What’s stopping your success? Many people think it’s a lack of funding for their startup. But, here’s some sobering news for you:
Only 18% of startups fail because of monetary problems.
Incompetence, on the other hand, is responsible for 46% of startup failures. Nothing can kill your business faster than employing the wrong people. And, unfortunately, businesses often make the mistake of cutting back on the staff bill in order to cut costs.
Isn’t cost-cutting good?
Generally, it’s a good idea to cut costs wherever possible. But if that’s keeping you from hiring a competent team, then it’s actually doing your business more harm than good. It would be better to consider hiring a smaller and more effective team that can help you build your business.
Let’s say, for example, that you decide you can handle the accounting for your business. With the accountancy software out there, it’s relatively simple to do so. What could go wrong?
A lot, actually. As the owner, you’ll have a lot of work to do as it is. You might have to rush through the paperwork only when you get a chance. This not only puts more pressure on you, but it could also result in small transcription errors or simple mistakes.
That, in turn, means you won’t have an accurate record of how profitable your business is. You could have problems getting invoices out on time and chasing up payments. Finally, when it comes to tax time, discrepancies could mean losing out on deductions you’re entitled to.
It’s going to cost a bit more to hire someone to do your accounting for you, but it will definitely be worth it. Without the accounting responsibilities, you can apply your time more productively to get new clients and sales.
These principles can apply to other business functions as well. It makes sense to hire the best people that you can afford to get your business off on the right track.
But how do you attract the right talent when you’re a new company on a smaller budget?
Match the average market salary
The best way to attract the right talent is by doing something pretty simple. Do your research and find out what the average market salary is, and consider paying at least that or more. There’s a lot of competition out there when it comes to attracting highly skilled professionals. It’s wise to offer a salary that will make joining your team worth their while.
Consider offering equity in the company
Someone who is more qualified or experienced might request a higher salary. This can be tough if you’re operating on a limited budget. Something you can do instead is offer them a reduced salary along with equity in the company.
Having complete control over your company is something that you might not want to give up. But, it could be worthwhile if it means gaining a highly skilled staff member at a reduced rate. Offering equity is also a great way to incentivize the new employee. As an investor in the company, they will work hard to see the business succeed.
Use automation to reduce costs
Whenever possible, you should switch to automated options to manage tedious tasks and reduce the need for extra staff. A good CRM program, for example, can help to automate much of the lead nurturing process.
Let’s say that a prospective client fills their cart only to abandon it and exit your site. Your CRM system can send out a reminder a day or two later. It can also be used to send out information at different stages of the customer journey based on the client’s activity on your site.