Arturo Noriega is an entrepreneur, small business expert
and founder of Centro Community Partners.
His career includes work as a manager of advisory services at Ernst
& Young, consulting for Deloitte and Aon, and business development at
Barclays Global Investors.
I first met
Arturo through my work as an MBA Advisor at Centro. I thought he would be a great resource, as
someone who works every day to help small business owners and entrepreneurs overcome obstacles. Here's the transcript from an interview I did with him a while back:
LBBB: When professional investors assess the
viability of a startup, they often examine three core ingredients: the Market, the
Team, and the Technology/Innovation...not necessarily in that order. Which of these core elements do you find to
be the most important, and why?
AN: Most
important to success? I think there’s a
pecking order from most to least, the most being the people. Regardless of how good your tech is, unless
you have a great team, you don’t really have anything. Anything good starts with good people. But you have to have a complimentary set of
skills, meaning that everyone has a different sweet spot that contributes to
the overall success of the company.
The next I’d say is market, the unmet need. Then it would be the innovation or advantage
that you’re offering but only so far as it responds to the need of the
market. And everything comes back to the
team, the leadership. You need that
vision – leadership – that’s able to respond quickly to market demands, and
really leverage whatever tech is being created here.
LBBB: What would
you say is the greatest obstacle that small businesses tend to face?
AN: The
greatest obstacles? Time and money – the
two things that kill any startup, especially in tech. Lack of capital, running of money,
underestimating capital requirements for carrying out operations…If the company
does run out of capital it obviously can’t meet requirements of the
market. Also time, time for setting up
and carrying out processes. In one of
the ventures I’ve been working on, everything has proven to cost twice as much
as I thought and taken twice as long.
See, no one ever forecasts how much money and time it really takes. Usually, take your forecasts and multiply by
two. That 2x multiple – most startups
don’t see that coming and it’s really a killer.
LBBB: What about
the flipside of that coin? What would
you say is the greatest asset that small business have but often overlook or
fail to take advantage of?
AN: Ideas that
are generated by the team because no one asks the question – in other words,
the unidentified opportunities. In
startups, people are so focused on specific things and tasks that they don’t
fully explore ideas or opportunities, don’t really look at the big picture.
Also, communication.
Because people are not available, they’re working virtually, or working
on different projects, they don’t get that interaction and cooperation that
stimulates the process, asking those what-ifs.
Human capital is the greatest asset – the potential is not fully
recognized. Leaders don’t even ask “what
do you think?”
Another asset that’s overlooked is networks. People feel they have a limited amount of
professional advice to navigate waters of startup when really there are
unlimited resources outside of the organization to help the startup succeed.
LBBB: We had a
guest speaker talk to our class about the importance of space. How important do you think brick and mortar
is to a small business? What kind of pitfalls have you experienced that you
would advise readers to avoid?
AN: Getting an
office is important…if your budget allows it.
Many people now meet virtually or work from home, maybe even meet up in
a café somewhere to get certain things done, though that’s not always conducive
to work. The key thing is making sure
you have appropriate office
space. You know what I mean? Many startups get office space – because they
don’t know better – and it’s just
inappropriate for their level of growth.
It’s either too expensive or too small, but either way it doesn’t allow
for organic growth. The trade off here
is productivity, right? That’s the whole
point of office space, to make your company more productive. You also want a physical address and that
sense of legitimacy, that you’re a legitimate business in the eyes of your
customers and the public.
LBBB: Besides the
obvious issues of liability and regulations, what is it about HR and staffing
that proves so difficult for small businesses?
AN: You know that’s
a really good question…(laughs) and I
haven’t really come up with a solution yet.
HR is ongoing challenge, not just for startups. The big thing I think is that vetting process
– you want someone to be able to walk right in and be able to do [the job]. But that comes with a premium beyond the
reach of small businesses. What happens
is that as they’re forecasting growth and allocating capital to staff, that’s
done really poorly. Roles and
responsibilities are not well defined because people do multiple things. In order to manage that , managers must
really be sure to create detailed job descriptions. You might realize you can split work between
part-time workers instead of getting one fulltime professional. I’ve done that and that works great.
What happens, too – you don’t know how committed they are
to the mission. Motivation is so key. It
is rocky. You can navigate and manage
that situation but until you measure performance… Another solution is to give
up more equity to attract better people.
That way they have a vested interest in the success of the
organization. Motivation becomes the big
issue and keeping people committed to the mission.
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