The list of components necessary to make your business a winning venture over time is, of course, vast. But in my opinion, these are the planks you must get in place first:

Management, management, management
This may seem like a cliche, but it is top of the list because it really is fundamental. Whenever our investments at Genesis have crashed or faltered, it’s because we have not been rigorous enough in our assessment of the management – or worse, ‘made allowances’ when we’ve spotted a weakness.

We once discovered, much too late in the day, that the rather shaky general manager in a start-up was being carried by the founder even though the founder knew the general manager wasn’t up to it. And why? Because, in another life, the founder had been bailed out by the general manager (who’d taken out a second mortgage on his own house to save the founder).

We’ve learnt the hard way that however excited you get about all the other aspects that make a successful business, when it comes to management there must be no compromises. Period.

You need a complete set of skills
Entrepreneurs frequently undervalue skills other than their own. This results in an unbalanced team where either: one of the core skills is missing or someone second-rate has been hired. The other skills and qualities I’m talking about are:

Sales skills:
Young companies are often weak on sales, while some don’t even know the difference between sales and marketing. If you don’t know that, you are unlikely to thrive.

Finance skills:
Never under-invest here, but be sure to invest appropriately. You may be impressed with an accountant from one of the ‘big four’. They may be good at the corporate stuff, but how good will they be at getting the money in? That’s a fundamental for almost all early-stage businesses and in some sectors it’s critical whatever size you become.

I remember being a founding investor in a dotcom business which we’d installed in the basement of our premises. Like many dotcoms then, the model was largely a dream of how things would be in the future, and they were burning through cash at a rate of knots.

The finance director was a very smart cookie from one of the big four, with lots of experience of the sector (or so it seemed from a distance).

But the crunch came when the money had almost run out and it was therefore critical to stall every supplier by any means. At this point the FD needed to exude confidence and get the cash in. Instead, he walked around literally shaking and sweating, which affected the morale of the whole company.

Maybe he would have made a good general one day, but he wasn’t the one you wanted with you in the trenches.

Age balance: I’ve noticed at Genesis that almost no businesses come to us with a wise, older head to balance their energy and enthusiasm. I can’t understand the reluctance to hire non-executive directors. Ideally, this person should be someone who has been in your market and brings connections. Such people can cost surprisingly little and contribute a lot (just ensure you really understand their motives for joining you).

Craft skill:
If you are in the creative sector, you simply must have a principal committed to the craft skills, but as a counterbalance you need to put disproportionate emphasis on business management and man management.

Examples of those businesses that are driven by craft skills are entertainment, media, design, architecture, advertising, fashion, sport and even restaurants.

These craft skill people are nearly always high maintenance. ‘We’re too busy to do that!’ is their common cry when asked to do anything that isn’t concerned with their ‘work’. This can mean too busy to: pursue that prospect they accidentally met; chase up payment; train people so that they can help them; attend internal meetings; take tough decisions like telling someone they’re fired… Six months later, you’re still paying for somebody that everyone agrees is useless, thereby putting more stress on the rest of the team.

For all my experience, I still find it a tough challenge to balance the creative and business management/man-management aspects of the companies I am involved with. It’s tough because it requires a cultural change in how you operate. But it has to be done otherwise creative talent can almost give rise to a ‘no-go’ area in the business and you will end up competing with one arm behind your back.

Enthusiasm/passion:
I always find it remarkable that even the most ordinary talent can achieve great things if their leader can inspire them and sweep them along as a team. There are good examples of this in sport: Brian Clough made Nottingham Forest massive over-achievers; they won the European Cup twice without one world-class player.

Experience of failure:
By this I mean experience of both successes and failures. How is the team going to be after a whole succession of failures or rejections? How will they be after a bad week or bad quarter? Handling bleak business conditions, setbacks and failures requires great resilience and leadership ability.

Experience of managing growth: When you start a business, the founder(s) need to be into everything. Leading from the front; first in, last out of the office; checking everything; cajoling people, consoling them; even sometimes bullying them a bit â“ whatever it takes. But you will only ever run a small business if you continue that way.

When assessing management with regard to this topic, I always ask what their experience is of managing people beyond the micro-management sphere. How good are they at delegating? Do they really want to hire people who are better than themselves? How do they cope when it’s necessary to bring in professional managers?

I was fortunate to be an early-stage investor in iglu.com, one of the very few original dotcoms that not only survived but thrived.

Richard Downs, an LBS alumnus, has grown his business from four people to 154 and my estimate is that he’s had to change his management style fundamentally at least three times. And he’s done it extremely well, boosting the value of the business significantly along the way.

And this is not just an issue for early-stage businesses – for entrepreneurs, it’s one that never goes away.