I can’t pay you much, but please, work for me…

OLYMPUS DIGITAL CAMERAThe most efficient use of human resources in the life of your business is probably during start-up, mostly because you have very little money and you have to get work done.  So, you get creative. Of course, there are always your friends and family, but if there is no help forthcoming from them then other avenues must be explored.  The first of these avenues is hunting for an additional partner who has the skills you seek and who is willing to give time and skill for shares.

The difficulty with this approach, we found, was that in the early stages the business has no defensible value as you have no clients on which you can base value projections or forecasts and thus the number of shares given in relation to time and skill becomes tricky to determine.  Here you simply need to agree the amount of shares and expected time and skills that is acceptable to all parties. Of course, if the new partner is willing to give time, skill and some money that is an even better option.

Another option, if you have a little money is to entice someone to work for you for a very low wage with the promise of employee shares in the future, when the business has become successful.  Believe it or not, there are people who are intrigued with start-ups and are willing to take that risk with you.  The trick is finding them.  We used the traditional recruiting tools, found lots of candidates who were eligible, fewer who were suitable and we almost employed one such person, but he just waited to receive our offer of employment to tell us that he was not really serious when he said he would work for that salary.  This forced us into a direction that should have been our first course of action and not a last resort.  But traditional thinking around human resource acquisition and management got in our way.

Outsourcing is the answer, if you can suspend your judgment and traditional ways of thinking.  One quickly realises that not everyone has to work for you as an employee and in a start-up you would prefer they do not as there is a lot of uncertainty.

With outsourcing, particularly to low cost locations, you are able to get high quality resources at very competitive pricing thus your dollar goes further and you are able to get more done on your maxed out credit card or the remortgage of your home.  The key to outsourcing is to use a reputable outsource provider (Odesk, Elance, etc).  Choose 3 to 5 candidates and then devise some small deliverables to test the skills of each of them.

Ensure that your brief is clear and detailed.  From the questions that they ask as they are completing the deliverable, you get a sense of their capability, skill and suitability to work with you. Language, in many cases, is a challenge, but luckily in the technology area where we required work there was a common understanding of the important terms.

As far as possible, protect your IP when giving outsourced providers access to your solution.  There are ways to do that, particularly with regard to technology solutions. Once you are comfortable with a few of the candidates’ skills, then you can give them larger pieces of work to do.  Having 2 or even 3 additional resources on call allows you to parallel process work thus getting to the market quicker or simply having available resources if another is unable or falls ill.

Managing outsourced work is very different from doing it yourself or having people in the office doing the work that you supervise.  It requires a completely different skill set.  Here the focus is on giving an accurate and detailed brief, being available for questions and knowing how to work with virtual teams.  It also means having a skill that is able to create a framework and allow different people to fill in the detail in a way that might not be how you would usually do it and then bringing it all together in a workable solution.

A complex technical solution requires at least two technical people to ensure continuity and to minimise the risk of having only one technical resource who might leave or simply get ill or exhausted.  We only had one technical co-founder and a complex technical solution with no back-up resources.  This took its toll on his family life and for 2 years he worked 7 days a week, this is not sustainable or worth the risk.

If you really cannot afford an additional technical resource then cut down on the solution functionality.  One of the big ‘Lean Start-up’ principles is to develop a minimal viable product (MVP), get it to the customers and see if they will buy it, before developing any further. Of course we made the classic error of going beyond an MVP that resulted in an exhausted technical co-founder and no sales.

If you are lucky enough to be able to afford a resource or two, ensure that they deliver according to agreement and expectation.  Also construct their work in a way that they feel a connection to your purpose, can grow and learn and give them as much autonomy as is possible, these are the most powerful performance motivators (reference Daniel Pienk).  If you do that, you are more likely to be successful in paying a lower wage and getting great people.  There are many excuses why people might not be delivering but with little money you do not have the luxury of entertaining those excuses and/or spending time on performance improvement plans.

Another classic error that we made was not keeping the resources to task.  Even though we felt the non-delivery was valid we should have either suspended the contract until we were ready for that skill to be utilised or a more radical idea could have been to sell the resource’s time to someone else for a period of time.  This inability to act cost us dearly.  When employing people in the beginning, it is preferable to employ them on a contract basis for short periods of time, say 6 months.  Unfortunately this makes recruiting people even harder.

Having little money and a requirement for different skills than you have in your founding team is one of the biggest challenges that start-ups face.  The answer to it all is getting sales as quickly as you can. That way you can start affording to acquire additional skill and are more likely to get investors that will give you access to money to employ people.

2 thoughts on “I can’t pay you much, but please, work for me…”

  1. Briliant Mel. What do we say about hindsight?

    All I can add is, “never build a nuclear reactor to boil a cup of coffee”.

    1. Thanks Barry, that is one of the reasons I am posting our learnings so that our hindsight can spare others the pain

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