You may have heard that startup ideas are worthless until they are proven. If ideas are worthless, why do many startups get funded with just an idea and a vision? The answer is investors fund founders and their team.
Unless you have a defensible and protected innovation, what values your startup is your team and their ability to execute. In fact, the Venture Capital firm, First Round Capital, shows that investors invest more in repeat founders, which essentially means experience and proof matter. Human capital matters.
Ideally, your venture starts with a passionate team with complementary skills. However, in most cases, it is only the founder who takes the role of the leader, maker, and marketer. As the startup gains momentum and validation, hiring becomes essential.
Hiring your first team members is the first big decision you will make as a startup founder. For most entrepreneurs, the opportunity cost of assigning work they can do to someone new does not justify the investment.
Many entrepreneurs in the beginning of the venture often see hiring as an unwarranted cost and are afraid of investing resources in a new team member, especially since the risk of a wrong hire looms very largely on a startup. Hiring the wrong team is one of the biggest reasons for startup failure.
In the early stages of your startup, the most direct answer to today’s question is, you know you need to hire the first or next team member when filling a role is the only option to move the startup forward. This could be because you don’t have the required knowledge and expertise or you may be missing out on key business opportunities because of your limited availability.
Nonetheless, having clear hiring goals can prove to be a major entrepreneurial enabler and can effectively accelerate the development of your startup app idea while minimizing hiring risks. Follow these tips to effectively qualify every hiring decision that you need to make for your startup.
1. Project Your Organizational Chart
Imagine your startup has reached growth stages and has become an established business. How do you picture your company’s organizational chart at that stage? This exercise allows you to forecast how your startup team will develop in the next few years, fundamentally on the basis of key activities to be performed in your venture.
Your projected structure and roles are hypotheses, just like any other startup hypothesis. As your startup progresses, you will change, iterate, and pivot your structure. This exercise aims to help you put your vision on paper and define practical hiring benchmarks.
2. Define Hiring Benchmarks
Your hiring benchmarks will depend on your business model, growth strategy, funding, and market. You can set priorities for hiring based on business goals to be achieved, such as the number of customers acquired, markets entered, or even revenue goal reached. Your projected organizational chart helps you determine who you need to hire, while building your hiring schedule around your business performance can give you clarity in terms of when to hire next.
3. Can You Do It First?
If possible, before hiring, assume the role yourself to understand all aspects of the job. Once you can understand the requisites, challenges, and timelines, you can form a realistic idea about when to hire more experienced and expert candidates to do the job better so you can focus on what you do best.
4. Seek A Mentor’s Perspective
Drawing up a projected organizational chart and defining hiring benchmarks requires making many assumptions and hypotheses. Much of your planning can change as your startup grows and new realities emerge. This is where a mentor’s experience can help you identify the most valid hypotheses and make hiring schedules beneficial for your startup in both the short and long term.
If you are still averse to the risk of hiring despite all your due diligence, then adopt the testing period approach for every single hire. Testing and measuring the performance of your team members can also give you an idea as to what works for your startup and what doesn’t.
Hire new members for a pre-defined testing period and closely monitor their impact on your startup. If things work out well, commit, and double down your hiring efforts, otherwise let go of the non-productive and essential members of your team and start again.