25 Feb 2008  Sharpening Your Skills

Starting a Business

Sharpening Your Skills dives into the HBS Working Knowledge archives to bring together articles on ways to improve your business skills.

Questions to be answered:

  • Should I keep control of my company?
  • How do I turn potential into profit?
  • How can a resource-challenged start-up grow?
  • What legal mistakes should I watch out for in starting a new company?

Should I keep control of my company?

Rich or Royal: What Do Founders Want?
It's a fundamental tension many entrepreneurs face, the conflict between wanting to become rich and wanting to keep control of their new company. Few can have both. Professor Noam Wasserman discusses his research into the motivations of entrepreneurs and the people who invest in them.

Key concepts include:

  • Entrepreneurs are often motivated by the potential of money and control, but very few ever achieve both.
  • A fundamental tension between "rich and regal" starts to develop as entrepreneurs look to attract resources to grow their ventures.
  • Investors need to understand the motivations of the entrepreneurs they back to make sure their goals are aligned.

How do I turn potential into profit?

Turning High Potential into Real Reward
Transforming high-potential ventures into high-performance ventures, says professor Joseph Lassiter, depends on combining what, how, and who you know.

Key concepts include:

  • Successful entrepreneurs look ahead and say, "Two or three years from now, this is exactly the customer and exactly the product, and this is exactly why they're going to be compelled to buy."
  • A key issue is who do you do business with initially who lets the venture start moving down the "right" product road map?
  • Turning high-potential ventures into high-performance ventures is always an elegant combination of know what, know-how, and know who!

How can a resource-challenged start-up grow?

How Can Start-Ups Grow?
For new ventures a lack of resources makes growth difficult to come by—just ask those nine out of ten fledgling firms that fail. Professor Mukti Khaire says the key may be in acquiring intangible resources such as legitimacy, status, and reputation.

Key concepts include:

  • Small companies can grow by developing intangible social resources such as legitimacy, status, and reputation.
  • In some cases the location of a new venture is a critical facilitator of success because of the symbolic benefits offered by an office address that is legitimate in the minds of stakeholders.
  • Firms have to work at maintaining their status in the hierarchy, while legitimacy is a critical issue only in the early stages of firms' lives.
  • For new firms in established industries, there is value to doing some nontechnical, symbolic things in the manner that is widely accepted and to adhering to industry norms and culture.

What legal mistakes should I watch out for in starting a new company?

Top Ten Legal Mistakes Made by Entrepreneurs
The life of a startup can be precarious, a wrong turn disastrous. Harvard Business School professor Constance Bagley discusses the most frequent legal flops made by entrepreneurs, everything from hiring the wrong lawyer to puffing up the business plan.

Key concepts include:

  • Entrepreneurs tend to delegate too much to the lawyers.
  • Lawyers are risk averse; delegating to them can often compromise business objectives.