Your business is unique. As are you. As is your growth path.
Let's look at three hypotheticals.
Case 1: The first startup has a great product, and they've even found an angel investor. As soon as there’s enough money in the bank, the founders hire a big team of mid to junior-level execs. While this feels like exciting progress, the founders soon end up stressed about the financial overhead that’s been created. They're also overwhelmed by the needs of the employees, all of whom look to the founders for all decision-making… tying up more and more of their time on admin, taking attention away from core functions of the business.
The decision to grow so fast so early has caused this startup to balloon. Recovery will need enormous effort and discipline, and luck.
Case 2: The second startup stays lean for as long as possible—just the solopreneur working hard on the product for the better part of two years. When the startup is finally able to hire, there’s financial stability to bring in top-level employees who can take the company leaps and bounds forward.
The decision to stay small early on paid off in spades.
Case 3: The third startup stayed lean, and used only consultants and freelancers. The solopreneur kept a steady hand on product development and the startup was gaining financial stability. They land an enormous client. It's a big opportunity, and this anchor customer can set them up like none other. The solopreneur scrambles to hire. He fills the top spots quickly and expects all these high performers to hit the ground running. Some do and most don't. Company morale suffers. Blame wars erupt. The Solopreneur finds himself multi-hatting as people quit or are fired and then replaced with others who quit or are fired. Before he knows it, his beloved startup has a toxic workplace culture, and he himself is burning out.
The decision to stay small almost/maybe killed a great startup.
To be honest, I can’t tell you when is the perfect time to hire. It's different for every entrepreneur and every business. I am on my solopreneur adventure and I'm figuring it out as I go for SmartCue, thanks to all I've learnt from working in a startup after startup. I believe this is one area where the questions I ask you are far more valuable than any pearls of wisdom I might be tempted to drop.
Let's get into it.
Here are the questions you need to answer when you think it is time to hire.
Do you have a core product/business ready?
If not, hold off on hiring.
It's just too early. This is the time to keep costs low and keep your attention on the problem you're trying to solve. You don't need the distraction of employees - whoever you hire will need an induction, some mentoring, some hand-holding, some coaching and feedback, and some performance management. Wouldn't you rather spend this time working on your product? On the product market fit? What it would take to scale your business?
Besides, this is when you want to keep your costs as low as possible. You don't even have a product yet, just an idea. Hold on to the money you have.
If yes, then hiring might be an option, in light of what the other questions reveal. Hiring is definitely an option when you feel the need to start delegating the repeatable strategies you've put in place to free yourself up to figure out the next step forward.
Do you have the expertise for the next step?
If not, then would you be the right person to assess these skills in someone else? For instance, if you've been told you need a digital marketing plan, but never supervised one before, would you know the skills to look for in a new hire?
A safer approach, I've found through painful experience, is to lean on expert contractors, agencies, and part-time hires. Agencies with management oversight are a great way to get your toe in the water. They're more pricey than individual experts, but they also bring greater accountability. In my experience, that's often more cost-effective in the long run.
If yes, then assess if you really need someone else in a senior management position, or if you can supervise it yourself, as long as someone junior does the grunt work. You could, of course, tread the middle path and get someone that has a little bit of experience, and the ability to grow into the role down the line.
Are you missing out on opportunities?
Track all the time it takes you to complete work that doesn't align with your strengths. Do this for say, a week. Now add up all this time, and ask yourself what else you could be doing with that time, within the context of developing your business. This is your opportunity cost.
Finance isn't one of my strengths, and I find that it takes me twice as long to do finance-related tasks (because I drag my feet on them!) than any other single function for SmartCue. I would rather spend that time with my marketing agency, brainstorming ideas and digesting my marketing data. That was my opportunity cost.
By bringing on someone who could take finance off my hands, I was able to dive into marketing and get serious value out of my investment with the marketing agency I use. Moreover, SmartCue's finances are in better hands too!
Do you have a work-life balance?
If not, it's time for a little self-awareness. Many of us equate exhaustion, being busy, having a 'crazy schedule' as badges of honor, and validation of our valor as business owners. Who told us that? Who modeled these behaviors for us? Because honestly, it is unhealthy. And it is unsustainable. We get tired, angry, and worn down. We make mistakes, we lose patience with people who deserve better from us, and we are much more likely to start hating what we do because it takes us away from so much of our lives outside the office. Especially now, when the office is wherever our devices are.
What would it take to take that pressure off of ourselves? What do we really need? Is there a particular function that stresses us out and therefore, takes much longer to do? Is there an area of the business we aren't good at, and so we find ourselves underperforming and then overcompensating for it by overworking? Do we have decision fatigue? Answer these questions, and then find ways to take things off your plate. There are a number of ways a lot of the work we do can be automated, hived off and outsourced, or taken care of by a new addition to our staff.
If yes, good on you. Stay the course.
Can you really afford the right people?
If not, think about alternatives. Building a team takes investment. Instead of a full-time hire, can you bring on a consultant who only spends a certain number of hours per week? Can you outsource the function completely, especially to an agency that commits to an outcome? Do you have the bandwidth to coach someone with less experience?
Ultimately, you want to build a business that can grow itself. To do that, you need senior employees who can work independently. But in the meantime, are there things you can do that can work just in the meantime?
If yes, measure twice before you hire. Building a team takes investment. I'm repeating this for effect here. It's not just the cost to hire, or the salary, but also the time you'll invest in these people, the contacts they'll take with them when they leave, the headspace that a bad hire will take up, the stress of firing someone, the severance package. Think it through, from hire to fire, and think through both, the best-case scenarios and the worst-case scenarios.
Is human capital the most efficient way for you to grow?
There are a lot of investments you can make to grow your business; investing in people is just one of them. Today, there are several ways that you can meet these business needs without full-time employees, and the burden of salaries (and growth paths) that they bring.
However you choose to proceed, always get a second opinion. We solopreneurs can become echo chambers for ourselves, and that can be a dangerous thing to any business, irrespective of size. Reach out to your mentors and peers within your community and listen, even if you don't agree (especially if you don't agree) and only then commit yourself to a path.
We're all rooting for you.