-5 internal candidates versus an average of over 200+ external applicants, (or 1000’s if your ads are not written correctly) those internal candidates are far more likely to be successful as the final candidates.

So, doesn’t it makes sense to have a formal internal bid or internal mobility plan in place? Well, yes it does, although one poll found that only 28% of Fortune 500 CHRO’s actually had a well-defined plan.

Well defined would include:

Well thought out- put some real time into what type of plan will work best for your organization
Documented- get it down on paper, so to speak. Make sure the steps make sense and that you have the technology to support it
Communicated- plan different communication mechanism- an employee newsletter, published posts on your intranet form employees who have bid and been accepted, announcements at your monthly stand ups
Adhered to- nothing is worse than putting a plan together, communicating it and then not following your own plan. This means that EVERY position must be posted. Nothing will derail your success faster than publishing some but all your positions
Promoted- find fun ways to promote the internal bid process- highlight the employees who have been successful. Tie balloons to the cubes, hand out congratulations cupcakes. Anything to bring attention to your program!
Tracked- ensure that you are tracking your metrics from the start and that you can report on your success. Tracking your metrics will also tell you if certain teams are accepting more internal bids than others and allow you to focus your continued efforts in the right places

The number one reason job seekers reported looking for new opportunities in one 2016 poll? Lack of advancement and promotional opportunities. Stated another way, what you don’t retain, you replace.

Recruiting is an expensive proposition no matter how you cut it. In fact, almost 20% the dollars spent by an employer every year go toward the costs of recruiting and onboarding backfills.

So, well run internal bid programs not only make sense from an employee morale standout, but from a very real dollars and cents standpoint as well.

Establishing Goals

December 11, 2016 by sherriesuskimissionviejo

We talked about how to establish Core Competencies in your Performance Appraisals, in the last article, in order to tie your Guiding Principles to your Performance Management system and to reinforce the Culture you are trying to create. Keeping in mind that the overall goal is to increase employee engagement to drive bottom line results, it is important that you add goals to your Performance Appraisals as well. I am a big believer in SMART goals.

I won’t go into a huge amount of detail here as there are numerous websites devoted only to this, but in a nutshell, SMART stand for:

– Specific – the more granular the better
– Measurable- make sure you have systems and processes in place that can actually measure whether or not you achieve the goals
– Achievable- stretch goals are fine; impossible goals are not. No one will strive to meet something, putting in 110% ,for something they do not believe is possible
– Realistic- I personally like some of the variants for this goal a bit better than “Realistic”. You might use Relevant or Results Oriented to ensure that the goal is meaningful given where your business is
– Time based- the goals should not be open ended- they should have dates by which they should be completed. Usually shorter time frames for employees in nonexempt roles and longer for those in managerial positions.

Implementing goals in an organization for the first time can be a challenging exercise. One of the many jobs as CEO or President of a Company is to establish goals that support the strategic plan, which is a written document that articulates the organization’s strategy for achieving its mission and vision. It does not have to be an overly complicated process. They can be basic goals such as, Increase revenue by 20% or Gain an additional 5% of market share. At the point at which you are comfortable with the goals, you can share them with your Executive team. There should be as system in place whereby they can then align their goals in support of yours. The first year out, it may be best to limit goal generation to the Executive Team or at least no further than the Director level. The real work is not in defining the goals but in managing the business in support of the goals. This requires dedication to and support of the process. If you have monthly or quarterly management review meetings they should be a part of each presentation, outlining where each team is in support of these goals and allowing others in the room to ask clarifying questions. It can be helpful when you are just starting the process to actually flowchart the goals in the organization to give everyone a quick visual of how the goals are aligned.
It is very rewarding at the end of the year to look back and see all that has been achieved. Sometimes we forget to take just a few minutes to celebrate our successes before we launch into the next set of goals and deliverables.

Creating your Guiding Principles

November 22, 2016 by sherriesuskimissionviejo

Just like there are many different versions of a Purpose Statement, there are many different versions of Guiding Principles. They can go by How’s, Core Principles, Core Values or Guiding Principles. But, by any name, their main purpose is to start to establish what you stand for and what you believe in. They start to form the framework for how you will guide your company, how you will do business and how you will realize your Purpose Statement.

As with the purpose statement, it is always best to engage your workforce in the creation of your guiding principles. Have a few brainstorming sessions, have an idea box or e-mail address that suggestions can be submitted to, have a contest, anything that will start people talking and then thinking, and it usually does happen in that order, about how they are going to actively contribute to the Company’s Purpose Statement. Let people know up front that the management team appreciates all of their input, will take all of it into consideration, will summarize it and will come back to the group with 4-8 Guiding Principles. There is some debate to be had over the ideal number of principles. My preference is to have about six. You need enough to cover everything you need to, but not so many that no one can remember them all. Keep in mind that you will want them hanging or painted on a wall and you don’t want it to look like a long story that no one wants to take the time to read.

Some examples of Guiding Principles might be:

Do what is right and not what is easy
Be appreciative
Have a positive impact with each encounter
Be humble
Focus on our customers

Once you have identified your core Guiding Principles, it’s time to announce them to the Company. Make sure this is accomplished with some fanfare and that, preferably, it is participatory. People remember how they feel and it is much easier to elicit a feeling if you are participating in something than it is if you are simply listening to something. One idea might be to break your team up into groups and to have each group take one of the Guiding Principles. Ask them to come up with a skit to depict the wrong way to portray and GP and then the right way. Be sure to end with the right way as that’s what you want people remembering. Teams can have a lot of fun with this exercise! Imagine a skit showing how NOT to be humble where someone is walking around boasting how great they are and taking all the credit for a goal that has been achieved and then showcasing what the same scenario would look like when someone was being humble, giving credit to the team in its entirety.

Guiding Principles should concisely convey how a company defines itself from a variety of different perspectives. Make sure that your Guiding Principles speak to your external customers, your internal employees (which can also be customers) and to what success means to you. Your Guiding principles should flesh out your purpose Statement, adding more specific information on how you plan to accomplish that on a daily basis. Ideally you become recognized by your Guiding Principles and stand out amidst your competition.

Socializing Your Purpose Statement

November 14, 2016 by sherriesuskimissionviejo

There are many different versions of a Purpose Statement. Some call it, the mission statement, the WHY or the Go-To statement, but they all drive toward answering the same question though, “Why are we in business?” Now that you have defined your Purpose Statement, with the input and guidance from your cross functional teams, it is time to broadcast it.

By all means, allow the employees and teams that were involved in creating it help you to socialize it throughout the organization. This serves two purposes. One, your team is invested in this statement and will appreciate seeing it trumpeted to the rest of the organization and their work celebrated and two, the rest of your organization feels differently about edicts coming from top management than they do about edicts coming from their peers. The likelihood of success is much greater when it comes from both. You can’t be everywhere at once, especially in a large organization, so anoint your team as the ambassadors of the Purpose Statement.

So, let’s talk about way in which you can socialize this message. Is there a Company newsletter? Run the cover article covering the new Purpose Statement, explaining what it means to you and to the team that helped to design it. Make sure you publish their names and, if possible, their pictures. Everyone likes to see their name in print attached to a corporate initiative. Perhaps there are company-wide business meetings that occur monthly or quarterly. Have a banner printed up with your new Purpose Statement. Let it scroll down behind you as you announce the new direction. Allow each of the team members to come up and speak about what it means to them personally and how they think they will apply it to their daily lives at work. Giveaways, while a little corny, do work to keep the message in front of everyone. Mousepads, sports bottles, key chains are all inexpensive reminders of what you stand for.

Start to use the words and phrases that are incorporated into your Purpose Statement in your verbal and written communication. People repeat what they hear and read. Think about ways in which can act that will be physical manifestations. If your Purpose Statement talks about giving back, think about ways you can show you are giving back. Can you set up a charity for employees that run into financial trouble? A Lend a Hand Fund so to speak. Can you engage with a local charity and support back to school or Thanksgiving food drives? You will find that the more ways you can think of to deliver your message, the easier it will become for employees to understand it and live it.

Uncovering Your Company Culture

November 7, 2016 by sherriesuskimissionviejo

Ask yourself some quick questions and you can likely uncover your Company culture that exists today. Although employees often ask these questions, sometimes members of management forget to ask the very basic questions that help them to understand their Company Culture from the employee’s point of view, good or in need of improvement. Do we do our best to meet employee’s needs? Do we treat each other with empathy, dignity and respect? Do we respond to our customers, internally and externally, with urgency and positive impact? Do we hold ourselves accountable? Are we inquisitive? Do we empower our employees to amaze our customers? Are we consistent in delivering excellence? The answers to these questions will help you to start to get a better idea of how your culture is shaped.

After asking, the easy part, and answering honestly, the hard part, you will have a good idea of your current company culture. There may be facets of that culture that you think it would be healthy to change. In order to change, though, everyone needs to be on the same page and moving forward in the same direction. It is often useful at this stage to create a focus group of employees who will create and take the journey with you to develop a Purpose Statement for your Company. There are many different versions of this, the mission statement, the WHY, the Go-To statement or the Purpose Statement. They all drive toward answering the same question though, “Why are we in business?”

Kick off your focus group with cross functional participation. Explain the purpose of the meeting and open a brainstorming session. The idea here is to get as many thoughts on a whiteboard as possible, not to qualify them at this point. Let the team go away for a week and think about the ideas that have been generated. At the next meeting, start to work through which ideas capture the essence of who you think you are or want to become as a company, the reason you would tell the rest of the world for why you are in business. This statement should be “action-oriented” and should inspire people to actively DO something. Well written purpose statements not only help to guide your team internally toward a common understanding and goal, but are valuable tools externally for attracting quality candidates and customers. While the statements themselves serve as reminders of what is important to your organization, the process of engaging the workforce to develop them allows people to feel ownership for “their” organization.

Once your Purpose statement is finalized, which is a big step in the right direction, and one you should celebrate with the workforce, you are not yet finished. Next, you should decide how to socialize and message these statements. You might look at adding them to mousepads as free giveaways, using them on your website or having an artist depict them on the wall in the lobby. The point is to continually incorporate your Purpose Statement into the way in which you do business until it is ingrained and second nature.

As a side note, culture can and should be driven by initiatives, performance metrics, goals and other measures, but culture also needs to be driven by the less tangible, kindness, compassion and empathy. Cultures are driven by the words used and the deeds carried out every day. They are driven by doing what is right for your employees as human beings. By bringing in flowers on Mother’s Day, by handing out Good Gotchas, by taking the time to listen and to genuinely care.

When Startup Culture Changes

October 3, 2016 by sherriesuskimissionviejo

It is a very intense time when a startup first goes into business. Everyone is working full-tilt and you likely have a small, close-knit staff that appreciates a fun and free atmosphere. But there will always come a time when a startup is no longer a startup. Either it goes out of business or continues to mature into a regular company. This is a transition few, especially young people, tend to think about when they dream of beginning a new startup. But the fact remains that startup cultures, by definition, are ultimately unsustainable for a number of reasons, and it’s critically important to have a vision for your business beyond the early stages and a plan for when the inevitable transition occurs.

Fix The Typical Weaknesses Of Startups

For example, spending often gets out of hand at startups because you want to have a good time around the office, offer fun perks and haven’t gotten around to hiring an accountant yet. If you don’t have an accountant or finance person to manage, interpret and advise you on the numbers, it’s critical that you bring one on. Know also that many startups fall into the trap of making emotional rather than rational decisions. This is especially true when it comes to creative differences and underperforming employees. You may like them and want them to stay around. They may be old friends. But at some point you’re going to have to start making the tough business decisions, and that includes letting people go if necessary.

You’ll Need To Bring In New Employees

Of course it’s possible your new employees will hold the same passion for your company that you and your original team do. But it’s also likely that they’ll be a step down when it comes to engagement. It’s the responsibility of you, your employees and the established company culture you’ve built to get any new employees as impassioned about your work as you are. You will not only need to bring in these new employees, you will have to train them. Sometimes, that means abandoning your startup’s stereotypical laissez-faire attitude for some micromanaging. It’s very important to develop a good training program at your company as well – without one, you risk new employees getting confused or lost and ultimately dissatisfied.

Your Organization Will Start Getting More Complex

When an organization starts to get more complex, it will require more complex methods of managing it, many of which are typically adopted by more “normal” businesses. You will need to choose your leaders carefully at each level. You will need to be able to distribute workload more fairly, so typical long startup hours are not needed to be worked by large numbers of people. Long hours are usually a necessity at the beginning, but it’ll only be so long before disillusionment and burnout set in.

Keep Your Startup Culture Alive!

While by definition a “startup culture” never lasts forever because your company isn’t a startup forever, there are some things you can do to ensure that “new startup feel” continues. Perks are nice, but they aren’t going to keep employees invested in your business in the long term. Make sure to always listen to the suggestions of other employees while having a defined hierarchy. Hold onto your established values. Reflect upon them, and live them every day during your startup.This will help ensure continued growth and employee engagement.

Raising Funds For Your Startup – Without Investors

September 15, 2016 by sherriesuskimissionviejo

You’re an entrepreneurial spirit; you have an idea and you know it has potential, but you’re just not sure what to do next.

Well, one of the first things you’re going to have to do is get some money. That’s the hard and fast truth; it’s incredibly difficult to get a business off of the ground without at least a little bit of financial capital to work with. But for some, the idea of fundraising is appalling, and finding funds through an investor seems even more daunting.

The good news is that there are ways to build funds for your business in its first phase that don’t involve pitching to potential investors. So, if you’re an investor who wants to avoid the standard path to fundraising, explore some of these alternatives:

Back Yourself

This is probably the most difficult (and scary) option to wrap your head around, but honestly, if you really believe in your business, you should be ready and willing to invest yourself fully into your idea. Depending on how financially established you are, you may have a few options that you can tap into. Look at your savings, and determine how much you can reasonably put towards your business. If you have a mortgage you may be able to refinance / make use of your home equity.

Remember, no one is going to want to invest in a business if its founder isn’t willing to put a bit of their own money on the line.

Partner with the Correct People

This really comes down to networking and networking well. If you have people in your network that believe in both your business idea and you, you may very well have the co-founders or investors you’re looking for right there within arm’s reach.

As an entrepreneur, you should always be working your network, and your network’s network to build connections. You’ve probably already researched the various channels you’ll need to access when growing your business (distributions, supplies, clientele, etc.), and made connections with people in all of those realms. Don’t be afraid to look for investors within those channels.

One of the most important parts of your business will be the people that you build it with. If you can get an existing supplier to invest in your business, you’ll not only have an investor….you’ll have the supplies that you need.

There are a few other ways that you can get around the investor pitch. Check back soon for more ideas!