If you are an entrepreneur, you probably have a lot of things on your mind. You are under-resourced – strapped for time, money, and people to help you achieve the goals of your startup. You need more of everything to grow and succeed, and that list of necessities includes diversity. There are lots of reasons why diversity is important, but quite simply, diversity is good for your business.
Study after study has confirmed that diverse corporate boards lead to higher profits. For example, McKinsey’s study found that companies who ranked in the top quartile of executive-board diversity had returns on equity that were 53% higher. In addition, these same diverse companies had earnings margins that were 14% higher than the least diverse companies. A Catalyst study shows that boards that are more diverse also have a higher return on equity, higher return on sales, and higher return on invested capital.
Think all this doesn’t matter to startups? It does. If everyone on your startup team is alike, you limit the experiences, network, and perspective that your startup has to draw from when running and growing the business.
A diverse team brings different ideas and perspectives to the table, which improves your chances of being able to come up with more creative plans for your startup and with more creative solutions to problems as they arise (and they will arise…). A diverse team might be able to identify and solve a problem that a homogenous team wouldn’t even realize was a problem until the damage was done.
Diversity can also improve the culture of your startup. As you grow, it can allow you to attract and retain a broader group of talented individuals.
More diverse teams will typically have more diverse networks, which means expanded access to a broader pool of potential investors, customers, and talent for you to draw from.
Finally, and perhaps most importantly, the more diverse your startup team, the more likely you will be able to understand the needs and wants of a larger (and more diverse) customer base. It’s doubtful that you would want to limit your prospective market to a single demographic.
So as you think about growing your advisory board or making early strategic hires, do more than reach out to people who are just like you. Ensure that your building a diverse team and your business will be better for it.