Over time, an organization tends to take on a life of its own. A companys culture does not emerge overnight. It unfolds over the lifetime of the business and usually reflects the character and style of the founder. Because of its power to shape how business is conducted, the culture of the organization should not be left to chance. If a founder is honest in his or her dealings, supportive of employees, and quick to communicate, he or she will likely set a standard that others will follow. An entrepreneur can create an innovative cultural environment by setting aside his or her ego and opening up to the ideas of others, supporting experimentation through the elimination of unnecessary penalties for failure, and looking for and tapping into the unique gifts of all employees. Like empowerment, creating an organizational culture that fosters innovation tends to draw employees into the work of the company and often provides a boost to commitment and employee morale.

It should be clear by now that, in large part, business management is a mental sport, and those who have the right frame of mind are most likely to win. Therefore, every leader should strive to incorporate a positive, can-do attitude into the organizational culture. Ideally, the founder should be able to add a measure of professional management without sacrificing the entrepreneurial spirit and basic values that have given the business a successful start. leadership involves pointing the way and getting others to follow willingly. It is far more focused on the destination than on the details of getting there. An entrepreneur must convey his or her vision of the firms future to all other participants in the business so that they can contribute most effectively to the accomplishment of the mission.

In a totally new venture, the founder faces major uncertainties and unknowns. Therefore, individuals who are launching promising startups, with the prospect of attaining significant size or profitability, need to have certain qualities. Many people assume that a business leader must have a flashy, highly charismatic, Im-in-charge personality to be effective, but this is not the normand it certainly is not required. Effective leadership is not so much about wanting to be in charge as it is about having the ability to take charge by setting the right priorities, finding good people and sorting them into the right roles, and then making the relationships work for everyone involved.

Section 5 of your business plan looks at your operation and your management plan. As you may have discovered in reading through chapter 19, the people who manage your company, particularly the founder, can set the tone for business success. We will begin this activity by looking at those who hold ownership positions in the business

Owners, Leadership, Staffing

• Discuss the people who hold the ownership positions in the business.
  • What experience and expertise do they bring to the business?

As a newly formed business becomes established and grows, its organizational structure and pattern of management will need to be adjusted. To some extent, management in any organization must adapt to growth and change.

Exhibit 19.1 shows four stages of organizational growth characteristic of many small businesses. As firms progress from Stage 1 to Stage 4, they add layers of management and increase the formality of operations. Though some companies skip the first stage or two by starting as larger businesses, thousands of small ventures make their way through each of the stages pictured in the exhibit and described below.

To fully visualize your business venture, you need to think about the people. Many of you are starting small with just one, or a few employees, but whatever stage your business is in, every person should have a functional role in the business success.

• How will the duties and responsibilities of the leadership, the managers, and the operative employees be organized within your organization?
  • What functional roles will be required? What skills will be required? Provide a job description for each role.
  • How many people will you need?
  • Provide an organization chart that shows the structure and size of each functional unit in the enterprise. (Use the line organization style, demonstrated above, to illustrate your organization.)

The entrepreneur who wants to build a competitive business needs to think carefully about how to find and hire the best people available and then hold on to them. Just the thought of having to figure all of this out too often keeps new ventures from ever getting out of the starting block. The Small Business Administration (SBA) simplifies the process by outlining 10 easy-to-follow steps that will help to ensure your compliance with what can be a confusing array of federal and state regulations regarding hiring. These steps are provided at the SBAs webpage Hire and Manage Employees, which can be found at www.sba.gov/business-guide/manage-your-business/hire-manage-employees (Links to an external site.).

To recruit effectively, the small business manager must know where and how to find qualified applicants. Sources are numerous, and it is impossible to generalize about the best pool in view of the differences in companies personnel needs and the quality of the applicants from one locality to another. Chapter 20 provides some of the more popular sources for finding employees. Recruiting is only the first step in staffing your organization. Review chapter 20 for the steps to navigate the hiring and onboarding process.

A primary consideration for any firm is compensation. In general, small firms must be roughly competitive in wage and salary levels in order to attract well-qualified personnel. If you pay below average wages, you can expect to attract below average applicants. Small companies have reported that well-designed compensation plans can help to boost employee work performance and morale while reducing turnover. Using a chart similar to the one below will help you to organize your company

Title (list each person you will Employ)	Brief Job Description	Annual Salary (Use this column for executives)	Hourly Wages (Use this column for employees)	Hours worked per week

• Where will you find and how do you intend to attract your people, leaders, managers and operative employees?
• How do you intend to compensate your people, leaders, managers and operative employees? (Be specific, what wage will you pay?

Entrepreneurs often lack the skills and expertise to manage all aspects of their business. Outside managerial assistance can offer a detached, often objective point of view and new ideas. They may also possess knowledge of methods, approaches, and solutions beyond the experience of a particular entrepreneur. Sources of management advice include your banker, accountant, attorney, insurance advisor, suppliers, and others.

• What managerial assistance would be beneficial to your business venture. How will you find and select your outside managerial assistance?

Exhibit 19.1 Organizational Stages of Small Business Growth