8 Questions Every Startup CEO Should Ask Before Adding a New Role

By Michael Overell - Oct. 30, 2013
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It doesn’t matter at what stage your business is expanding; deciding to bring on a new employee is a monumental decision. Particularly if you’re a growing startup.  Bringing on a new employee not only impacts your burn rate, it affects the day-to-day culture and future direction of your team.  It may even move you further away from the things you truly enjoy, as the business grows and more oversight is required.  Cash flow is precious, and so is your time. Finding the balance between the two and aligning your hiring decisions with your business goals can be a challenge.

Hiring your tenth employee is almost as exciting as the first.  Adding new employees shows the business is growing and you’re confident in the future.  Many people feel pride at contributing to growth and relief at passing on some of the tasks that have been so stressful. Others measure the ‘success’ of their startup by how quickly they can grow the team. But the decision to add a new employee shouldn’t be made lightly.  Additional employees can actually stunt growth if they tie up too much cash flow, and the number of people on a team significantly affects the culture of your business.

So, is it the right time for your business to expand?  Answer these questions below to find out:

1. How Hard Are Your Current Employees Working?

Is your current team regularly commenting that there is more work to be done than usual? Or that they’re working more and more hours each week? You should at least begin to explore whether hiring someone new would reduce the pressure.  A great place to begin in your investigation is by asking your employees.

2. Do Your Employees Have Space To Innovate?

In order to stay afloat in the long term, your business needs to continually innovate and stay ahead of market trends.  A creative spirit needs space unencumbered by looming deadlines or a pile of unanswered emails.  Pushing your employees to maximum productivity may work for the short term but will hurt your bottom line in the long run.  Give your employees the breathing space to try out some of those new ideas and projects they discuss around the lunch table.

3. Is Your Current Growth Likely To Extend Into the Future?

A sudden spike in sales, perhaps due to a lucky marketing break or seasonal growth, can drive some startups to hire too early.  Consider the yearlong effect of an additional employee in your workforce.  Run some numbers on the value they will be creating over a long period of time and ask yourself whether that is a likely outcome.  Ensure you’re experiencing a sustainable growth curve and not just a blip.

4. What Are Your Personal Goals?

Not everyone dreams of growing a business all the way to IPO.  Consider how continued growth will impact you, and your business.  Larger companies require different management techniques. The culture needs to evolve dramatically.  Your role and responsibilities will change as a business grows – and so will your stresses!  Don’t get caught up in the excitement of growth only to discover it’s not actually what you wanted.  Many business owners purposefully choose to sustain a ‘boutique’ size group for these reasons. Ignore the naysayers who negatively refer to this as a ‘lifestyle businesses’. It’s your baby, and nobody else’s.

5. Do You Need To Hire Full-Time?

If you’re unsure about whether the current growth is sustainable in the long term or whether you really need the hours of a full-time employee, consider part-time or casual employment.  The part-time workforce has many highly qualified employees looking specifically for flexible hours for personal reasons.  Part-time employees also tend to get more done in less time, increasing your business’s output without putting too much strain on cash flow.

6. What Opportunities Are You Currently Missing?

If you can remember a time you saw an opportunity but didn’t have the resources to chase it, it may be time to expand your workforce.  If your goals are to rapidly grow your business by taking advantage of as many opportunities as you can, you will need to hire in excess to ensure the team has the capability of identifying and exploiting the opportunities.  Consider temporary hires or outsourcing if these extra people would stretch your resources too far over the long term.

7. Do You Have a Clear Set of Tasks for a New Hire?

If marketing, logistics, and design are all a little bit stretched it may be difficult to find one person who can assist across all three departments.  This is the point most businesses find difficult to address when it comes to hiring: which department do they increase first?  The best way to address this is to identify your bottlenecks.  Which area is slowing the flow of sales and growth of the business the most?  Strategically placing employees in areas that focus on growth rather than maintenance will ensure you are prioritizing cash flow and will have more resources in the future to dedicate towards less crucial functions.

8. Do You Have Somewhere To Put Them?

This one can be easily forgotten!  Do you actually have somewhere for a new person to sit?  If you hire another person, will you need to get new offices?  Will it feel cramped in your current space?  Will you need to upgrade your communication structures and equipment?  All of these additional expenses can affect the return on investment of a new employee.

Tip: Don’t Stress If You Make a Mistake

At the end of the day, if you employ someone when you really needed to outsource or your growth slows, it’s not the end of the world.  Admitting you made a mistake is the first step, and taking the necessary actions to retreat and begin again won’t be easy. But you will survive.  You will also learn more about yourself and your business so that the next time you are faced with expansion decisions you will make the decision that is right for you and your team.

Image courtesy of Incase.


Michael Overell

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