Guest author Gary Whitehill is Entrepreneur-in-Residence at Startup Weekend.
Struggling entrepreneurs around the world are in deep envy of Nick D’Aloisio’s business acumen. Last month, the 17-year-old sold Summly, his news-aggregation app, to Yahoo for a reported $30 million! If and when D’Aloisio starts another company, it will certainly be, to put it mildly, well-funded.
Of course, most entrepreneurs do not have access to that kind of cash. The average business takes years to break even, let alone post a profit. Two-time entrepreneur Jordan Eisenberg, founder of UrgentRX warns that, “Few things in a start up are more important than carefully managing cash. At the beginning, before you have investors, it is not unusual for you (and possibly employees) to forego salary for extended periods of time. Do whatever it takes to build your product and get it to market.”
While the founders of a company might be willing to forgo a paycheck for months on end to get their business up-and-running, their employees may not be so eager to make that sacrifice. To get workers to go along, cash-strapped entrepreneurs have to get creative.
Many startups simply do not have the money for any kind of traditional compensation plan. That’s why so many entrepreneurs try to leverage equity. Taking on co-founders or compensating employees with a stake in the company can be a viable initial fix, but it isn’t always sustainable.
Fortunately, there are other low or no-cost alternatives to get people to do work on your startup.
StartupDigest, for instance, champions the Curator Model. The company finds talented individuals to manage or “curate” the digest for their home cities. Curators receive no financial compensation, yet management insists volunteers line up to lend a hand. Why? Because the platform lets curators distribute digests in their own names. It’s a win-win transaction in which no money changes hands.
As long as a curator is not a potential competitor, it allows collaborators to self-promote/and leverage the company’s rolodex in exchange for some form of labor. When an employee or partner wants to spend his or her time performing tasks you need done, the need for monetary compensation can drop out of the equation.
Colleges and universities can also provide free labor in the form of interns. Offering mentorship in exchange for help at the office can pay divdends, especially since many college students bring a deep grasp of social media and other technological chops that make them capable of much more than just making coffee.
Sometimes startups need to hire real paid employees. To land high-caliber talent at a rate you can afford, make your startup worthy of others’ personal investment.
‘Life hacks’ don’t cost a lot of money, but can make working at a startup more desirable than a better-paying position at a staid old-guard firm. Silicon Valley companies like Google and Facebook are well known for providing employees with everything from in-house chefs to daycare. Those are expensive, but ther are other tactics available:
• Flexible scheduling: Startups aren’t a 9-5 job so let employees come in when they want.
• Remote working: Forget Marissa Mayer. If employees are productive at home, let them work from there when they need to. At least they won’t leave to go work at Yahoo.
• Public recognition: Praise in front of others for our efforts is an innate human need – leverage it to build loyalty!
Focus on offseting lower wages with fun, engaging and accommodating perks that don’t cost the company a lot of money. It’s the best way to compete for the talent you need.
Not evey candidate will sign on to a vow of poverty to work at your company, but there are people out there ready to take a bit less in order to become part of something special.
Image courtesy of Shutterstock.