Tackling human resource challenges for startups

Hiring talented and loyal staff is a challenge for any business.

Throw into the mix a fledgling concept and a company with no proven track record – hiring the right people can seem like a massive hurdle to overcome.

As we’ve discussed before, the startup industry is experiencing a shift away from easy money to an increasingly competitive landscape for venture capital, thanks to rising interest rates and a slow down in global economic growth.

As such, venture capital (VC) firms’ appetite for investing in new startups has reduced and been refined, meaning only the very ‘best of the best’ ideas are getting the funding they need to grow.

 If you want to read more about what startups can do to attract the right investors during the tech downturn, click here.

But staffing presents another ongoing challenge for startups that needs to be managed properly for businesses to succeed.

But aren’t staff aplenty at the moment due to the big tech layoffs?

Big tech companies across the globe have been laying off staff in a bid to recoup costs in the wake of the current economic environment.

Smart Company recently did a round up of all the big Australian tech startups that have had to layoff staff this year.

But for those startups who have been able to weather the storm and need to fill positions with the right people, accessing good staff with stretched financial resources can be very difficult.

Besides the usual things like a competitive salary, job security and growth opportunities, finding employees that ‘buy in’ to the vision is crucial.

Potential employees who are passionate about the concept and feel that they can add real value and make a mark on a business are important to build loyalty and longevity in the business.

These early hires will also become the building blocks of your business, so getting it right is essential.  

How to be strategic to hire the right staff

Early-stage startups don’t need to get caught in the trap of hiring all employees at a senior level.

Choose your candidates and employees strategically – hire where experience is needed for one role and where passion and growth is required for another role.

Startups also shouldn’t compare themselves to large organisations who have endless resources to throw at hiring top-tier staff.

Offering an attractive benefits program is another way to incentivise potential candidates, such as company perks or even equity in the business. 

Offering equity in the business 

Offering equity in your business for your foundation employees is a good way to create true buy-in to the business and build loyalty.

Offering equity gives your employees a long-term incentive to remain with your business and to grow with it.

Employee equity (or an employee share scheme) is the process of granting shares to your employees as part of their compensation package.

As the company grows, the value of the employees’ share in the company also grows, which creates the incentive to work hard and see the business be successful.

It also means that the startup can save money on the initial outlay of a high wage by offering an attractive option for employees to grow with the business.

There are many different ways you can offer employees equity in your startup so it’s best to discuss the right option for you with your accountant or business advisor.

Aligning your business with funding partners who offer more than money

Making your startup attractive to the right VC firm is essential, and the best foundation for this is ensuring you’ve done your due diligence, and that your numbers and research stack up. 

Once you’ve got this sorted, looking for the right VC partner is the next step.

If human resourcing is a major hurdle to overcome, some VC companies can offer time, expertise and ‘people on the ground’ in part or in lieu of capital investment.

At Summit Capital, we are in a unique position to leverage the expertise and resources of our wider company network to support our founders with a pool of talented human resources to help drive growth within their businesses.

This unique offering means that our startup partners have access to more of that top-tier expertise where they need it, without having to hire full-time employees to fill these roles.

As the business grows and becomes more successful, we are then able to shift our expertise towards finding the right people for these positions, to see these startups reach the next level of growth.

Leveraging the distinct capabilities of the VC firm that your startup partners with is an essential step in overcoming the hurdles of human resourcing for early-stage companies.

Your VC partner should be able to offer strategic advice on how and where to best utilise resources (both human and financial) to help your startup grow sustainably.