CHAPTER 7
Building the Founding Team
SUMMARY AND AUTHOR’S NOTE
Today, the majority of new ventures are started by teams. This is due to the complexity and rapid
pace of today’s business environment. Technology has shrunk the global marketplace and
brought our international competitors and partners closer. Technology has also changed the way
we do business and the speed at which business activities occur, so it is difficult for a solo
CHAPTER OBJECTIVES
After reading this chapter, students will be able to:
• Explain how to effectively build a founding team.
• Understand how to work with professional advisers.
• Discuss when to add a board of directors.
• Compare and contrast the pros and cons of outsourcing with independent contractors versus
hiring employees.
CHAPTER OUTLINE
OPENING CASE: Green Sherpa: Filling in the Gaps on the Founding Team
• Figure 7.1—The Entrepreneur’s Network
Chapter 7: The Founding Team 31
II. Seeking Professional Advisers—building relationships with professional advisers
a. Attorneys—choosing a good attorney
III. Seeking Personal Advisors—the role of advisors in supporting the founding team
a. Building a Board of Directors—types of boards and the selection of board members
• Figure 7.2—Board Members and the Business Life Stage
b. Advisory Board—assembling an informal panel of experts to support the business
c. The Mentor Board—a personal board that coaches and advises
d. Mistakes to Avoid with Teams and Boards
i. Equity Distribution
ii. The Buy-Sell Agreement
SOCIAL ENTREPRENEURSHIP: MAKING MEANING—Singing for Famine Relief
IV. Outsourcing with Independent Contractors—using independent contractors to fill needs
without hiring staff
RELEVANT CASE STUDIES
Case 4 The Crowne Inn
Case 6 Potion Inc.
ANSWERS TO QUESTIONS ON KEY ISSUES
1. For what kinds of businesses is starting as a solo entrepreneur sufficient? Are there
advantages to starting even these types of businesses with a team?
Team efforts have a higher rate of startup success than solo ventures. You can share the
2. What strategy should an entrepreneur employ when selecting a personal board, an advisory
board, or a board of directors?
You should have an advisory board from the inception of the business and a board of
3. How might the need for an attorney differ for a service business and a high technology
company?
A variety of responses are possible, but in general, a high-technology company is likely to
4. How can you ensure that you are using independent contractors correctly and in accordance
with the law?
5. Suppose you are starting an apparel company where you will design and manufacture a
unique line of clothing. What kinds of independent contractors can help you start this
venture?
SUGGESTIONS FOR EXPERIENCING ENTREPRENEURSHIP
1. Interview an entrepreneur who started a venture as a soloist, and then visit an
entrepreneurial venture started by a team (two or more people). Based on your interviews,
write a two-page report discussing the advantages and disadvantages of each approach.
If the student wishes to do a direct comparison, he or she should choose two businesses in
2. Choose a lawyer, accountant, or banker to interview as a potential professional advisor to
your business. What information will you need to secure from him or her in order to make
your decision?
In general, students will want to gather information on the potential advisor’s expertise,
Chapter 7: The Founding Team 33