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Bold Leaders

Managing a Small Business

How to Be the Boss When You've Never Had One

A Survival Guide for Entrepreneurs Who Suddenly Become Managers

When Robby Stein was 25, he began hiring employees for his new startup, Stamped. A top prospect lived on the opposite coast, and his wife was expecting a baby. Suddenly, Stein was discussing health insurance concerns, paternity leave, and a cross-country relocation.

“I realized there were a lot of topics I’d have to read about very quickly in order to do the job,” said Stein, who is now director of product management for mobile and emerging products at Yahoo, which acquired Stamped in 2012.

These days, it’s not unusual to skip the traditional ladder climbing and suddenly find yourself in a leadership role. At October's Forbes Under 30 Summit in Philadelphia, Stein and four other leaders with unconventional ascents shared what they’ve learned—often the hard way.

1. Delegate. Don't take on every task yourself. Nick Taranto discovered this in 2012 when he co-founded Plated.com, a company that delivers cooking kits to your door with all the ingredients needed to make a meal.

“The first thing we had to do was build a fridge,” he explained. After spending two weeks tinkering with industrial air-conditioning units and after-market parts, he turned on the contraption. It wouldn’t cool below 70 degrees. “You come to the realization that you have no idea what you're doing and you have to bring in people who do,” he said. “My job is to understand what I don’t understand.”

2. Hire Carefully. Skipping reference checks may save time initially, but it could cost you in the end. Lisa Falzone, co-founder and CEO of the iPad point-of-sale business Revel Systems, shared that one former employee walked out with a number of company-owned tablet computers. “Hiring way too fast, it’s a recipe for disaster,” she said.

At Plated, it wasn’t until someone stole a significant amount of money that the startup brought on a human resources team. “I wish we’d done that a year earlier,” Taranto admitted.

3. Interview Impartially. Employing people you know isn’t necessarily the answer either. When an acquaintance is in the running for a position, ask someone else to conduct the interview so friendship isn’t a deciding factor.

“They’re expecting to get a job because you were drinking buddies in college,” said Ben Parr, co-founder and managing partner of DominateFund, a seed-stage venture capital fund. He suggested asking yourself, “Is this truly the best person I could hire for this position right now?” because there’s a lot at stake. Bringing on a diverse team helps prevent groupthink. Plus, each employee plays a part in developing the company’s culture, especially in smaller businesses.

4. Get Feedback. Great bosses don’t simply hand out criticism. They ask for it, too. “The more feedback you can gather from your team, the better,” said Parr, who admitted some comments aren’t easy to take.

“It hurts,” agreed Raj Mukherji, director of marketing at AT&T, who shared this credo: “You can’t be constructive when you’re criticizing.” Rather than dish out blows to his reports, he asks for “fearless feedback”—honesty in real time—so he can learn how to improve in his role as a manager.

5. Motivate. “Everybody is motivated differently,” said Mukherji. Find out what drives each person, he said. “If you try to use one management style with everyone, it’s not going to work.”

Get to know what members of your team want to accomplish. By helping them reach their goals, you’ll benefit the company, too. Plated works with employees to create personal development plans. “We ask, where do you want to be six months from now?” Taranto said. “For good people, we invest in those folks because they have the knowledge, they’re part of the culture, and they understand the mission.”

6. Set an Example. “It’s not just about titles or getting a promotion,” said Stein. Being a leader means “earning the respect of your team and the people around you.” And that’s not going to happen if you shut yourself in your office.

“If you’re isolated,” he said, “you’re just barking orders.” This holds especially true when the boss is younger than some of the employees. As Parr explained, “You have to show that you’re serious, that you’re the first one in and the last one out, that you’re worthy of their time and respect.”

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