mistakes

Things Startups Shouldn’t Spend Money On

By Mark Evans in Startups 4 Comments Tags: , , ,

In working with many startups, one of the biggest dangers facing them is, surprisingly, having money in the bank.

It’s one thing to bootstrap an idea because it forces entrepreneurs to be creative and flexible, although it can be frustrating not to have the financial resources to move aggressively or execute quickly.

And while money makes life a lot easier for startups, entrepreneurs also have to be careful about handling their new-found “wealth”. Since plunging into the startup world 10 years ago, I’ve seen too many spend money like it’s burning a hole in their pockets, buying products and services they would never have considered when there was no or little money kicking around.

For most start-ups, here’s “danger list” that should be avoided unless really necessary.

1. Office space, particularly cool, funky space. For whatever reason, too many startups decide the only way they’re going to be successful is moving from the basement or the spare room to an office space in the happening part of town, complete with exposed brick and a fridge full of snacks and soft drinks. It is based on the belief that attractive office space will attract talented people, while forgetting that an exciting idea is far more compelling.

2. Hiring a full-time marketing person. Most startup entrepreneurs are developers as opposed to marketers or communicators. As a result, they don’t understand how marketing works, how marketers do their jobs, and when they’re needed. Since entrepreneurs don’t have marketing expertise, they think hiring a marketer makes sense because, after all, every company should do marketing. The problem is many marketers are hired before they are really needed, and entrepreneurs don’t have the ability to assess how a marketing person is performing. Rather than hiring a full-time marketer, I would recommend hiring someone on a freelance or contract basis.

3. Hiring a PR agency on anything other than a project basis. Much like entrepreneurs are not terribly savvy when it comes to marketing, they have little insight into public relations. When they are looking to attract attention, entrepreneurs realize they may need a PR firm but the trouble is PR firms are looking to get what they need – an assignment with a healthy monthly retainer – as opposed to what the startup needs. My advice to startups when it comes to PR is to hire an agency on a project basis for a month or so. If the relationship is successful, the startup can hire the PR agency for another engagement when they’re needed.

4. Swag. There’s a mystery between a startup and the need to have swag – stickers, t-shirts, jackets, hoodies, pens, USB keys, bags, etc. Like cool office space, too many startups believe a sign of making it is placing a large order for swag. It may look good when your employees descend on an event with matching t-shirts but how much return does swag really generate.

5. New computers. Startups are dominated by geeks; geeks like new technology so if there are a few bucks collecting dust, buying a new computer, laptop or tablet is easy to justify. Truth be told, most of these new “toys” aren’t needed because existing devices are perfectly fine. There are, of course, exceptions to the rule. If your lead developer needs a more powerful computer to be more efficient, that can be justified. If, however, a non-developer wants a new computer so they can have run more tabs in their browser or create a PowerPoint presentation in less time, that should get the alarms bells ringing.

6. Travel. Travel is expensive. It costs money and, as important, time, and it can be a major disruption to have a key person out of the office when there is a lot going on. Travel to attend or speak at a conference seems like a great idea but it can often be a waste of time because it generates few of the returns (e.g. new contacts, potential customers) that are envisioned. While it is a good idea to “get out of the house” once in awhile, startups need to think about things through. Another rule should be not sending more than one person to an out-of-town event, which is complete overkill.

7. Hiring too many friends. On one hand, it’s good to hire people you know and trust given the time people who work for a startup spend together. The danger is people are hired based more on friendship than how good they are at doing their jobs. Given each hire for a startup is crucial, employing a friend who isn’t as good as another candidate is a mistake. Another reason not to hire too many friends is it can be difficult to fire them if they’re not performing well given how it could impact the friendship.

Are there any other things startups should avoid spending money on?

Social Media Hiring: The Bad and Good

By Mark Evans in Social Media No Comments Tags: , , ,

On the Sysomos blog, I recently did a post looking at the biggest social media mistakes made by companies, and the things companies should focus on to make the right hiring decisions.

The Mistakes:

1. Hiring people based on enthusiasm rather than experience. Many senior executives don’t understand or, for that matter, use social media so anyone who just has a modest amount of insight about social media comes across as knowledgable. The problem is enthusiasm doesn’t mean someone can use them effectively to meet a company’s strategic goals.

2. Hiring someone with a limited skill-set. People doing social media are “corporate soldiers” fighting on the front lines every day. As a result, they see a variety of inquiries from customers, potential customers, partners, investors and suppliers. This means they need to handle multiple roles – customer service, marketing, business development, sales, etc. If someone doesn’t have the experience or knowledge, they will have a difficult time doing the job without a lot of supervision.

3. Hiring cheap. Given social media is a new corporate activity with uncertainty about ROI, many companies are hedging their bets by hiring cheap. It works because there are lots of people excited about having a social media job. The reality, however, is you usually get what you pay for. Instead, companies need to look at offering more money to attract better candidates with deeper skill-sets and experience.

4. Under-staffing. Another cost-saving measure when it comes to social media is taking a conservative approach to hiring. Most companies start with an individual as opposed to a small team, even if their strategic plan is ambitious and multi-pronged. This is despite the fact the tactics and content creation to support social media programs can be labour-intensive. It explains why many companies’ social media efforts fail due to a lack of execution.

5. The lack of investments in tools to make social media activities more efficient and productive. Even though many social media services are free, the tools to support their use can cost money. Whether it’s monitoring services, publishing tools or ways to automate content distribution, an investment in a solid social media toolbox can make the difference between success and failure.

The Right Approach

To start, companies need a strategic plan or roadmap about where they want to go with social media – even if their initial foray is relatively modest. This will provide insight into the person who should be hired first, as well as those who could be hired later.

For the first hire, the focus should be on someone who has a variety of skills, including, of course, experience with social media.

This person needs to have strong communication and writing skills, as well as a good grasp on marketing and business development. Having someone who can also provide strategic insight would be valuable.

This is important because a company’s initial efforts will play a major role in whether social media will succeed or fail. As a result, it makes no sense to hire someone who lacks enough experience or the right skills.

In other words, don’t hire a junior employee simply because they are inexpensive and enthusiastic about social media.

With a solid person in place to establish a social media program, companies can then look for social media evangelists and tacticians to help support day-to-day operations.

These are people who are going to be on the front lines, talking to people online or in person at conferences, meet-ups and other events.

Again, you want people with strong communication skill, and enough confidence and experience to know what they can handle, and when they need to circle back for support.

These positions can be high-pressure given the flow of information come at them so it is important to have people who can stay cool when things get hot.

If there is enough social media activity to justify the investment, it makes sense to hire people to monitor social media activity. While this is a tactical position, it requires people with enough knowledge and experience to recognize situations that require attention and action.

At the same time, these people also need to quickly determine whether specific social media activity should be routed to particular departments so they can take the appropriate action.

The hiring process depends on how a company wants to approach and embrace social media. Regardless of whether it’s a small operation or a significant part of the business, it is crucial to hire people with the right skills and experience.

This is particularly important for the first person hired because they can make or break your social media efforts.

Related Posts Plugin for WordPress, Blogger...