Story excerpt provided by Jerred Ziegler.
Finding good talent should be a priority for any startup management team. Once a new business receives its initial investment, a large portion of the funds are usually dedicated to hiring, a process that can be daunting for new entrepreneurs. Every business relies on the talent they hire to execute their business plan, respond to their market needs and grow their business.
Mike McCann is the director of First Connect programs at Rev1 Ventures, a venture development partner of Ohio Third Frontier. He’s worked with countless companies who have faced the hiring challenge head-on and emerged successful. We sat down with McCann, who offered insights on growing a new company.
Q: What are the most important traits to look for in a new employee?
A: The person’s fit with the company’s culture and values, along with their ability to adapt, be flexible and scale with the business. If there is misalignment between the person and the company, there is a high probability of turnover later in employment, no matter how competent the employee may be. Employees must be prepared to wear many hats on any given day. No matter what their background, they should expect to participate in discussions and decisions on operations, sales, product development and more. Early team members need to take on more responsibility as the organization grows.
Q: When do you know it’s time to hire? When should you bring on full time help as opposed to contracted help?
A: At the concept stage, when you may not have a product and only have a few customers, it is typically just the founding team working at the business. Salaries, if they exist at all, are low with the majority of funds dedicated to developing customer relationships and building prototypes and products. At this stage, the majority of the work can be outsourced to key partners/contractors. As the company evolves and grows, however, more activities related to sales, marketing, and product development will move to internal team members. Hiring usually occurs alongside other milestones like closing major rounds of invested capital or reaching certain revenue goals.
Q: How important is hiring the right employee for your startup?
A: Making the right hires is one of the most important steps a company will take. Among the critical early priorities for a company, however, hiring must take a backseat to both product validation and the development of a solid business plan. Once those two things are complete, you can then focus on finding the right people that can scale the product and business operations.
Q: How do you find the right employees outside your area of expertise?
A: We see this challenge with new businesses at Rev1 time and time again. The key to successfully hiring outside your area of expertise is to build a strong network of advisors and supporters that are experts in such areas. This network can help you draft hiring plans and job descriptions. Advisors can even help with the interview process, providing guidance on which candidates have the appropriate skills for the role.
Q: How can a startup successfully retain their employees?
A: Startups often battle an ability to provide market-level salary compensation. Instead, many of these companies will offer some form of equity or stock-option compensation, giving employees a long-term incentive to stay and build equity value in the business. Setting the right expectations for employees during the on-boarding process is also key. New employees should have a clear understanding of the company’s vision and goals, and know how their role is contributing to those goals.