Who and How to Hire for a Startup

Simple Equations Solve the Hiring Problem 

When you are hiring for a startup company, you must avoid the biggest mistake that startups make. Many small businesses wait until that ‘oh, shit!’ moment before hiring. That’s natural. You know that poor cash flow can cripple a new business. 

On the other hand, if you don’t hire soon enough, you risk overwhelming yourself and burning out. Therefore, it is crucial that you forecast your business growth, and start budgeting for new hires. This way, you will be prepared to hire who you need, when you need them.

To hire a startup team, avoid this huge error

Stop measuring your hiring needs by the size of your revenue. It’s a huge error. 

If you hire based on a percentage of your total revenue (for example, staff costs of 50% of revenue generated), you will struggle to grow. You’ll never have enough employees to get enough work done to push you to the next level.

Instead, base your hiring activity on the activity your company is doing. Reducing the strain on your current employees will give them the capacity to do more work and better-quality work. Hiring correctly places a mega focus on providing quality customer service – and this is hugely important when the cost of poor service is so high.

When should you hire key positions in a startup company?

With your mindset on activity instead of revenue, how do you judge who to hire first? Startup companies operate in much the same way as other companies: you have front-end and back-end roles. In general terms:

  • Front-end roles are revenue generators – sales and marketing, for example

  • Back-end roles are those that support the sales effort – such as training, production, admin, and finance, for example

It’s tough to decide which to hire first. Without sales, you could have no work for your back-end people. Without the back-end staff to do the work your sales team sends to them, your sales effort will be wasted. Can you imagine having to turn customers away because you don’t have the capacity to serve them? 

When prioritizing who to hire, it makes sense to concentrate on revenue-generating hires. However, you must balance your hiring to ensure that the sales generated can be fulfilled and that your fulfillment staff are not sitting on their thumbs and racking up costs. Here is the solution:

  • Hiring for product/service fulfillment

There is a great rule of thumb applied by manufacturing plants in their expansion decision-making. This rule says that when a factory gets to 80% utilization, it is time to expand. Use the same rule for your product and service fulfillment staff – when you get to 80% utilization it is time to start hiring for a startup company.

  • Hiring for support and management

Ask yourself, how fast is this part of your company growing? What does the utilization of resources look like, and how much work must be done to get to X in sales? When you are more than 50% there, start hiring.

The benefits of hiring new people

Intelligent hiring for key positions in a startup company will help you to:

  • Maximize productivity

  • Maintain morale of your current employees

  • Ensure focus on providing continuous quality customer service

  • Protect your reputation

  • Manage cashflow more effectively

Of equal importance is that hiring people with specific expertise will enhance your business. You’ll free up time of those currently undertaking roles in which their skills are not best matched, and this will enable your people and your company to do more, sell more, and acquire more customers.

What should you expect of your next hire?

Whether a revenue generator or operational cost, whoever you hire should, of course, possess the skills you need them to have to hit the ground running.

You should hire people who have an open mind, so they can learn the intricacies of the role quickly. They will need to take direction and instruction from you or their supervisor, and they should be punctual and reliable, as well as honest and professional. This is the type of hire that will produce the benefits you are aiming for.

Have you figured out who your next hire will be? What activities are log-jamming your growth? Do you need to boost sales, or do you need to improve your operational capacity first?

Book a free call with Level 5 Mentors today, for the guidance that will help 10x your growth.

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