Starting up any business will bring extreme pressures, and research shows that most businesses will fail within the first five years. With this in mind, if you’re a business angel it is worth keeping a very close eye on team harmony, a significant indicator of the future success of a startup.
The majority of startup enterprises begin with an idea conceived by two or more people working in partnerships or a group. The chances are, the founders of the business will know each other well, they may even be friends or family members collaborating on a great business idea, the problem is even the best of relationships can be tested to the limit by the inevitable day-to-day pressures that come with running a business.
Do you have a Tevez in your startup team?
As anyone who saw a certain Champions League game this week will know, teams can be affected badly by disharmony in the ranks. If one member of the team suddenly refuses to play ball, this can have a dramatic affect on morale. Even the most promising teams could feature a Carlos Tevez type character harbouring underlying issues so it’s vitally important that everything is done to prevent problems in those early stages when a business is launched so no one feels aggrieved when changes happen.
The honeymoon period…
A startup is typically launched with a great deal of enthusiasm amongst its founding partners, the ideas are flowing and there is often the euphoria that accompanies that first big order, or securing that first big client which tells you that this business idea really does have legs. This is the exciting honeymoon phase of course, the foundations are being laid for future success and there really can’t be anything that would get in the way of reaching that first million. Or could there?
This honeymoon period is unlikely to last long as the influx of orders and signing up of new clients paves the way to late nights, seven-day weeks and the dreaded accounts. As a lack of cashflow can quickly kill a business in its early stages, a large proportion of time will be spent on maintaining it.
This can be a particularly challenging phase for startup founders and one fraught with danger.
There may be trouble ahead…
If we rewind to that early honeymoon phase this is the point where agreements are made and firm foundations for trust between the partners must be established. If those foundations are weak, there may well be trouble ahead because like any relationship, business relationships must be based on trust.
Startup founders who do their homework will establish this through written agreements but unfortunately this can be overlooked by inexperienced founders, often to the detriment of a business. Written agreements between the founders should include elements of what’s expected of each other and just as importantly how any cash the business generates is divided. Taking care of this early on will form the basis of that trust when the relationship is inevitably put to the test.
A fledgling business is often subject to growing pains, that might include changes of direction or evolving ideas that will test any partnership to the limits. To stand any chance of maintaining a successful business partnership both partners should be working from the same page when it comes to their aims and ambitions for the startup.
Sometimes these ambitions may be to grow the business or make adjustments to the service, either way compromises will need to be made and opinions heard. This is why team harmony is so important, without it a business will often buckle under the strain of conflicting aims and objectives.