Monday, June 24, 2024

How Many Employees Should Your Startup Have?

Getting your own startup business off the ground can be a very complex process. There are numerous hurdles, each just as important as the last. Identifying a unique product or service which is in demand is no small task. Developing an ironclad plan around said product or service can prove extremely challenging. Failing to secure the necessary funds to make your plan a reality could easily topple anything already in motion. Along with these early-stage goals, issues around the legal process, physical location, technology, marketing, and even the unexpected, will surely rear their heads. Simply put, establishing your startup as a successful business is difficult! It is necessary to do everything in your power to mitigate as many risks as necessary.

This is where the hiring process comes into play.  Phil Libin, the former CEO of Evernote, spoke on the effects hiring has on a company, “When you go from one person to three people it’s different. When it’s just you, you know what you are doing and then you have three people, and you have to rethink how you are doing everything. But when there are 10 people it’s all going to change again. And when there are 30 people it will change again. Same when you reach 100 people.”

This begs the question, how many employees should a startup have? We connected with a few current business owners for their thoughts on this. 

Accelerate slowly

Ryan Rockefeller is the co-founder and CEO of Cleared, an online healthcare option which treats allergies. He believes that startups should not be overly aggressive, especially early on.

“Every startup is unique, right? Each has their own funding, goals, and plans. However, unless you have an angel investor with bottomless pockets, your resources will be limited. If you burn through these resources quickly you will find yourself struggling to stay afloat. Many startups have a vision of where they want to be in a few months or few years’ time. This is wonderfully appropriate for any business. But it’s necessary to take stock of where your startup is at presently. What can you realistically afford right now? What can you achieve right now to better situate yourself for those future goals to be easier to attain? I would advise any business, but especially those just getting started, to hire slowly, thoughtfully, and within their means. Success is not built overnight.”

Where is your startup at in the building process?

Audien Hearing focuses on affordable and quality hearing aids. The co-founder, Dylan Arthur Garber, is of the opinion that startups should identify their immediate situation and hire based solely on that.

“Let’s say that you have this incredible idea which could prove revolutionary to whichever industry it’s targeted at. You do not want to go out and hire a marketing or sales team at this point because all you have is an idea. If you are building a product, you need the people who are focused on this task because you can’t move on to the next step before completing your current task. Inversely, let’s say your idea has come to fruition through the work of your research or engineering teams. It would be unwise to just sit back and hope that the customer would show up at your doorstep. Hiring marketing and sales teams at this point would be the next move. It’s best not to get ahead of yourself.”

What are you capable of and where do you need help?

Matt Miller is the founder and CEO of Embroker, a company dedicated to business insurance. He advises any startup owner to take some time to self-reflect on their goals and strengths.

“In the early days of a startup, it is important to identify business strategies, growth plans and intentions for your company. These are crucial steps that lead down the path of success. But it is difficult to achieve success by yourself. The reality is that you can’t and won’t be able to do everything because you don’t have the time, or you’re not gifted in a specific way. Look at your plans and ask yourself, ‘Which of these do I believe I can do well?’ and ‘Where do I think I’m going to need some help?’ There’s no point in hiring someone for a job you can do yourself. There is a massive benefit to bringing someone on board who can fill a need within your startup.”

Be mindful of your current and potential size

Daniel Osman is the head of sales for Balance Homes, a company with a fresh take on home equity and co-investing. He knows that startups can grow rapidly and believes that those in charge should be cognizant of what this means for the company.

“The larger a startup gets, the less it becomes like a startup. In what may feel like the blink of an eye you can go from meeting in your garage to a huge office space or warehouse. As these things change, so do the dynamics of your employees and leaders. The larger, and likely more profitable, version of your startup will begin to feel more professional and less personal. Office politics will begin to arise. There is such a thing as too many cooks in the kitchen. Don’t be afraid to hire if your needs demand it. If affordable, you can always break up your workforce over multiple locations to maintain that personal feel and negate some office politics.”

Evaluate your timeline

Glamnetic is a company that specializes in beauty products whose CEO is Ann McFerran. Her advice to any startup is to make hiring decisions based on what you want to accomplish within a specific time frame.

“From the beginning, the pace of a startup is fast and furious. Ideas are being pitched, people are being introduced, excitement is in the air, and things can seem like a bit of a blur. Often one of the primary goals of an early startup is to get a product or service out before a competitor does. Time is of the essence. I’ve found that things move quicker with a smaller group as large group dynamics involve many more thoughts and opinions. A small group lends itself to making decisions in unison and heading in that direction without much hesitation.”

Quality not quantity

Kanish Gupta is the founder and CEO of Hightouch, a business data and technology company. He is of the opinion that startups should not focus on a specific number of hires but rather the quality of each hire.

“A startup is only as successful as the people who make up the company. Employees who are specialists in their fields will prove useful at any stage of a startup. But if you can identify potential hires who can wear multiple hats within your company, you’ll set yourself up for much more likely potential success. An employee who can handle marketing and sales will keep your headcount lower and save you money.”

Identify points of resistance

MitoQ is a company specializing in antioxidant supplements. Shaun Price, their head of customer acquisition, advises leaders to look for areas where their startup is struggling or could use some growth.

“Every business, no matter the size, will eventually reach a point where they find it difficult to grow, reach a new customer base, or innovate. It’s at this point that those in charge may want to take a step back and evaluate if and how adding a new team or new hire to a team could make a difference. Is there a new way to approach the current problem? Is there a skill set that your team is lacking? It’s important not to hire needlessly and focus on legitimate needs.”

Find a balance

Brandon Amoroso is the founder and CEO of electrIQ marketing, a company focused on business marketing. He believes that there is no magic number and those in charge of the hiring process should aim to strike a balance between productivity and resource distribution.

“It may seem enticing to bring multiple new hires on board early on in your startup. However, too many people on one project can cause productivity to become a trickle while utilizing too much money. The flip side to this is that if you don’t have enough people on board you will struggle to advance at the rate you desire. All of this is subjective and important to evaluate on an individual basis.”

Technical or people skills?

EnergyFit is a company specializing in at-home workout equipment. Jeff Meeks, their VP of sales and marketing, also believes that there is no perfect recipe for the number of necessary employees and startups should instead focus on their area of need.

“Every startup has a cap on their finances dedicated to hiring and it’s essential to utilize these resources effectively. Is your company in a position where it needs more employees who are more inclined to people skills such as writing, speaking, attention to detail or self-starting? Or do you require technical skills such as research, software knowledge or engineering? Awareness of your current needs is imperative.”

Full-time, part-time, or contractor?

Ryan Rottman is the co-founder and CEO of OSDB, a company that specializes in sports information. He advises startups to focus on filling their staff with employees of different hiring statuses.

“One of the beauties of a startup is that those in charge have the ability to make it whatever they want it to be. There are no rules for who to hire, how many to hire, or how they are hired. Some roles in your company must be filled by full-time employees. Other roles can be taken on by part-time employees or even as contractors. Where does your startup have a hole currently? How can you most effectively fill that hole financially and productivity-wise? The answer to those questions should determine who and how you should hire.”

 Much of what was discussed above is subjective, so it is imperative that you take the time to evaluate where you are at with your current startup. Dave Thomas, the founder of Wendy’s, sums up the focus for any person running a startup, “What do you need to start a business? Three simple things: know your product better than anyone, know your customer, and have a burning desire to succeed.”


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