MaRS Library When do I need to hire an employee and who should my first hire be?
Hiring advice for tech startups
As a tech startup, it’s difficult to decide when to make your first hire, especially if you are operating without investment. There is no “one-size-fits-all” answer to when you should recruit a new employee, and who you should hire. Each company has different needs.
Remember that filling these needs and setting up the necessary payroll will add a new level of complexity to your accounting process.
Because each new tech startup usually includes a team of founders, each with their own different set of skills and experiences, it is important to understand where your gaps lie. Making the wrong hiring decisions can be very costly to a startup. Creating an employee hiring roadmap can help you pinpoint when and where additional expertise is needed.
Your hiring roadmap
When making your first hire, your roadmap should cover:
- What your startup will look like in one, two, three and five years. For example, outline revenue goals, market penetration/adoption goals and geographic or product expansion plans
- What you need to do to reach your goals. Identify the specific activities required
- What resources you need to reach these goals. Identify the knowledge and skills these activities (above) require from future employees
- What this plan will cost and how you will pay for it
Next steps in hiring
Once you have highlighted what knowledge and skills are missing, and at what point in the business evolution you will need them, follow these steps:
- Look at your team of founders and decide what they can realistically take on and do well, and where help is needed. Consider not only their scope of knowledge but also what can be delegated to allow them to focus where they’ll bring most value to the business
- Identify the depth of knowledge you need to bring in. For example, could a recent marketing grad help you get the word out through social media, or do you need someone with deeper experience to create a strategic marketing plan?
- Find out the “going rate” for the level of skills you need. Calculate the additional and applicable costs of employment, such as mandatory benefits, time off, equipment and space
- Understand how much of these particular skills are required, and whether it will be an ongoing need or a temporary one
- Consider whether it makes sense to hire a temporary or part-time employee, or a full-time employee—or a consultant, contractor or virtual resource
Remember that whatever you decide in your hiring process, you’ll need to budget for the resources you need and when you need them. Full-time permanent employees expect a certain level of long-term commitment.
Early-stage, unfunded tech startups can sometimes struggle to attract candidates because of the perceived risk. If you know you only have the money to engage someone for six months, it may make sense to start with a six-month contract, and only extend it to full-time permanent if and when your startup is secure enough to make a longer-term commitment.
Generally, early-stage CEOs and CTO/VP engineering roles are filled by founders. Often, early hires fill executive or junior/support roles, such as:
- Administrative assistant
- VP of sales and/or marketing
- Junior programmers/developer(s)
There is a growing number of part-time and “virtual” resources available to fill these roles on a flexible schedule, and they often work for more than one startup at a time.
An arrangement like this enables startups to access expertise in areas such as marketing and human resources much earlier than ever before. This can help position your company for greater success without a sizable upfront investment in full-time employment.