When is the right time to start hiring?

Hire when it starts paining

When people start building their new startup, they desire to hire people. The desire to hire people has more reasons than to make money and sustainable profits. There is a misconception that by hiring people, they will do the work for you and you can profit from it.

Sometimes, ego drives this decision as well. They are so tired of reporting to a boss and they finally want to be the boss. The identity matters more. Friends and family are looking at you. They are seeing if you will succeed or fail. And hiring people is the most visible way to show them you are succeeding.

In many parts of the world, especially in India, business success is usually measured by the number of people working under you. When people tell others that they run a business, the first question is "How big is your team?". You are not taken seriously if the team size is less than 5 people. If you have more than 50 employees, people think you are a successful business owner.

Sometimes the founder with 5 team members is making more profit than the "Business Magnate" that has 50 team members. You cannot judge a book by its cover. You cannot judge a business by the number of people working in the company.

The first rule of building a Micro Startup is: Don't do it for your ego. Your ego is your identity. You want to be seen as a successful person. You want an offer, some 20 employees reporting to you and you want media to cover your story. To be honest, these things might feel good, and make you feel like a success but it will not put money in the bank.

What other people think about you doesn't matter. When you show off a certain level of success, there is pressure to keep that up. But the reality of business and life is that there will be ups and downs. There will be a time when you have to restructure your team, let go of some employees, downsize, and then grow again. If you have already shown people that you are a success, you will feel a lot of pain when they think you are failing. Work hard in silence, do it for yourself, for your team, and your customers. People will take notice at some point. And if they do not notice, it doesn't matter.

The main focus of your Micro Startup should be to become profitable and sustainable so that you are never at the risk of having to shut down your startup and go back to a job. They say 90% of the businesses fail in the first 5 years. Another 90% of the remaining 10% fail in the first 10 years. If you manage to make your startup live beyond 10 years, you are 1 in 100 businesses. That's a good goal to have.

The second priority should be your team. They shouldn't be insecure in your company and start looking for another job because your startup is at risk of shutting down. Be frugal, be conservative, and optimize for survival than for growth. Many founders try to grow too fast and then collapse when there is an economic downturn. Don't hire fast fire faster. Hire slowly and never fire.

If you take care of yourself, you can take care of your team. If you can take care of your team, they will take care of your customers. If you take care of your customers, they will take care of your company. If your company is taken care of and survives, it will take care of you. That's the circle of the life of a startup.

When to Start Hiring?

You need to know when to start hiring. You hire when it pains. Do not pay a very high salary to start with and expect that they will do the work for you.

Do not expect your employees to work hard if you do not work hard. There is a time and context to hire high-tech talent. It will come later when you have more cash flows.

When you are getting started, work with freelancers and contractors. Find someone who already has a job with a monthly salary and get them to work with you part-time for extra income.

If you are offering services to clients, focus on building your personal brand, do the sales and when it comes to execution, execute yourself. When you don't have enough time and you feel like having an extra helping hand will help you focus more on branding and sales then hire someone to execute the projects.

Do not hire anyone full-time to start with. Hire freelancers and part-time employees who are good at their craft. If you make more revenue than what you are paying them, you have got something working. As the revenue goes up, you can consider hiring them full-time in your company.

If you are selling education, you might need someone to be a mentor, community manager, and offer support which might be time-consuming for you. When I started digital marketing education back in 2017, I did it all myself. When my hands got full, I hired a student from the first batch of my training program and assigned some of the responsibilities to them.

There is a very high chance that you might end up with the wrong hire when you start. It needs practice and patience to hire the right talent and for the right reasons.

So even if you are making good revenues, do not try to expand too fast. If you start making good profits, store that profit for future expenses because during the initial days of your startup, the journey will be very rough. You will have an amazing few months and another few months will look like the startup is failing. Just like Bitcoin in its early days, you will go through a lot of volatility.

In future lessons, we will talk more about team building. I have added this lesson early in the series because I don't want you to make the mistakes that I've made during the initial stages of my startup.