If your business is ever going to grow past your own shadow, you will need to put a management team in place early on.
What most founders don’t realize is that you should be building that team from your very first hire.
Usually, your first real employee (beyond VAs) will be technical. They’ll be helping you fulfil the work you’ve brought in. But technical skill is not the only thing you should hire for.
They should also be ambitious and interested in moving up beyond a technical position. If you look out for that drive, this first person will be able to become your team lead when you hire the next round of people.
They don’t have to have a lot of experience – they just have to want it. That way, you can hire people for them to lead when the time comes.
They’ll be able to train and oversee new staff, keeping the number of your direct reports down.
Ideally, you’ll get someone who has a bit of experience (one or two years) as a team lead or project manager. They can still fulfil the work themselves, but are also capable of directing people.
They’re not necessarily the “boss” of people in this early stage, but they’re able to keep 3 or 4 people focused and moving in the right direction.
As your company grows, you’ll expand beyond simply fulfilling the work that comes in. You’ll build a marketing team, and possibly a sales force. You’ll have an operational unit, and a finance department.
Follow the same system in each of these areas, even if some of them come up concurrently. Hire a smart, ambitious person who can do the work and will be able to manage other people doing the work in the future.
You can promote people like that upwards until their skill runs out. If you’ve made the right first hires, though, the skills won’t run out.
And that’s important, because at some point you’re going to want to scale the business.
After a few years in the business, your original hires will know the company intimately. They’ll know the systems and will be intertwined with your other employees. They’ll be connected with your customers and understand the market.
But at this point it can go two ways: they either relish the challenge of scaled growth and step up to the plate, or they cap out. Their ambition and skills are capped and they don’t have the energy to go further.
If people end up in the second camp, it’s not their fault. In fact, it’s your fault – you failed at hiring the right people in the first place and creating a culture that always enables people to do bigger and better things.
So what do you do if you know the business is ready for scale, but your managers can’t handle it?
Well, at that point it’s time to hire in professional executives. These are the people who have the experience or trajectory to grow your company fast.
This is why building your network is so critical. You need connections in all kinds of industries and business models to find superstar executives and lure them into joining you.
Please: continually expand your network, especially if you know you will be hiring executives at some point.
Your network should encompass vendors, industry figures, CEO networks, and the schools that turn out the kind of people you want.
You should also include your competitor’s best employees, in case you want to poach them in the future.
Go after people who have already been trained, work in companies that are similar to yours, and have the experience or trajectory to get your company to the next level.
You never know when a superstar will walk into your life. If you invest in your network, they’ll appear (which is why people who think networking is a waste of time will generally never get the superstars).
Now, when startups get funded, the VCs want to see executives hired first. They’re not worried about technical talent — that’s relatively easy to get.
But VCs know that good executives who know how to handle things with a global perspective will be able to grow the company very quickly.
Self-funded companies, on the other hand, often run into problems by the time executives come on. Bad habits have become standard practice within the company, and there are problematic processes and inefficiencies all over the place.
This happens because the founder didn’t sit down to carefully plan their management team. In fact, most founders don’t even give this any thought — they just hire haphazardly for technical ability as the need arises.
To avoid this, you need to start with the end in mind.
The Predictive Org Chart™
The Predictive Org Chart™ is a forecasting tool you use to map out which people your business will need to really thrive as it grows.
Map out every part of your business by unit (production, sales, marketing, finance etc). Outline each role you will need, and create a space on the chart for each position.
Lay each position out with a clear indication of who each person will report to. Remember that each manager should have no more than 6 direct reports.
Now fill out the chart with who currently fills each role. You will probably end up with the same few names over and over again, but bear with it.
Doing this will help you identify what your most important hires are at this point, and how to best leverage the skills of your existing people by narrowing their responsibilities.
With your Predictive Org Chart™ mapped out, you’ll be able to hire the right kind of people the first time around.
Maybe they start as generalists who can fill a few roles, but over time will be able to specialize and oversee one particular area.
A quick side note to truly emphasise how important these first hires are:
They will teach your future teams, build the culture of the company, share their deep knowledge, and be the glue that holds it all together.
The first leadership team are the key cultural group of the company, and their impact goes far beyond just doing the work.
They create the DNA of the company.
(Which is why it’s so much more valuable to invest in staff like this early on instead of VAs. Overseeing an ambitious employee will have far greater impact on your culture and bottom line than overseeing a $10/hr VA.)
The Predictive Org Chart™ also enables you to move fast if a superstar does come across your path.
Because you’ve mapped out the people your company will need to achieve your ultimate goals, you’ll know when it’s time to bring in external leadership.
The org chart lets you understand what your company needs to grow, without a superstar wandering in.
But if a superstar appears during your growth phase and you can afford them, plug them in immediately.
If for some reason you can’t get them to join you, then stay in touch, as your situation and theirs may change and align soon enough.
Have a plan to snap them up, even if it means rearranging the original org chart a bit.
Don’t be so slavish to your plan that you don’t take advantage of an opportunity. That person might have the skills to single-handedly 10x your company. They’ll be worth 100 times what you pay them.
I’ve seen 2 year plans happen in 3 months when a superstar takes the reigns, so be flexible.
So to recap: hire great people who can become your first managers as early in your business as possible.
Pick people who are smart and ambitious and who thrive in fast-paced, changing situations. Pick people who want to be part of something bigger than themselves and have the desire and aptitude to lead.
Nurture them and provide an environment they can thrive in. Give them all the training and leadership they need, so that they in turn create a powerful company culture.
Develop your Predictive Org Chart™, and hire more great people for them to lead when the time comes.
Never let a superstar pass you by.
That’s how you build a world-class management team right from the start.