Chapter 8

The Founding
Team
 Overview

• The founding team

• Professional advisers

• Board of directors

• Outsourcing with independent contractors

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 Advantages of a Founding Team

• Intense effort of start-up shared

• Less likely to abandon
• Proceed further when all functional
areas covered
• Provides more credibility for new venture
• Information analysis and decision-making
is improved
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The Entrepreneur’s Team
 Characteristics of an Effective Team

• Expertise covers the key functional areas of the

business: finance, marketing, operations
• Someone has experience in the industry
• Good credit ratings
• Solid industry contacts with sources of capital
• Passionate about the business
• Have time to spend on the business

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 Professional Advisors

• Attorney—advocate
• Accountant—not an advocate
• Banker
• Insurance Broker
• Boards of Directors
• Boards of Advisors
• Personal Board
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 Functions of Board of Directors

• Select and hire or fire the

CEO/senior manager

• Nominate directors

• Audit the company’s records

• Review performance against projections

• Prepare and monitor the strategic plan

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 Functions of Board
of Directors (cont.)
• Approve sale of assets, major acquisitions

• Monitor compliance

• Declare dividends

• Step in, in times of crisis

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 Mistakes to Avoid
When Forming a Team
• Forming team casually
• Including team members with
different goals
• Using only insiders
• Using family members as
professional advisors
• Giving founding team all stock in
lieu of salary
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 Outsourcing

Raw
Supplier Materials
Manufacturer
Manufacturer Raw
Supplier Materials

Supplier Virtual Manufacturer

Company

Supplier
Distributor

Retailer Retailer
Retailer
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 Using Independent Contractors

• A worker is an employee if s/he...

– Must follow your instructions
– Receives training from you
– Cannot hire, supervise, or pay own assistants
– Has a continuing relationship
– Must follow set hours of work
– Works only for you
– Must submit regular reports & is reimbursed
– Relies on your tools and materials

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 The Virtual
Entrepreneurial Company
 Take-Aways

• List what students took away from the

discussion in real time

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