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What is the best way to hire people in the startup without pay?

Discussion in 'Planning Your Business' started by Master77, Jan 2, 2018.

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  1. Master77

    Master77 Member

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    What is the best way you found to excite people to join your team without giving up shares of your company in the start-up phase?
    I am the founder of the company but I am looking for others to join me to build this vision. I don't have loads of money to spend on salaries and I want people to bring value to the company. Recently someone asked for shares in exchange for their work but I haven't even seen their ability to work as they won't start until we agree on a compensation package. What has worked best for other start-ups? At this point, I would rather hire a social media company or learn the material myself than to give shares away to someone who has not proven they deserve them. Thoughts?
     
  2. djbaxter

    djbaxter Administrator Moderator Member

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    Interesting question.

    You might want to consult a lawyer. There is probably a way to offer some sort of compensation contingent upon that individual's contribution to your company.

    But I must say it doesn't surprise me that someone would be reluctant to work for you for free.
     
  3. Steve41

    Steve41 Member

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    Good Question Master77
    I have thought about this as well with my start-up and depending on what position you are hiring for here are a few options that may work for you:
    1. Sales Position - pay them per contract they sign, per new customer they acquire, per dollar they bring in per day/week/month etc.. This way you can almost ensure that your cash flows are maintained. You can also entice them with a bonus program if they hit certain targets.
    2. Assistants - you can go with Virtual Assistants who work on a set budget per task. I suggest here that you do the lion's share of the tasks yourself first, then start outsourcing them as you see fit.
    3. Marketing - This can be tricky and yes you will want them to see the vision of the company as you do, but as a start up I would say do what you can on your own and build some sales, then hire an outside contractor to manage it from there. Hiring a person or a team on your payroll would be risky as a start-up because you may need to pivot your vision/mission as you grow and they would have to pivot as well. With an outside marketing company you can switch to a different firm at any time with no recourse. Also, outside companies typically have more experience and resources available to them.
    Hope that was helpful.

    Steve
     
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  4. Master77

    Master77 Member

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    Hi Steve, Maybe you can know the company who working at outsourcing with startup's like mine?
    And another question, I need a lawyer who can make me a contract with my new employes, to working for the contract?
     
  5. Small to Feds

    Small to Feds MVP Member

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    Many of my start up clients and associated prospective employees utilize contingent hire agreements.

    A contingent hire agreement is one way to formalize a relationship with an experienced employee with the prospect of joining your firm at a later time when the business base is there to permit professional advancement.

    Under such an agreement the prospective employee agrees to contribute time and effort on an interim basis on a proposal or a market account and is assured on paper by the company of a position on the project or account(s) when are awarded to the firm.

    A free sample is located at the site linked below:

    SMALL BUSINESS FEDERAL GOVERNMENT CONTRACTING ("Smalltofeds"): Generic Contingent Hire Agreement
     
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  6. Steve41

    Steve41 Member

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    Hi Master77, without knowing anything about your company/startup I would suggest starting with a local company to outsource to. There's many advantages to using local companies.
    As far as your need of a lawyer, I'd say don't get too hung up on stuff like that as it is time consuming and energy draining. That stuff can all be worked out later. I'm not trying to say that contracts aren't important, It's just that in the initial stages its better to build sales and revenue and prove out your product/service before putting too much time into the legal aspect.

    Steve
     
  7. Master77

    Master77 Member

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    Hi Ken, Thank you for your help, but I think that this contract is not good for my beginnings in business.
    Did you manage to sign such a contract?
    It is the very interesting question.
     
  8. Master77

    Master77 Member

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    My business is connected with the sale of exclusive and expensive luxury goods. The check starts from 1 million dollars and more. profitability of its 30 percent. But I have a very bad website. And a bad marketing.
    And I really need a good team, to improve my site and improve my marketing but where could I find it without money?
     
  9. Steve41

    Steve41 Member

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    If I read you right it seems that you broker deals of expensive items between a seller and a buyer. If that is correct and the profit is 30% that would mean you would make $300k off of one deal. If that is true then you could buy the best marketing team and best website money can buy. Sounds to me that if you can get that first sale done then your money troubles would be over.
     
  10. Small to Feds

    Small to Feds MVP Member

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    Master 77,

    Thanks for the feedback. The contingent hire agreement I offered is an example. It is utilized regularly by my startup clients who cannot afford to bring individuals on board, but who need to offer expertise in their marketing and proposals to prospective clients. The prospective hires who sign on are willing to let their resumes be used and in many cases assist with the effort to obtain the new business (marketing, presentations and the like) They are assured by the agreement that when the new business materializes they will be on the payroll. The strong point in this approach is that it is tied to a particular project or client and both parties to the agreement believe there is a strong possibility the work will materialize.

    I have used this approach for over 20 years and signed many agreements in the format you see. Ken
     
  11. Master77

    Master77 Member

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    You right!!! But first, i need to sell it at once!!!! If I did it I didn't ask a mentor question for this situation.
     
  12. Master77

    Master77 Member

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    That is, this is a typical example. Thanks for your idea and the fact that you shared your experience. It is very important for me as a beginner businessman without money...
     
  13. Justin Hazellief.

    Justin Hazellief. Member

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    I hate to say it but, if you really need help and can't pay them then giving up partial ownership might be your best option. By having a share in equity this person will be more motivated to do their best. Far better than somone not getting paid will do. Owning half of something is better than owning all of nothing. Find the best person who can do all the things you can't. They will help you grow bigger than you could without them. Make sure you share the same values.
     
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  14. Master77

    Master77 Member

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    Are there examples of such contracts?
     
  15. Ramona Vandusen

    Ramona Vandusen Member

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    On the off chance that you have awesome work to offer and time to tutor and guide another, contracting understudies is a contrasting option to paid colleagues. A reasonable number of understudies will work for nothing as long as your work will help their resume and propel their future profession.
     
  16. Edvin

    Edvin MVP Member Top Contributor

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    Hi Ramona, thank your providing another perspective.
    Indeed, I recall reading that hiring interns and treating them like royalty is a great way to find and acquire top-performer talents.

    I've thought about giving back and leveraging interns; but, in U.S. employers must be aware of Fair Labor Standards Act (FLSA) with regards to unpaid interns. If the intern is contributing to business operation (i.e. filing, documenting, emailing, etc), then the intern is entitled to minimum wage and overtime, which employers must comply with. So, for all intents and purposes, interns are no different than any other employees; if it walks like a duck and quacks like a duck, then it must be a duck.

    Unpaid interns may shadow employees and engage in none-operational activity; such as pass me the pen; or decorate the office for season holiday where the business would normally not under take and its business operations would be unaffected.

    The benefit of interns in US, according to Employer Guide to Structuring a Successful Internship Program, is that employers have the opportunity to evaluate and screen potential employees prior to making a fullā€time position offer, which leads to financial savings.

    ---EDIT---

    Your posting does make me wonder if I can have an "unpaid-to-paid-internship" position. That is, the unpaid intern can shadow me until I feel s/he is ready for hands-on training, in which s/he can turn into paid intern. Obviously, this need to compliance with labor law needs to be verified.

    Perhaps a better approach is to hire an intern with a contingency. For example, the job shall require that in lack of experience the candidate must become google adword certified, a self paced online course, before starting employment.
     
    Last edited: Jan 11, 2018 at 6:05 PM
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