Building a 100m valuation company: Part 3 – Securing a purposeful team
To recap, over the next few weeks, we are talking about how to build a 100m company.
There are five layers that a business owner needs to build to ensure that you can support your company valuation. How you act and direct your team across each layer changes over four stages of growth, from start-up to scale-up, ramp-up, and value-up.
The first layer is about positioning—it answers the question “what makes your business special in your customers’ experience”.
The second layer is the delivery system, which is all about designing processes, activities, and systems based on the experiences your customers want.
The third layer is about getting the right people to do the right thing at the right time every time and at the right price.
Building and growing a business towards a 100 million valuation 20 years down the road is simply impossible without a high-performance team. It’s simple logic. Without a capable team, it’s just you doing everything and holding everything together. This makes your business a job and, at best, you might attract a small buyer for a small price who wants that life.
In this podcast of the Money Show, Pavlo Phitidis unpacks the third layer in “Building a 100m valuation company” [Securing a purposeful team]
Getting the right people
Recruiting the right people is the first challenge. You need to know what talent you want, why you want it, and where to find it. Broad job descriptions based on functional roles doesn’t work, you need to think about hiring in terms of performance. If you are looking for a salesperson, how do you specify the talent and skill sets you need? Good salespeople have similar attributes, skills, and experience. Yet, of the many you’ve hired, most have probably not stuck around, leaving at great cost to your business. Rather, recruit against a system that you want that person to operate, innovate, and manage. It’s far easier to recruit against a set of activities than a set of CV of bullet-pointed attributes.
Doing the right thing
Once on board, getting that person to be able and capable fast is the next challenge. How do you train and then performance manage that person if the job description is shaped as a broad function, like sales? Simply performance managing against targets that a salesperson must deliver, for example, 5 new customers a month, is sure to fail. A sales system includes valuable content and activities to enable a salesperson’s success. For example, who are your customers? How do they buy your products/services? What are their key motivators and concerns? How do you resolve objections? Organizing activities that generate a measured outcome into a sequence allows you to measure performance more closely and usefully.
Arguably, one of the biggest challenges in a business is deciding how to delegate effectively. Delegating responsibilities to a team member only to have to do it, check it, confirm it and so on defeats the purpose. Delegate a system, not instructions. This is the key to unlocking delegation success and performance.
At the right price.
Despite the fact that education, skills, and knowledge are widely available, finding the right talent as you grow and are under pressure might make you think that big, hefty degrees and a weekend course at Harvard require you to pay big salaries. As private businesses, we cannot compete with corporates on salary and must build our businesses more smartly as a result. The key here is the system you employ to perform that function. Again, if it’s built to the specifications of your customer experience, you can afford to get a person with less experience and no Harvard degree to run it and grow from there.
Leading this element of your business changes over time too.
Starting up—get a team on board that is inspired by your vision and wants to be part of the future. The more cross-sectional their appetite to learn, do and help, the better, since in the beginning, you need a jack of all trades.
Scaling up: Specialize your team into functional areas of marketing, sales, operations, and so on. Working with them, build the business systems in a manner that has them co-creating the systems with you. It makes people feel valued, accountable and it automatically sets the standard and bar as to how they need to perform.
Ramping up – get your team to build capacity within each of their functional areas. As leaders, they need to be more strategic and have their underlying team do, so that they can lead the constant improvement of each functional system and coordinate between them.
Value up – lock your key team into the future of the business. Any buyer who is paying a premium price for your business will want to know who is going to deliver the growth and performance in the future that you’ve enjoyed in the past when you leave. A committed, high-performing team adds a full multiple onto your valuation, adding a significant uplift on your market valuation.