The advantages of setting up a company as a team
Driven by the increasingly networked nature of processes, tools, and product content across all kinds of sectors of industry and fields of competence, it is becoming essential to work in diversified teams. This can also offer a decisive competitive advantage to business founders. But it should not be underestimated how challenging it can be to succeed in such teams, which may consist of men and women from a variety of age groups with different backgrounds, goals, and experiences. How to make things work despite the challenges is something the Steinbeis Consultant Felicitas Steck can tell us about.
A key question is, what is the optimal composition of such a heterogeneous team? To help with this, there is a concept which is simple to implement and uses a unique approach to highlight the subtleties of interaction between different types of personalities. Understanding the unique characteristics and strengths of individual group members – and the best way to put these to use – acts as a motivation to keep commitment and energy levels high in the team. This team trend can also be found in startups. According to the German Startup Monitor, around 73 percent of German startups are founded by teams. This compares to the general picture with startups, 80 percent of which are solo startups.
Founder teams have a variety of membership compositions: There are additive founder teams, which consist of people with the same interests, almost exactly the same know-how, and similar experiences. They also have almost identical resources. These compare to complementary founder teams, which are made up of people with different qualifications, experiences, and even goals and – significantly and importantly – these complement each other. Four eyes see more than two, and founder teams – especially if they are complementary – tend to have more capital. Such founder teams offer a comprehensive variety of cultural and social know-how and with this, commercial, intellectual, cultural, and social capital. Especially with new business enterprises – during the initial period when a company is still being set up together – this knowhow provides a foundation of immaterial resources that can be much more important for startups than material resources.
Whereas solo business founders can go about implementing their plans in a clear manner in a straight-line process, with a team of founders the strategy has to be agreed and coordinated. A team should therefore take a number of things into account beforehand, to play to the tangible advantages of working as a group of founders. The biggest stumbling block usually has something to do with areas of responsibility and objectives, then come the need to compensate for missing know-how and experience, the challenges of communication and coordination, and finally how to make decisions. The least important factors when it comes to business success are personal conflicts and the distribution of shares within the startup.
Contracts and documentation are a fundamental requirement when setting up a functioning business enterprise. Whereas a firm is shaped by enthusiasm and passion at the beginning, as things move forward conflicts can and will arise in the course of day-to-day business. Solving such conflicts is always easier and quicker if there are clear and detailed contractual arrangements, and documentation is in place. Aside from covering ownership structures, partnership agreements can and should address responsibilities and tasks.
Assuming all the bases have been covered and obstacles have been removed, a functioning complementary team of founders – with a high degree of specialization, appropriate task sharing arrangements, a strong idea, and a good product – has excellent chances of surviving in the market.
Felicitas Steck is a project engineer at the Karlsruhe office of Business Start-up, a Steinbeis Consulting Center, is a consultant in the innovation workshop, and runs Steinbeis Enterprise Competence Check projects. As well as providing consulting services, coaching, and training to startups, managers, and teams at small and medium-sized businesses, she also works for architect and engineering practices, as well as ambitious craft businesses. Her role as an expert is to help teams of founders and other groups to identify the optimum setup.