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Staffing Strategies for Cost-Effective Startups

In today’s fast-paced business world, startups have been at the forefront of workplace innovation. With remote work now forced upon many companies, staffing has become even more critical. However, it’s also the most underdressed cost structure many startups face. Startups often pay enormous premiums for full-time employees, even if they no longer need them to work full-time. It raises questions about the efficiency of spending all of people’s time and the importance of work-life balance in the workplace.

One concept many startups have adopted from the manufacturing industry to challenge this problem is hourly or project-based work. This model originated from the need to create products for a certain amount of hours, and workers were paid hourly. However, when people moved into offices, they still retained the manufacturing mentality, which required a person to sit in a seat for a certain number of hours to produce value units. Although the workplace has evolved, this model is still prevalent today. Startups must ask themselves why they are paying for it when they could cut their costs in half by only paying for the value they need.

Hiring an agency can solve the problem by providing the demanded amount of time that allows paying exactly for the time a startup needs. This way, it brings a net benefit to the employee, the contractor, and most of all to the startup, as they are not paying twice their hourly rate for half the time.

Startups often struggle to find the right talent for their team, especially with a limited budget. Well-developed companies often hire developers, marketers, and other positions simultaneously, even if they do not need all these positions. It is tempting for founders to copy this approach to fill poorly defined roles, but this is not sustainable. Having a limited budget and not having an attractive job offer to specialists makes it easy to make things work with the right support. A great example is what Ragnarson does when providing software development teams to startups working on their MVPs. With specialized external teams, many top European startups could get their ideas off the ground when not having in-house software dev specialists.

When often facing difficulties in raising funds to pay for their team, there are more startups can do to manage their staffing. It is even more relevant when especially at their early stage, many startups struggle to cover the team costs, which is far more than they need at that given point. In truth, it may be a bit stupid to waste energy to raise funds by giving up equity or spending their time and effort to cover unnecessary labor costs instead of building their business.

In the case of startups, the concept of full-time employees also raises questions about inefficiency in the workplace. On the one hand, when keeping people on site, when many tasks are not suited to the full-time working schedule, startups often fill employees’ time with tasks that are not their specialties or that they are not good at. Instead, startups should focus on what functions they need most at that moment and contract with the least amount possible to get the most value. The temptation of tightly filling teams’ calendars with any work results in employees burning too much of their time, often doing very unconstructive things. And such a situation is not at all favorable either to startups or to employees.

In such circumstances, startup teams should focus on one thing instead of multiple things. Although this may not be the reality of the world anymore, there is still a lot of value in focusing on a single thing. What founders should foster is to create pitch decks that focus on using funds to achieve a particular goal, not team building.

Setting a strategy for getting big deals done is crucial for startups. Many aspects of it require a single person to handle, such as leading tech development or recruiting. Founders may also struggle with the highs and lows of their contribution, with some periods where their time is well-utilized and other times where it is not. Hiring people for many unclear roles in a startup is always a shortcut. Still, in the end, it turns out to be expensive, non-efficient, and, above all, paradoxically doesn’t make startups more professionalized. 

In conclusion, startups face many challenges in staffing and raising funds, especially in today’s remote work environment. The importance of work-life balance and focusing on one thing rather than multiple things cannot be overstated. Startups must carefully consider the value of full-time employees and ensure they are paying for the value they need rather than all people’s time. By adopting these strategies, startups can build successful businesses and achieve their goals.


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