The pressure to hire
When business growth starts to accelerate, founders come under increasing pressures. There are more customers to service, product improvements to implement, the website desperately needs updating and you can’t remember the last time you went to bed before 1am.
Founders get to the stage where they need to hire.
Hiring is often seen as a sign of success. Yet for many startups, hiring too early, hiring the wrong person, or hiring for the wrong reason can create more problems than it solves. Before posting that job advert, there are a few important questions to answer.
Do you need to hire at all?
Hiring is not the only way to increase capacity. Before committing to a permanent employee, consider freelancers, consultants, contractors, agencies, AI tools or part-time specialists. These options can provide expertise and flexibility while reducing financial risk. For many startups, they can be an effective bridge until demand is more predictable.
Can you afford it?
For many startups, staff costs are the single largest expense. It isn’t just the salary; a £50k employee is likely to cost around £70-80k when you take into account National Insurance, pension contributions, recruitment costs, IT equipment and training. Then there are the ‘invisible costs’; how much of your time as a founder you will spend managing them, reviewing their work and dealing with staff issues. Our rule of thumb is that staff will generally cost double their basic salary.
What problem are you trying to solve?
Founders often reach the point where they feel overwhelmed and assume the solution is to hire another pair of hands. However, being busy and needing an employee are not always the same thing. Sometimes the problem can be solved through better processes, automation, outsourcing, or simply by focusing on fewer priorities.
Before hiring, take a step back and ask yourself a simple question; what is the bottleneck holding the business back?
Start by identifying which activities create the most value for the business and which consume the most founder time. If you’re spending evenings preparing customer proposals, perhaps you need administrative support. If customers are waiting for product updates, additional technical resource may be required. If demand is growing faster than you can fulfil it, operational capacity could be the constraint.
The key is to hire against a specific problem rather than a job title. A clear understanding of the challenge you’re trying to solve will help determine whether you need to hire at all, what skills are required, and how success should be measured once the new person joins.
Who should your first hire be?
Your first hire should always be selected on the basis of the problem that you are trying to solve. Most often (but not always) this is product development. If you’re a deep tech startup it may be a scientist or engineer, if you’re a SaaS startup it might be a developer.
Founders often say, “I need to generate more sales, so I need a sales manager.” While there are exceptions, early-stage sales are often best led by the founders themselves. They understand the product, the market and the customer problems better than anyone else. In many cases, hiring in another function can free up founder time to focus on revenue-generating activities.
The next question is around experience levels; should you hire a grad, or someone more experienced? The first hire answer is generally in the middle ground; you want someone capable of working autonomously without continual babysitting, but equally you don’t want to blow your budget on someone with 10+ years in industry.
Last, but by no means least, when hiring into a startup, you shouldn’t just be looking for technical expertise. You need someone who is adaptable, pro-active, and who can pick up tasks that may not be in their immediate comfort zone. And as obvious as it sounds, you also need to hire someone that you like.
Hiring quickly
Once you can afford to hire and have established what function and experience you’re looking for, it’s tempting to rush in and fill the position immediately. There’s no doubt that a good hire will help accelerate growth in your business, but a bad hire will waste both time and money.
You’ve gone this long without hiring, it’s likely that a few more months won’t make much difference, so don’t feel like you have to hire the best of a bad bunch if that’s what you’re faced with in your first round of interviews.
What if your new hire isn’t working out?
At the end of the day, you can only discover so much about a person through the interview process. As good as someone appears on paper, or in interview, they may simply not fit your business when it comes down to it.
A poor performing hire must be addressed quickly; make sure that you set measurable KPIs and have regular reviews with your new hire during their probationary period so that their understanding of their own performance is aligned with yours.
As difficult as it is, parting ways with a poor hire must be done as quickly as possible, and in line with relevant employment law, enabling you to recruit someone more suited to the position.
Hiring after investment
A rapid injection of cash from an investor often comes hand in hand with an agreed business growth plan, which involves hiring. You’ve got the money so now you need to hire in order to deliver growth. This is often where we see the biggest pitfalls.
It’s worth taking a moment to re-read the section on “hiring quickly.” This applies even after investment.
One of the interesting foibles of hiring after investment is salary. Your business has the funds, it can afford to hire more experienced staff on larger salaries. If you are using a recruitment agent then they will encourage you to offer larger salaries as they will take a percentage cut of this; the higher salary you pay, the more your recruitment agent will earn.
Offering higher salaries will attract better candidates, right? Not necessarily. Offering higher salaries may attract a larger pool of candidates, but the best startup employees are often motivated by learning, ownership and the opportunity to help build something from the ground up.
We aren’t advocating poor pay, but it’s important to hire people who are going to thrive in a startup environment and, as we mentioned earlier, those who are adaptable and pro-active. Incentives can be given in the form of share options, annual bonuses and career development opportunities.
The fine print
Hiring is not just a commercial decision; it’s a legal and operational one too. Employment contracts, probation periods, pensions, holiday policies, performance management and workplace procedures all need to be considered before your first employee joins. While these topics may feel like a distraction from building the business, putting the right foundations in place early can prevent costly issues later.
If you’re based in the UK then you also need to bear in mind that new employment laws are coming into place on 1st January 2027.
Hiring Strategy
The best hiring decisions start with a clear growth strategy. At TREE Strategy & Coaching, we help founders identify the roles, capabilities and organisational structures needed to support sustainable growth. If you’re considering your first hire, or planning to scale after investment, we’d love to help.