Every business was a startup once. They grew steadily and successfully from scratch because of the decisions made by their founders. Founders like Ben Chestnut of MailChimp, Tom Chapman of luxury online fashion brand MATCHESFASION, and Markus Persson, founder of Mojang, the creators of Minecraft.
But how do you make the right decision early on? You will always make some mistakes, and you need to embrace them, but when it comes to hiring you should take care to avoid the following four pitfalls.
Hiring on the cheap
This is a false economy. We all know what that means. If you buy a lower-price product because you’ve got an unrealistic budget you often end up regretting it. Yes, people are not commodities, but when startups take on their first employee, they often approach hiring in a similar way.
Money is always tight for startups and it can take months, if not years, for them to reach the position where they can afford to hire. But in my experience, one of the biggest mistakes they make when they reach this point is underestimating the experience level needed from their first employee.
Building a startup is incredibly hard work. And, to be brutally frank, it requires levels of commitment and experience that are outside the boundary of expectations for someone you’re paying minimum wage. This is a problem that many startups try to tackle by hiring their friends and family instead. But this is equally dangerous.
Many startup founders justify taking on their friends by telling themselves that not only is it a low-cost alternative but that their friend will have an in-built commitment to the business. This is almost never the case. While it usually starts well, if and when the relationship degrades it does so at lightning speed; leaving the founder without support and often with a desperate new aversion to hiring.
Hiring without a clear job role
Startup founders always reach the point where they’re doing all the jobs themselves. Everything from basic admin tasks to strategic planning, and all the jobs in between. This is natural and quite normal. But it can cause issues when you start to hire.
The problem for many founders is that they become so accustomed to doing everything, that they can’t separate out the different roles effectively, and worst still, they believe that no one can possibly do some, if not all, of those jobs as successfully as they can. Avoiding this pitfall is crucial.
There are lots of ways to tackle this but for a first hire I recommend you approach the problem with a laser focus on freeing up your own time. To do this you should identify the one thing takes up the majority of your time for the least reward and the one thing that is holding the business back. Often you’ll find that these two things are the same; for example, you are spending all day coding when you should be in sales meetings, and the speed of coding is having an effect on sales.
The real challenge comes if it’s a role that you think you ‘own’ and are the best at. That’s when you need to have a chat with yourself. If you think you are the greatest salesperson, marketing expert or coder in the world, hire a new founder or CEO and do that job instead. This attitude usually puts it in perspective. Your job is to be the best leader, motivator and visionary in the world. Just get close to that.
Hiring someone who is just like you
One of the biggest problems when it comes to your first employee is the temptation to hire someone who thinks like you, acts like you, and mirrors your own behaviour. You shouldn’t feel bad about this because it’s a pitfall that can affect every business large or small worldwide. It’s human nature to be drawn to people who are similar to you.
If you hire employees who are just like you then you run a very big risk of creating a closed community that does not have the diversity of thinking or background to ensure you’ll succeed. You could end up running a business full of leaders, all competing with each other and you’ll have no people who want to, or are capable of, playing vital supportive roles.
But even more insidious is the problem of a lack of cognitive diversity. Over the last few years, it has become clear that highly successful teams contain people with different ideas, thoughts and attitudes. To create a successful team you need a variety of types of people; some who think intuitively, some who are analytical. Teams like this engender debate and come up with innovative solutions. Read up here on what the next generation of female leaders will demand.
Hiring for your ego
The final pitfall does not, thankfully, affect every founder but when it does occur it can kill a business. In my experience, in the worst cases, it stems from a founder’s inability to process, analyse or cope with outside attention.
When a startup gains a little traction, the founder can be thrust into a whirlwind of new experiences, contacts, events and media attention. Life becomes very exciting indeed, sometimes overnight. And in order to live up to expectations, the founder feels like they need to hire lots of staff very quickly.
This attitude can sometimes mean that the very first hire they make is utterly wrong. Feeling the pressure for a star hire, they can end up almost bankrupting themselves. And worst still, once a founder has embarked on this path, it can be very hard to stop. That can mean that hiring escalates at a very rapid rate and every new hire has to be a person that gives the founder an ego boost.
While there’s no way of knowing if this will happen to you in the future, now you know it’s a risk you are better armed to guard against it. Remember, the biggest businesses in the world grew quietly and at a steady pace. They didn’t need big names on a huge payroll to be successful. The fact that they attract stars today does not mean that they went out to recruit them when they were a microbusiness.
When you start hiring, remember these four pitfalls and you’ve got a good chance of building a business that’s the one to watch in the future.