Most small business start with a great idea – it may be a revolutionary product, a service that meets a currently unmet need, or a small twist on an existing business that opens up a whole new market. There are businesses being founded every day on ideas that have the potential to change the world.
But then again, most small businesses also fail.
In truth, ideas are not all that valuable. There are ideas everywhere – practically lying all over the sidewalk. How many times have you heard someone say “somebody ought to start a company to do that…”? If ideas alone were valuable, then the free market would create an exchange for trading them like any other commodity. But you don’t see a multimillion dollar “idea exchange”, do you? Hey, there’s an idea right there!
What matters, then, is not the greatness of the idea. What matters is execution, and execution requires great people. In Jim Collins’ popular book “Good to Great”, he notes that truly great companies are much more focused on “who” than “what”. Having the right people on board is far more critical than knowing exactly what you are trying to achieve. Some of the world’s greatest companies started out doing something very different than what eventually brought “success”. I’ll take a C+ idea with A+ people executing it over an A+ idea being executed by C+ people any day of the week.
Case in point: I recently met a young entrepreneur named Adam Albright, who founded RentStuff.com, on-line broker for local individuals to rent out anything from sporting goods to sewing machines. He was describing the process of starting his business, and mentioned that he had purchased the domain name from a person who had originally bought it fifteen years ago with the same basic business idea. The previous owner, however, never put enough effort into it to get the business off the ground. The idea is nothing new, and there are other, similar businesses in existence, but the value comes from the execution being performed by Adam and his team.
Great people, though, are in short supply. Nearly every company claims to hire “only the best people.” But if that were really the case, wouldn’t unemployment be at 50%? The truth is that the larger your organization becomes, the more the overall quality of the people will move toward average – which is why it’s important to start strong. Great talent attracts great talent, so it’s critical to build your business on a solid staff up front. If there is one area of business that is worth overpaying for, it’s people.
When I speak to an entrepreneur or hear about a new business, I am just as interested in learning about the people as I am the idea or concept. Knowing who is involved will tell me much more about the long-term viability of the business than understanding the idea. The idea is basically worthless - it’s the people that matter.
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