When should a startup bring talent in-house?
It’s an understatement to say that a startup company has a lot going on! As a business stakeholder and business leader, you’re juggling multiple “full-time” jobs:
- bringing an idea from concept to fruition
- taking an MVP service offering from pre-revenue to PMF
- navigating customer segmentation within a specific vertical
- building out the founding, management, and various teams.
In this blog, we’ll focus on building the right team for your startup company by zoning in on three principal buckets of employees.
- Executives & Administrative Roles
- Sales & Marketing
- Research & Development
Whether you’re a technical co-founder or an experienced commercial-side (non-technical co-founder), take advantage of these must-know tips for placing names in each of these functional roles.
Keep in mind that while various stages of your startup company’s growth will drive changes in your organizational chart, this blog is to help B2B SaaS-focused startups between ideation & post revenue (< $1M ARR) stages.
When and How to Hire Executive and Administrative Roles for Your Startup Company
Key Principle #1: Founders maximize the highest and best use of their time
Budget permitting, the founding team should list out its core responsibilities and strive to do only those things as the company gets started. This list will be long, and the best parts of the job will not be the only things on the list at the beginning stages of the company.
The founding team must be willing to stretch themselves in duties and time dedicated to managing the company, but only for a season. Additionally, founders should focus on the responsibilities that fall within their skillsets. Chronic overwork and working ‘outside of your lane’ will lead the startup company’s leadership to burnout. Critical management activities may get lost when that happens, which can then compromise the business’ growth trajectory and even interject enough risk into the business to cause it to fold!
Key Principle #2: Leverage a fractional labor force
Far before the advent of the gig economy, fractionalized professional assistance has been available in several areas. Examples of this range from personal assistants up to chief financial officers or CFOs.
We’ll run with these two examples for now:
- Hiring a Personal Assistant: If by chance, none of the founders have the administrative chops to keep detailed records and a calendar straight, there are several opportunities to outsource this effort to anyone from off-shore administrative services to graduate student interns.
- Hiring a CFO: While the job of a chief financial officer tops off an entire stack of financial services, all of which a company needs, a budding startup does not need any of these positions full-time. Bookkeeping and accounting services are essential to keep your company’s data room clean and thorough.
Key Principle #3: Automate rote work and complex workflows
In order to have a clear understanding of the tasks that you find yourself doing over and over again, try keeping a journal of your daily activities. If you’re not a journal-type person, take a hard look at your calendar and your task list on a weekly basis. Ask yourself the hard questions like, “What things could I stop doing? What tasks are becoming overly complicated? Is there a system or solution that can help me manage specific processes?’
Deciding plainly and transparently (in front of your co-founder or clients in some cases) to stop doing certain non-essential tasks can be tremendously freeing when there are always more things to be done than time permits.
Gain the leverage you need over your time by automating the tasks you must continue to do. By doing this, you’re free to spend more brainpower on the creative endeavors you enjoy and that are more crucial to the business.
Consider these opportunities to embrace automation:
- Employ cloud-based management system
- Use effective task management (rote) or working document management systems
- Create workflows in exchange or in addition to email collaboration
When and How to Hire Sales and Marketing Professionals for Your Startup Company
Key Principle #1: Your industry SME or subject matter expert should be your sales lead
The founder who knows and understands your ideal customer persona(s) the best needs to embody the client-facing role of your company; typically this is the CEO.
While it’s tempting at the first glimpse of traction to offload sales activities to a specialist, it’s undoubtedly too early and it will create complexity where there shouldn’t be any. There are a myriad of factors that will impact at what stage certain roles within the sales team will be beneficial to bring on, i.e. sales volume needed, degree of consultative sale, etc…, but for the most part, until you have a proven, repeatable sales process that is battle-tested, the primary sales efforts should stay within the CEO role.
Key principle #2: When it comes to marketing, start it early
Unless one of your superpowers is marketing, ( i.e. digital marketing and/or brand positioning), leveraging consultants (fractional labor force) to assist you with essential marketing elements is highly recommended at the early stages of your company.
It’s crucial that you craft the right message to attract your core customer audience right out of the gates—it truly will be more than worth the investment in the price tag. It’s akin to building muscle density as a teenager, which makes you stronger for the rest of your life. If you try too late in the game to ‘get strong’ on the marketing side, it will cost you a lot more time and money, without the benefit of a long history of compounded benefits.
Key principle #3: Establish a growth strategy
It’s important to have a plan that informs your cash model. Customer acquisition costs and revenue targets cannot be dice-rolled into an Excel model, rather they need to be well-researched from data sourced from the ‘ground-up.’ Once you have a plan in place that takes into account the number of paying customers forecasted, cost to acquire these customers (not only in dollars but in people’s time as well), you’ll need to track progress against this plan and make adjustments to keep your startup on track to meet its goals.
Maintain the plan! A plan is useless if you put it together and then throw it out the window when ‘whale-sized opportunities come along. If it doesn’t fit into your plan, take a really hard look as to the unforeseen consequences of diverting away from your original plan.
The most attractive opportunity may, in fact, hide severe collateral damage to your business as a whole if it takes your leadership’s focus away from the plan.
When and How to Hire a Research and Development Team for Your Startup Company
Key principle #1: Lock in a roadmap and budget
In order to have a solid reference point to make hiring decisions, the most important starting point for research and development or R&D is for the founding team to determine its roadmap & budget. As much as possible, lock this in early because deviations from this plan will adversely affect your runway.
Key principle #2: Choose a repeatable and dependable development process
If one of your founders is technical, it’s likely nonetheless that the initial build effort will benefit from a larger team in order to get the product to market more quickly.
Even if you scrape together a couple of college friends, it’s important to choose a repeatable and dependable software development process. This will provide the highest likelihood of achieving the roadmap with minimal pains (e.g. need for micromanaging a development team, missing deadlines, and shipping a sub-standard product).
Key principle #3: Protect the continuity of the team
When selecting additional team members for your initial team build, have high regard for the selection process; the decisions you make now on this team will not only be one of the most significant contributing factors to the early success of your company, but it will also play a big part in the degree to which you’ll be managing the residual cost of ‘R&D gone wrong.’
Your core team should not only agree to abide by the above processes in taking down the roadmap within budget but this team should also be a trusted partner within which the ‘tribal knowledge’ of where your R&D arm will reside. This tribal knowledge should be held within cloud-based management systems, however, there will undoubtedly be efficiencies for the core R&D team to remain on the product and be in place to continue to grow the team. This remains true whether you gain additional capacity from relatively junior talent or grow the team through the onboarding of key internal hires.
Key principle #4: Monitor operational efficiency
As the roadmap is gobbled up in a predictable manner, operational efficiency becomes a key metric that rises to the top. An analysis of talent compensation of third-party vendors/partners against the time-based equivalent compensation of employees will be key to determining when the tipping point will occur that makes it clear as to when you should hire internally.
Know the Right Time for your Startup Company to Hire Internally
We’ve discussed that on the G&A side, as well as on the sales and marketing side, the threshold to hire internally is pretty high, as capital efficiency is maximized by leveraging tools and working with fractionalized labor/consultants.
When determining when to hire internally for R&D, we recommend that you start as close to the product as possible. By this, we mean senior skilled positions that work with the business case of your product. These hires will continue to provide increased leverage for the founding team to continue to maximize its time to the highest and best use. Once you have the additional key team members in place, they’ll be able to continue to analyze the operational efficiency benefits of bringing on additional personnel. These decisions should consider the skills needed for ongoing work, as opposed to point-in-time skills (like database architecture), which are critical paths, but not something you’d hire for the foreseeable future.
A Helpful Checklist: Actionable Best Practices for Growing Your Team
Take advantage of this helpful step-by-step checklist of actionable best practices to use when you find yourself at the inflection point we identified in this blog.
Steps a decision-maker can take to find the perfect fit for their growing team:
- Assess current landscape of headcount
- Where are the skill gaps of current resources?
- Create short-term and long-term goals
- Decide on a budget for the resources
- Create a well thought out, concise, and thorough job description (a good agency will assist with this)
- What skills are needed?
- What is the current culture of the team?
- What type of personality will fit in best?
- Clearly communicate needs to recruiting team
- Top three must-haves?
- Top three nice-to-haves
- Involve multiple resources on the team to interview the candidates and have them weigh in on culture and skill fit.
The following suggestions work best if your hiring authority places significant value on both skills and culture. Naturally, the leadership panel will serve as the final authority for any hire, however, it’s best to consider including a peer or two in the interview process.
- Collective “buy-in” is helpful; it’s important that the current team has a positive reaction to minimize workflow disruption.
- It’s best to have a consensus that the candidate will seamlessly integrate with the existing team.
- A word of caution: Involving multiple team members can be cumbersome. Be sure this additional step doesn’t derail your hiring timelines. In an aggressive candidate market, speed is certainly a factor.