Chapter 9: Intro to Entrepreneurship: Building a New Venture Team

Three formal responsibilities of a board of directors

(1) appoint the firm's officers (the key managers), (2) declare dividends, and (3) oversee the affairs of the corporation

elements of new venture team

-key employees -board of directors -other professionals -lenders and investors -board of advisors -management team

common mistakes made in putting together a new venture team

Placing unqualified friends or family members in management positions. Assuming that previous success in other industries automatically translates to your venture's industry. Presenting a "one person team" philosophy—meaning that one person (or a small group of people) is wearing all hats with no plans to bolster the team. Hiring top managers without sharing ownership in the firm. Not disclosing or talking dismissively of management team skill or competency gaps. Vague or unclear plans for filling the skill or competency gaps that clearly exist.

liability of newness

The set of risks faced by firms early in their life cycles that comes from a lack of knowledge by the owners about the business they are in and by customers about the new business.

skills profile

a chart that depicts the most important skills that are needed and where skills gaps exist

founding team

a group of people with complementary skills and a shared sense of commitment coming together in founding an enterprise to build and grow the company

board of directors

a panel of individuals who are elected by a corporation's shareholders to oversee the management of the firm.

virtual assistant

is a freelancer who provides administrative, technical, or creative assistance to clients remotely from a home office

advisory board

is a panel of experts who are asked by a firm's managers to provide counsel and advice on an ongoing basis. Unlike a board of directors, an advisory board possesses no legal responsibility for the firm and gives nonbinding advice.

inside director

is a person who is also an officer of the firm

freelancer

is a person who is in business for themselves, works on their own time with their own tools and equipment, and performs services for a number of different clients.

consultant

is an individual who gives professional or expert advice. New ventures vary in terms of how much they rely on business consultants for direction

outside director

is someone who is not employed by the firm

employee

is someone who works for a business, at the business' location or virtually, utilizing the business' tools and equipment and according to the business' policies and procedures.

homogeneous

meaning that their areas of expertise are very similar to one another, they are likely to have different points of view about technology, hiring decisions, competitive tactics, and other important activities

heterogeneous

meaning that they are diverse in terms of their abilities and experiences

qualities of the founders

prior entrepreneurial experience relevant industry experience networking