Going from the idea phase to launching a startup typically involves the founder wearing a lot of hats, spending a significant amount of time doing the things they know best, and working overtime trying to learn all the aspects of the business they aren't experienced in. But eventually there comes a time when the company is no longer a one-person operation, and the need to start building a team is evident.
Let's look at three ways startups can starting building their team, whether that be working with interns, or hiring independent contractors versus salaried employees.
1. Determine Which Type Of Employee Is Best For Your Business
For many startups, once the workload and revenue starts to increase, the initial hires are typically independent contractors. There are many advantages to this strategy, such as limiting payroll costs and having the flexibility to hire short-term staff to assist with projects.
However, with the rapid growth of online businesses it's especially critical for e-commerce companies to stay abreast of the legalities around how employees are classified. "It's best to avoid the field of FLSA landmines and conform to wage and overtime requirements if the employee undertakes transactions with individuals or entities in other states or communicates with those in other states by mail, telephone or email," says Sergei Lemberg, Managing Partner at Lemberg Law. Considering that online businesses process transactions across multiple states or even countries, almost all online businesses would fall into this category.
And that's not all. It's also important to ensure that only certain types of hires are being classified as independent contractors. "As a rule of thumb, if your worker is classified as an independent contractor they should, at a minimum, set their own schedule, use their own tools, supplies, and equipment to perform their job, possess the special skills needed to perform the job without training; and maintain control over what they do and how they perform their work," adds Lemberg.
2. Utilize interns as a catalyst for growth
When payroll budgets are limited, companies can instead invest the time to train and develop interns. This is a very viable option for many startups because it's cost effective and younger employees often bring fresh and innovative ideas.
"Interns have been key for us. We made a big bet and staffed half the company with interns which let us grow significantly," says Christy Johnson, CEO of Artemis Connection, a strategy consulting firm. These paid internships were a great introduction into the professional world for the team while also strategically beneficial for the firm.
"An intern may be unpaid if, based on the totality of the circumstances, the internship is primarily for the benefit of the intern, not the business," advises Lemberg.
3. Deeply analyze your current team before making hiring decisions
Since startups typically start off with a small team, or just a sole founder, it's very important to identify team member's strengths and weaknesses and then base initial hiring decisions on areas of weakness.
Filling a role that is complementary to other team member's skill set can make the company stronger and the team more productive.
"I believe in the adage 'hire slow and fire fast'. Knowing that both my partner and I are adept in sales and marketing, we made the decision to hire an experienced Operations Manager," says Gianne Doherty, Co-Founder of Organic Bath Co., an organic skincare company. Filling the operations role not only allowed the founders to focus on generating sales, but the new operations role enabled the business to handle the influx of sales that came in, allowing the company to scale efficiently.
At the end of the day -- startups and businesses alike must first be aware of their hiring needs, but more importantly, how to effectively fill those gaps and continue to iterate accordingly.