In the early days of a business, two problems dominate: not enough money, and not enough people. Start-ups cannot match the salaries, brand names and job security of established employers. Yet the first ten or twenty people a business hires shape its culture, capability and trajectory for years. Get them right, and the business has a committed core that can carry it through hard times. Get them wrong, and the founder spends years managing problems instead of building the business.
This article draws on lessons shared by founders of fast-growing start-ups, together with established management practice, on how to attract people to an unproven business, whom to hire, how to train and develop them, how to reduce attrition, how to use equity and how to design roles around each person’s strengths. It also notes Australian legal requirements that founders must respect.
Attracting people to an unproven business
Without a big brand or high salaries, start-ups attract people with vision and belief. One Indian founder has described how, in his company’s earliest months, he persuaded a small group of capable people to join a venture that could not yet pay them well. He did it by explaining clearly:
- What problem the company would solve, and why it mattered.
- Why he believed the team could solve it, with evidence of the opportunity and capability.
- What people would gain: learning, responsibility, growth and a share in success.
Founders recruiting early team members should do the same: tell the story of the vision, make people believe it can be achieved, and be honest about the risks and rewards.
A note on Australian law. Founders and co-owners can choose to work without pay, but employees cannot. In Australia, employees must be paid at least the applicable minimum wage or award rate, along with superannuation and other entitlements. Equity or deferred rewards can supplement fair pay, but cannot replace legal minimums for employees. Unpaid “trial” work beyond a brief, genuine skills demonstration is generally unlawful. Get advice before structuring early employment arrangements.
Whom to hire
People who put the organisation first
For leadership roles, look for people who are not selfish: people who put the organisation’s interest first, their team’s interest second and their own interest last. A common analogy is military leadership, where officers are trained to put the mission first, their people second and themselves last.
People who believe in the purpose
People who genuinely believe in what the business is trying to achieve work harder, persist longer and stay through difficulties. Test for this in interviews: why do they want to join this particular business?
Happy, high-energy people
Energy and positivity are contagious, especially in small teams under pressure. People who stay constructive in tough times lift everyone around them.
Attitude over skill, within reason
Many founders say they hire primarily for attitude, values and energy, because skills can be taught but character rarely changes. One founder has observed that, despite years of effort, people seldom fundamentally change their values or motivations. It is far easier to identify the right people at interview than to change the wrong ones later. That said, some roles require specific skills from day one. Balance attitude and capability sensibly.
People with ownership
Ownership means treating the business’s outcomes as personal responsibility. People with ownership follow through without being chased, fix problems beyond their job description and raise issues early. Cultivate ownership in everyone, and hire for it in leaders.
Aligning people with the business
Even well-chosen people can drift from the business’s priorities. Keep them aligned:
- Give direct, timely feedback when behaviour or decisions conflict with the business’s interests or values.
- Explain the team context: how each person’s work affects others and the whole.
- Reinforce the purpose regularly, through stories, goals and recognition.
Building a training culture
Training is one of the most important investments a growing business can make. In small businesses, managers usually train their own teams. As the business grows, more structured training processes are needed. Three types of training matter:
- Functional or behavioural training: customer interaction, business etiquette, communication and teamwork.
- Product training: deep knowledge of the products and services, their features, benefits and uses.
- Process and skills training: how work is done, including procedures, systems, tools and technical skills.
Some fast-growing businesses commit to every employee receiving training regularly, for example a couple of days each month. Whatever the amount, make it regular, practical and linked to the work.
Cross-skilling and job rotation
In small organisations, encourage people to work across functions such as operations, sales support, administration, reporting and technology. Cross-functional experience:
- Helps people understand how the whole business works.
- Builds flexibility to cover absences and peaks.
- Develops future leaders with broad perspective.
- Keeps people learning and engaged.
Some organisations rotate roles deliberately, partly to prevent stagnation. People who stay in one narrow role for many years can become set in their ways and resistant to new ideas. Rotation keeps learning alive.
Reducing attrition by listening
People most commonly leave because of their relationship with their manager or the working environment. The single most effective retention tool is listening: regular conversations in which managers ask about problems and frustrations and genuinely consider them. You will not always agree, but listening and working through issues together resolves many problems before people resign.
Using equity to attract and keep people
Many start-ups offer equity, such as shares or options, alongside salary. Equity:
- Lets cash-constrained businesses offer meaningful rewards.
- Aligns employees with the business’s long-term success.
- Can become a major source of wealth for early employees if the business grows.
Some founders explicitly tell new hires that they may start below market salary, reach market rates within a year or two, and earn well above market over several years through salary growth and equity. Some companies also allow employees to sell a portion of their vested equity periodically, so that the reward becomes real before any eventual sale or listing.
In Australia, employee share schemes have specific tax rules and, for eligible start-ups, concessions. They also require proper legal documentation. Get professional advice before offering equity.
Getting the best from key people: designing roles around strengths
Every business has a few people who combine high potential, strong performance, skill and commitment. Some business educators call them a business’s “jewels”. Getting the most from them is one of the highest-return activities a leader can undertake.
Step 1: Identify your key people
List the people with the greatest potential, performance, skill and will. In a small business, start with one.
Step 2: Map strengths and weaknesses
For each person, identify which competencies are strong, say 7 or more out of 10, and which are weak, say 3 or less out of 10. A brilliant data analyst may be poor at sales. A natural salesperson may struggle with spreadsheets. A gifted trainer may be a hopeless cook.
Then design work accordingly: give people work in their areas of strength, and minimise work in their areas of weakness. You cannot make everyone good at everything, and trying wastes talent. People working in their strengths often produce several times the output of people forced into roles that do not suit them.
Step 3: Understand what drives them
A simple framework is to explore four areas:
- Recreation: what they enjoy doing.
- Aspiration: where they want to go.
- Proficiency: what they are expert at.
- Problems: what they dislike doing.
Then consider their needs, interests, concerns and expectations, which are the connectors that link their motivation to the business’s goals.
Step 4: Prepare the conversation
Before discussing a new role, prepare. Note the person’s past achievements, strengths and contributions over recent years. Opening with genuine recognition builds trust for the conversation that follows.
Step 5: Co-create the role and goals
Work with the person to redesign their role and goals around their strengths and aspirations, with clear measures of success. People commit to roles they help design.
Step 6: Schedule the follow-up
Set a date to review progress, and keep it.
Onboarding: the first ninety days
The first three months determine whether a new hire becomes a committed, productive team member or leaves early. A structured onboarding plan makes a large difference:
- Before day one: prepare equipment, accounts, a desk or workstation and a written plan for the first week. Send a welcome message.
- Day one: a personal welcome from the founder or manager, introductions to the team, an explanation of the business’s purpose, customers and values, and a clear first task.
- First week: shadowing, product and process training, and a buddy who can answer everyday questions.
- First month: small, meaningful assignments that build confidence, with frequent check-ins.
- Thirty, sixty and ninety-day reviews: conversations about what is going well, what is difficult and what support is needed.
Early-stage businesses often neglect onboarding because everyone is busy. Yet a few hours of preparation save weeks of confusion and reduce the risk of losing someone the business worked hard to recruit.
Employees, contractors or outsourcing?
Not every early need requires a permanent employee. Consider the options:
- Employees suit ongoing, core work that the business must control and develop over time.
- Contractors and freelancers suit specialised or variable work, such as design, bookkeeping, marketing or software development. Be careful to classify workers correctly. Calling someone a contractor does not make them one if the relationship is really employment, and misclassification can bring back-pay, superannuation and penalty liabilities.
- Outsourced services, such as payroll, IT support, accounting or manufacturing, let a small team focus on what it does best.
- Part-time and casual roles can provide flexibility while the business’s workload stabilises.
A mix of a small core team with trusted external partners often gives early-stage businesses the best balance of capability, cost and flexibility.
Common early-hiring mistakes
- Hiring friends or family without assessing fit or capability, which can strain both the business and the relationship.
- Hiring in a hurry to relieve workload, then living with a poor fit.
- Hiring people exactly like the founders, creating blind spots.
- Unclear roles, so new hires do not know what success looks like.
- Over-promising about pay rises, equity or growth that may not materialise.
- No written employment contracts, or contracts that do not reflect awards and entitlements.
Measuring people’s contribution
Owners can work with managers to create simple measures, such as revenue per employee, cost per hire, profit per employee and productive time ratios, that show how the team is performing and where to improve. Measures should help people succeed, not watch them constantly.
A worked example
A software and engineering services start-up has six people and needs to grow to twenty within two years. The founders cannot pay top salaries. They write a clear vision statement explaining the problem the business solves for manufacturers, and use it in every interview. Interviews focus on values, ownership and learning ability, with a practical exercise to test core skills.
New hires are paid fair market-entry salaries with a documented path to market rates and a small option allocation under a properly structured employee share scheme. Each person spends time in customer support, project delivery and internal tools during their first year. Monthly one-to-ones focus on what is working, what is frustrating and where each person wants to grow. The founders map each key person’s strengths and redesign two roles: a strong engineer who disliked client meetings moves to lead internal tooling, while a technically capable team member who loved client work becomes the first account manager. Both thrive.
After two years, the team has grown to twenty with low turnover, and several early employees have become team leaders.
Summary
Early team members shape a business’s future. Attract them with a compelling vision and honest discussion of risks and rewards, while respecting employment law. Hire for purpose, attitude, energy and ownership, and keep people aligned with direct feedback and a shared purpose. Build a training culture covering behaviour, product and process, cross-skill people, and reduce attrition by listening. Use properly structured equity to share success. Identify key people, design their roles around strengths and aspirations, and co-create goals with them.
Sources: small-business training notes on building manpower in a start-up and cultivating key team members, including lessons shared by an Indian start-up founder, adapted to Australian employment law requirements. This article is general information, not legal, tax or HR advice.
