Preparing to recruit at your startup

TLDR

Do you have an idea of who you need to hire? There are a few things you’ll need to consider and prepare for before you start recruiting.
Think it’s time to hire employees for your startup? If you have a rough idea of who you need to hire and what you might be looking for, there are a few things you’ll need to consider and prepare for before you start the recruiting process. 

One of those things is: when’s the right time? Right now? In six months? When you hit x milestone? You may be dreaming of all the things you could do if you had a bigger team, as startup founders often do. And the pressure to scale can be so great and overwhelming that the answer can feel like a constant, ringing asap! But salaries are often among a startup’s greatest expenses, if not the single largest one, and hiring blindly is like throwing water into a leaky bucket on the way to put out a fire. 

Here are some signs that it might be time to hire:
  • You have customers waiting but can’t support the demand
  • Your current team is burned out and overwhelmed
  • Your own time as a founder is spent on tasks that can be hired out
  • The quality of your product is at risk
  • You have a proven path to making more revenue but don’t have the team 

If at least a few of these criteria are met, then you should take a more financially-minded approach and see if your forecast agrees.

Budgeting for your first employees

In order to plan for the cost of hiring employees, you—or your accountant—will need to do some financial forecasting. 

  1. Working with your startup budget , add in the cost of your employee (or employees). Aside from salaries, don’t forget to account for things like: taxes, benefits, perks, increased team license/tool costs. 
  2. Then, play around with forecasting your revenue [LINK NEEDED], including how you think your new employees may contribute to your revenue. Stay on the conservative side. 
  3. Are there any expenses that you can cut from your budget as a result of hiring this employee? For example, if you were working with a freelancer or agency, you can now remove them from your budget. (Don’t forget to be prudent about timing. Allocate enough time to hire and onboard: at least three months.)

With the updated financial forecast you now have, do you have enough for at least one year’s payroll? You may even want to be more conservative and add another 20% on top especially if the economy is in an active recession. 

If yes, congrats! You may be ready to hire. What a milestone. Head to the next section to learn more about how to prepare your company for employees. 

If not, and your startup budget can’t quite support full-time employees yet, that doesn’t mean your growth is stunted. You can accomplish a lot with freelancers without having to worry about all the responsibilities that come with being an employer, for now.

Preparing for your first hires

Set your business up as an employer

Consult with a small business or corporate accountant who can advise specifically on legal setup requirements to employ people in your business, for your specific geographic area. To start, here are some things you’ll want to check off the list:

  • In the US, you need a EIN number
  • Enroll in employment taxes and payroll
  • Determine if you need to buy insurance
  • Establish your employment benefits

Develop your employer brand

Your employer brand is a powerful tool in attracting great candidates to work for your startup. 
Where a consumer brand (or simply referred to as a “brand”) sums up the entirety of a customer’s perceptions and experience with a company, an employer brand does the same thing from an employee’s perspective. Starting strong will be key in attracting and retaining quality candidates, important when your startup may be a company they’ve never heard of before and they’re taking just as much a risk on you as you are on them. 

Learn more about developing a strong recruiter brand from the very beginning.

Plan out your onboarding process

Startups often lack a formal training and onboarding process but thinking about what you can do to support new hires in advance can alleviate a lot of the pressure that can surface when they start. Studies show that anywhere between 25-40% of new hires are leaving their jobs within the first six months and a lot of that stems from an ineffective first few weeks when you most likely won’t be available to be onboard them as if it were your full-time job, because it isn’t. 

You’ll want to consider:
  • Internal systems set up for multiple employees such as upgrading any tooling to team plans
  • Thinking through an actual onboarding process and what you ideally want that to look like but also what’s feasible (this includes admin/systems for setting up meetings, pairing them with a mentor, checking that they have the tools they need)
  • How you’ll set expectations for the role in the absence of managers, and communicate them
  • Creating asynchronous resources that can be accessed and updated by anyone (with a tracked log of changes) so that one person isn’t the blocker 
  • Once you get past 10-25 employees, you’ll want to start building out an employee handbook that includes information on company policies 

Choose an ATS

Before you start the active recruiting process, choose an ATS (Applicant Tracking Software) to make the hiring process smoother. You may be able to start with something as simple as a spreadsheet, but there are many options if you want a more automated full-suite approach that scales with your startup, like these platforms:


What next? Let’s talk about the actual recruitment process [LINK NEEDED] to build out your startup dream team. To prime you for the hiring process, here are a couple of quotes.

It’s part strategy, all people: "You can have the best strategy and the best building in the world, but if you don't have the hearts and minds of the people who work with you, none of it comes to life." —Renee West, President and CEO, Excalibur Hotel

And always go for the A players: “My theory is that A players hire people even better than themselves. It’s clear, though, that B players hire C players so they can feel superior to them, and C players hire D players. If you start hiring B players, expect what Steve called ‘the bozo explosion’ to happen in your organization.” —Guy Kawasaki, Author and VC

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