Those of you who were wondering why I was not active for so long, here’s an explanation which is not too difficult to believe: I was busy running a startup. I was and still am short of time and everything else. But I thought I should share my hardships with you all.
For a startup this shortage is in everything: manpower, cash, office space, customers, support, etc. Everyone will have to multi-task and the sales cycle will have to be short in order to ensure that cash is coming in at right times.
First question, when is the right time to start hiring and in which area? When you are boot-strapping the venture, the intention is to keep the costs as minimal and variable as possible. Hence usually founding team is the one who brings out at least the beta version or prototype of a product. For a product firm, there usually won’t be any revenues initially. The initial hiring requirement in all probability would be for product development team and later for a sales team when the prototype is ready. In many instances, founders are the ones who do the initial sales. The actual marketing team would be formed only after the product is fully ready for distribution or deployment. For a service based company, the hiring would start earlier. The head count is directly proportional to revenues usually.
The most significant resource is cash. Startups always loose opportunities due to cash crunch. They cannot hire either on sales side or on support side or build infrastructure since they cannot burn cash at a fixed rate. They cannot take in large customer since they might not have the bandwidth to service the customer. They usually prefer smaller customers who bring in cash at frequent intervals and thus funding their operations. Unless there are investors who are willing to bring the required cash, startups which bootstrap usually grow slowly.
The next important resource is people. Hiring is an issue with both startups and large organizations. But more so with startups since they cannot pay the market salary. It is also very difficult to convince potential employees to join them. Ideally, like-minded people who are willing to join them on the journey of entrepreneurship are the initial hires. Fresh graduates would also be willing to join either as interns or employees (though retention is an issue) since it would add value to their career.
Marketing is another major area which is affected by resource crunch. Whether to hire and when to hire a sales person is an important question which no one is sure of answering. Ideally initial leads are through the network of founders and initial sales are made by founders themselves. But after a point, sales and marketing becomes an overbearing task on the founders who are multi-tasking. Ideally, one of the partners should market the product full time while others work on building the product or improving the service offered.
Though there are other constraints which startups face these are the important ones and there is no easy way out of it.