Ask a mentor: when should I start hiring?
Starting your own business is an exciting time - exhilarating, bewildering, and full of questions. And who better to answer these questions than our own mentors, who've been startups themselves at some stage?
Today's question comes from Will Crosthwait, co-founder of Auditionist - a platform that helps casting directors audition and pre-audition actors through video. His question is one commonly asked by businesses past the first stage of starting up and onto growth: how do you know when to hire?
Dear Virgin StartUp mentor,
We’ve just taken on some investment and are wondering whether to outsource labour to freelancers or employ staff. When’s the right time in a business lifecycle to employ staff for your business?
Should I Stay or Should I Grow (Will), co-founder of Auditionist
Dear Should I Stay or Should I Grow,
This is a great question that should be asked even by entrepreneurs and businesses with unlimited resources. As a startup that has been used to bootstrapping, it's very easy to go down the road of unnecessary spending once investment has been acquired. Having said that, being used to bootstrapping, you may also find it difficult to break frugal habits and taking things slow. So to answer this question effectively, you first need to ask yourself what impact an employee will have versus a freelancer on your brand and product.
Transactional Work & Flexibility
You need to determine whether the work you need done is a purely transactional exchange, or something which stands at the centre of your product. For example, if you have a need for someone to do research on the number of unemployed actors in the UK and populate this in a spreadsheet, then using a freelancer may be a good route. Flexibility is one of the more important reasons for using a freelancer in situations such as these. On the other hand, if you have a need for someone to pick up the phone and contact actors, discuss your product, and build a relationship with them, then it may be worth considering a full-time employee.
Do freelancers care about your product?
There are countless examples and experiences of entrepreneurs who have discovered that freelancers who don't necessarily care about the product; they see the work as a pure transaction and exchange of services. Personally I disagree with this notion and believe it is up to you as an entrepreneur to build a good relationship with a freelancer. I have worked with freelancers who not only care about my product, but offer their input and advice on how to push it forward. The major difference I have seen with myself and other entrepreneurs is that I immediately involved the freelancer in the whole business, ensuring they felt like part of the team from the get-go.
Building the dream team
Choosing an employee is not as easy as choosing a freelancer. You can't sort by ratings, and it's not as easy to stop the relationship if it doesn't go well; but having a full-time employee gives you benefits which are hard to find in a freelancer. Employees are fully immersed and focused on your product and don't have a number of other deadlines to meet. While I wouldn't expect your employee to be thinking of your product 24/7, if you manage an employee correctly you'll find they walk into the office on a Monday morning to say "Hey I thought of this idea over the weekend, and think we should give it a try."
Timing it right
There is no magic formula to say when in a business cycle you should hire someone full-time. You don't want to be caught in a Catch 22 situation where you are waiting for growth in order to hire someone, and missing out on the fact that hiring someone is what could actually create or drive that growth.
Starting a business is scary but if you have passion for your business, it's extremely rewarding." Similarly, hiring someone is perhaps even scarier as you need to trust them with something so close to your heart - but it might be time to take the plunge!
Louis Skoutellas, founder of Tripmule