I use a phrase that attempts to highlight the importance of hiring decisions in a company: You are what you eat and your company is who it hires. This observation has important implications for your company’s internal operations and appearance.

Simply put, excellent companies are very often comprised of excellent people. Quality in, quality out. From an operational perspective, excellent people tend to both improve efficiency and identify new opportunities. The value of these contributions often can’t be quantified when the people are being hired because excellent people create value that is unexpected. By hiring excellent people you create the potential for great things to happen.

Furthermore, excellent people usually have impressed their previous colleagues and partners, enabling them to lend their reputation to your company. When someone highly talented speaks favorably of their new organization, I assume that the new company is very strong. Top performers generally have credibility within their communities. These perceptions do matter, as reputation can create a virtuous cycle whereby more talent workers and future partners seek out your company.

The opposite holds true on both fronts. Bad hires often become very expensive, as they gum up the operations of a company, are costly to replace and can damage an organization’s reputation in the marketplace.

A lot of entrepreneurs have been told to live by the phrase ‘great is the enemy of good’, meaning that they should settle a little bit in order to move forward. Outside of hiring this is generally a phrase to live by in the early stages of a company. Getting a first version of the product to market that is not yet perfect is usually better than waiting for excellence. However, I believe that this phrase can be a bit dangerous when applied to human resource decisions, especially in a small organization. You should try to build an amazing team from the start, as doing so can expand your vision and help you build something better than previously imagined.

However, in some cases, you may not be able to find the dream team from day one. If this is your situation, you should go with the good team in the short-term, with an eye toward becoming great in the future. Position your company to be able to trade-up in the future – your goal should always be to make your team great.

Ultimately, if your team is great, your company is more likely to be great.