The transition from starting a business to managing a team is a perpetual challenge for new entrepreneurs. Here's how to make it smoother.
- In the early days of a venture, entrepreneurs are often a one-person show.
- But they eventually need to shift from the business-opening stage to the hiring and leading phase.
- Here, experts and Grubhub founder Mike Evans share how founders can tackle the challenge.
In the early days of a venture, entrepreneurs and small-business owners are a one-person show. They're the company's lead salesperson, marketer, finance director, and head of product — not to mention gofer in chief, fetching coffees and doing lunch runs.
But once the business gets off the ground, there comes a point when founders need to transition from starting the business to hiring employees and leading the team. The shift might not come naturally and is often one of the hardest for entrepreneurs and small-business owners to make, according to Caroline Daniels, a professor of entrepreneurship at Babson College.
"You have to move from a singular perspective to multiple perspectives and from actor to teacher," she said. "And you need to recognize that your direction going forward — and your company's ultimate success — is going to be predicated on how well you manage that change."
Insider spoke with three experts, including Grubhub founder Mike Evans, about how founders and small-business owners could make the transition smoother.
Be strategic about your first hires
Evans founded Grubhub, an online food-delivery platform, from a Chicago apartment in 2002 when he was 26 years old. For the first couple of years, he did everything himself, but as the business grew, he realized he needed help.His first few hires fell into two categories. "First, I wanted to hire people who were good at things that I was clearly not good at," said Evans, whose memoir, "Hangry: A Startup Journey," will be published later this year. "For me, that was sales. I needed expertise and someone who could do it better."
The second category was people who could take on the chores and tasks that he hated doing. "The problem with those things is that you either avoid them and they don't get done, or you do them and they're demotivating, so you end up spending less time on the business."
Before Grubhub ventured into online ordering, it was a platform for takeout menus. Evans had to physically collect the menus, scan and crop them, and then upload them to the internet. It was a tedious process.
So he hired Jack Kent, a young graphic designer who was scooping ice cream at the time, to do the job. Kent was untested, but Evans saw potential. "With startups, you don't have the funds to hire very experienced people," he said. "They have to learn on the job, and some people really surprise you."
A few years later, Kent was promoted to the head creative for the company's first Super Bowl ad. "It's gratifying to see people learn and thrive," Evans said. "It's good for them and it's good for the business."
Learn to let go
About eight years into running Grubhub, Evans learned a hard lesson about the importance of trusting his employees. One day, Evans, who has a background in software, made the executive decision at 2 a.m. to change key lines of Grubhub's code related to suggested tips — much to the chagrin of his development team.
The next day, the company's head developer promptly removed Evans' access to write code. Evans realizes in retrospect his actions undermined the team's ability to do its job. "The company was growing and at a point where having the founder write software for the business wasn't the best thing for the business," he said. "I realized I needed to take a step away from tinkering with everything and let people do their jobs without my interference."
Experts say letting go of control can be a challenge for founders, who are often deeply invested in their businesses. "You have to relinquish control over parts of your business — which you probably think of as your baby — to outsiders and that's hard," Laura Lemon, an assistant professor at the University of Alabama who studies employee engagement, said.
But you must understand that while it might not be easy, it's important for your employees — and for your health, Lemon said. No one wants to work for a micromanager, after all. And you don't want to burn yourself out by insisting you have a hand in everything.
Delegate for the results you want, but don't prescribe them, Lemon added. "You have to trust and empower the people you've hired to do the work you've hired them to do," she said.
Tell stories to inspire your new employees
Research has found that entrepreneurs and founders are an intensely driven and hardworking lot. While their single-mindedness can be beneficial for building businesses, it can also come at a cost, Daniels of Babson said. "Most entrepreneurs have been told 50 times that what they're doing won't work or won't be successful," she added. "When they're able to make it work, that builds confidence — but also a lot of dangerous hubris."
Humility is key. Don't assume that others will be as focused and passionate as you; instead, tell them with stories that communicate your values and beliefs, Daniels said. Talk about why you started the company and what you hope to achieve — with their help, of course. "You know why you're building the company, but other people don't," she said. "You need to give people a reason why they're there."
Explain the problem you hope to solve, experts say. Cultivate buy-in by using "we" pronouns and demonstrating the power of teamwork. Paint a compelling picture of the future.
Daniels said: "Your goal is to get others just as excited about the vision and invested in the success of the company as you are.
"The message should be: We're in this together."
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