Entrepreneurs, Why they are paid (Part 2)
Let's begin by reviewing the points from the last article. The job of entrepreneur is to produce wealth with less input than current industrial standard. He does this through the use of new innovation techniques. In addition to that, an entrepreneur must have market insight on an underserved community whose needs can be fulfilled by his product. Since people in this niche are his early adopters, he must make it his duty to study them well. He must learn their needs and culture, form relationships with their leaders, and last but not least, he must establish lines of communications for his message to reach that community. As business grows, and customers relationships are transferred from the entrepreneur to the company itself, the role of an entrepreneur begins to shift. His duties now lean heavily on his abilities to organize labor and manage connections. Organize labor and manage connections heh... What does this mean you say? Be patient young Skywalker, allow me to explain.
Many people don't realize that hiring is a craft. Like all craft, it involves a creative and technical element. The technical element of hiring involves the legal and finance dimension. Much of the headaches in hiring involves compliance with local and federal laws. An intelligent entrepreneur is aware of laws that may serve him and ones that may be a nuisance to his corporate aims.
The financial aspect of organizing labor is a bit more involved. It deals with the calculus of salaries without jeopardizing profits for re-investments. A company has payment obligations not just to his employees, but to vendors, investors, and expansion. An intelligent entrepreneur will know what salaries are competitive enough to attract fine talent without overpaying. He will keep his labor cost in check, so that investment for further expansion can be made and stockholder dividends distributed.
Don't worry If the technical work of organizing labor didn't excite you, you will have attorneys and accountants to help you in those domains. What you cannot bypass however, is the intuitive knack required for hiring, the talent of choosing men. Legal and financial mistakes in managing labor can be expensive, but hiring mistake will destroy your business. The creative element of hiring is the ability to choose the right man for the right job. It also involves the ability to choose people who work well with each other. The magic people call chemistry. This mystical element is so important that I don't believe success can exist without it.
A company is nothing but organized labor. Every person is a building block to the business. Each employee must have unique strengths that serves the productive aim of the company. The individual weakness of each employee must also be known and compensated by the strengths of other employees. In this way, you will form a perfect machine. Unfortunately, it is rare for people to truly know their weaknesses, nor should you expect them to be honest about it when asked. This requires you, the entrepreneur, to be an excellent psychologist. You must be a great at reading and managing men. A tough job indeed! You must cultivate a penetrative eye to spot talent and deficiencies, and the psychological brilliance to figure which persons work well with together and compensate each others' weakness. If you are successful , you will create a team perfectly capable of performing the task required of them. They will be happy and unstoppable.
Each person in your business is a block that has to fit with the rest.
The art of organizing labor is a remarkable craft. A single article could not cover all of its facets. An excellent piece for those interested in the art of hiring is called Who. I have not yet encountered a better book on the subject. Although I would love to write more on this, we now have to resume to the other responsibility of the entrepreneur, managing connections.
Business is relationship and relationship is business. As an entrepreneur, you are not only managing your employees but you are also responsible for the relationships with vendors, investors, partner companies, the press, politicians, and most importantly, the general public. In a world where opinion is supreme, success at this role is extremely vital. This is why I advocate for entrepreneurs to have a liberal education. He or she should be well versed in a number of subjects. This allow him to connect with people of various levels and backgrounds. A liberal education also allows the entrepreneur to know just enough about a subject to make him a difficult man to lie to.
Managing so many relationships can be a daunting task. You'll have many different personalities and interest, all having to be coordinated and their needs fulfilled with minimal compromises to other groups. This requires you, the entrepreneur, to be socially intelligent. When successful however, it is magic at its finest. A plethora of people will be happy. The customer loves your product, employees are fulfilled by their work, investors are richer, the press gets a new poster boy, and the public has a hero. Can this be you? It certainly can.
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