Hiring on a Budget: 10 Tips for Cash-Strapped Startups
Welcome to Recruiter Q&A, where we pose employment-related questions to the experts and share their answers! Have a question you’d like to ask? Leave it in the comments, and you might just see it in the next installment of Recruiter Q&A!
Today’s Question: Hiring can be expensive – but few entrepreneurs have the money to spare, especially in the early stages of their business. How can entrepreneurs hire the best talent, even when money is tight? What resources can they use? What tips, tricks, and techniques should they know about?
1. Leverage Your Story
Focus on hiring people who love the idea and the business. The person should be excited about the company’s culture and direction. People will often work for less money if they can work for a place they love.
As a founder looking to hire, do not underestimate the power of the story you are creating. Many people have joined teams for lower pay because they just wanted to be a part of the story that was unfolding. This is a double win since you get someone who really wants to be there – someone with the mindset of doing more for less instead of someone looking to max out their bi-weekly paycheck in the short term.
Don’t delegate hiring to your assistant – or anyone else for that matter. It will make a much bigger impression if you personally call a candidate than it would if Bob in HR does this.
Speak everywhere you can so that you are known around town. If you do so, it won’t be long before people start contacting you to explore job opportunities. Always say yes to those who ask for an informational interview. You never know who a person really is until you meet them, and they may very well become your next hire.
Something that has worked for us in getting help with our development workload has been to hire green developers right out of the local Nashville software school.
We have gotten about a dozen developers this way, and many start off working for little or no pay just to cut their teeth on a live project.
The positive experiences have definitely outweighed the negative experiences, and a few of the developers have turned into full-time employees for our team.
For a bootstrapped startup, necessity is the mother of invention, and this tactic has definitely helped us keep our burn rate low while keeping up with product development.
Yes, salary is part of a compensation package, but people work for a variety of reasons. Often, top talent can be wooed with flexible hours, a team of people who care about one another, a company that has a great reputation for giving back, educational opportunities, extra vacation time, or even a reputation for being a fun place to work. Especially as millennials flood into the workforce, compensation is less about cash and more about experiences in the workplace.
The best way to get great candidates is to utilize the right job board. So many entrepreneurs go automatically to the most popular ones. These are really good sources, but you can get lost in the overwhelming amount of posts and responses.
Research the best board based on what you need. For entry-level positions, post on college boards. Use LinkedIn to find more experienced candidates, and if you are looking for mature workers, list your position on AARP. When you find the right job boards, make your posts very clear. Writing a vague post will get you more candidates, but not all of them will be the kinds of candidates you want. The more specific your post, the more time and money you save.
Hiring is a difficult process, especially when you have little or no money. Most startup owners and entrepreneurs can attest to this. They may have a promising idea or business (and maybe they have even managed to secure some funding), but they can’t afford to hire the right people. Unfortunately, this prevents many startups from growing or reaching the next milestone.
Luckily, for many talented professionals, upfront cash isn’t everything. The potential of a large future payout can be enticing. They want equity. If you’re low on cash, but need top talent, then leveraging your equity can be a great option. You can use a platform such as AngelList or EquityOwl to find professionals who are willing to work for equity. This allows you to hire top talent without paying top dollar. If people love your idea, they’re going to want to work for you.
Cash-strapped startups certainly don’t have the time or money to invest in lengthy and costly recruitment campaigns. However, they clearly still want to attract and secure the most talented people to join their team.
Asking a candidate to record a video interview has many benefits in the recruitment cycle. First, it lets you screen candidates quickly, meaning that you only invest your time in the applicants you think are strong. Video interviews also allow you to reach out to these candidates before your competitors can bring them in for in-person interviews. Second, it allows the you to showcase your employer brand and the culture you are trying to cultivate.
Hiring remotely carries with it many benefits, including budgetary ones. According to a Global Workplace Analytics report, 37 percent of technology professionals would take a 10 percent pay cut if they were allowed to work from home. We, in fact, do have remote employees who have taken similar pay cuts to work for us. They were drawn to the increased flexibility, the lack of a commute, and the prospect of helping to build a company from the ground up.
Additionally, we’re headquartered in San Francisco, where the cost of living is very high. By hiring remotely, we’re able to attract experienced, high-performing employees located in places like North Carolina and Colorado – employees of a caliber that we just wouldn’t be able to afford if they were located in the Bay Area.
Money spent on hiring often has amazing ROI for companies. A bad hire can cost a company anywhere between 4 and 15 times the hire’s annual salary, in terms of both explicit costs and opportunity costs. That means a bad $100K per-year hire could result in $1.5 million in costs and missed opportunities for the company!
Try to be open to contractors. Hiring a non-permanent employee on a short-term basis allows the company to assess work quality and gives the contractor a chance to buy into the company culture.
A great way to hire the best talent when money is tight is to take advantage of your network. Everybody knows someone great. Attend free networking events, use social media to connect with new people, reach out to career services at colleges/universities for referrals, and encourage your current employees to refer friends or past coworkers. Make it known that you are seeking to fill positions, and always be on the lookout for great talent wherever you go.
