I want to share a truth you might find surprising: as a business owner—and especially if you are an entrepreneur starting a new business—your biggest challenge, your greatest risk, your most important task, isn’t raising capital or implementing processes. It’s making sure the people you surround yourself with will be the ones who will truly elevate your organization’s capabilities. Sure, raising capital is important, but your “human capital” is even critical.
The phrase may sound cold, devoid of emotion, but as I like to say, “Feelings aren’t what lands on a spreadsheet.” Human capital can be defined as the economic value of your employees to your business. Your greatest expense is your employees, but they are also your greatest asset.
The fact is, if you hire amazing people who enthusiastically support your mission, they can help share the burden of running a growing company with all of the varied challenges that it poses and help you create a competitive advantage in your market. But hiring even one bad apple can keep you awake at night and question your sanity. I know this firsthand!
This is true of all companies, regardless of size, but it is especially true for small businesses. In running a small business, there are ripple effects with every interaction that feel far greater, which is why I have found that most business owners hang on to people who are wrong for the job longer than they should. As an entrepreneur, your company is an extension of you, almost like a parent-child relationship. In those situations, there are consequences and dependencies that have a greater impact on a team of ten than a team of one hundred or one thousand.
That is why getting hiring right is the single most important thing you can do for your company. To be successful in business, you need to look at all aspects of your company with a business lens. Sure, calling your employees “human capital” may feel like you are diminishing them individually. But at the same time, you cannot afford to pour hours of your time coaching one underperforming employee who has a crappy attitude, even though said crappy person would appreciate the added attention.
Regardless of the size and stage of a company, getting hiring right is critical. The better the teams, the better prepared you are to deal with competition and market challenges. At the same time, people present their own challenges; what I hear from nearly all the clients I’ve advised and the entrepreneurs I’ve coached is “businessing” is the easy part, and “peopleing” is what makes that hard.
People are wonderful and complicated. Universally, regardless of the industry you are in, the people you hire will always add dynamic complexities. You can have all the practical and operational tools and tactics in place. You can write the most sound business strategy and be well capitalized. You can monitor, check, adjust, optimize, and execute in real time all day long. Your people, though, are your wild card. People can be pure pandemonium.
That’s why you need to hire people who are custom-fit for you and your company. The sooner you can establish sound hiring practices, the greater your chance of success. Even when you have those in place, you still need to remember that no matter how much you do, people are wonderful and maddening, and oh so unpredictable—and you won’t get far without them.