July 26, 2020
Finding the right talent for the right job is one of the most challenging and rewarding part of building startups. Founders spend a whopping 40-80% building teams & talent. According to startup statistics, about 10% of startups fail within the first year, and a staggering 70% fail during the next two through five years. Limited skills and running out of funds are some of the main causes cited for these failures. In the past, when it comes to talent acquisition, there were two main options – build and buy.
The build process is a traditional way of acquiring talent through the standard recruiting process. It takes anywhere between 2 to 4 months and costs ~$20-$30K, hiring through this process. This works well when the business strategy and talents needs are clear.
To reduce the recruitment time, many organizations use the alternative – buy option. This helps to recruit faster through staffing firms, agencies or consulting firms. According to the UpWork’s recent workforce report, it takes 20+ days to recruit talent through the staffing firms. But, it comes with up to 80% markups. This approach provides relatively faster access to talent, but higher cost over the period.
These two options work well for larger organizations with a clear business strategy for the next 2 to 5 years. But, startups work in a fluid environment, which changes fast. Startups need more flexible talent options.
The technology advances are paving a new way of talent acquisition that is faster and cheaper compared to alternatives. This option, sometimes referred to as the “borrow” strategy, connects organizations directly with the freelance talent, cutting off the middleman. Since there is no recruitment or procurement process involved, organizations can instantly access talent with 30-50% cost savings. The flexibility also offers additional advantages for scaling up or down quickly.
The three options – build, buy and borrow have their own pros and cons. Startups can benefit by picking the right combination based on their unique situation. For example, you can use the build and buy options for strategic initiatives, and borrow for tactical activities.
Alternatively, you can also use certain strategies for certain functions such as product development, marketing, sales, etc. For example, you can use the build option for product development, buy option for marketing, and borrow for support functions.
Once the right combination is identified, you can customize the talent mix for your unique needs. Below is a sample talent mix for startups.
Bootstrapping – early-stage startups work with limited resources, and are mostly bootstrapping. Using on-demand talent for activities such as creating an MVP may help keep the startup costs low and reduce risk. If there is no market demand, you can easily move on with less impact.
Seed – During the seed stage, startups evolve with a validated product and customer traction. This is a good time to start building internal teams. You can build internal teams for core functions such as product development, and use on-demand for activities such as sales & marketing efforts.
Series – During this stage, startups are in a growth mode with proven market demand, customer base and recurring revenue. The startup environment is much more stable with long-term business strategy and clear talent needs. This may be a good time to re-adjusting the talent acquisition mix with more internal teams.
As startups move through different stages – early stage, traction, growth; there are always needs for new talent to either fix the existing gap or fill new opportunities. The on-demand option can come in handy as a quick fix solution. The on-demand option can come handy as a quick fix solution.
As a startup grows, the need for new talent also grows. For example, expanding to a new market, creating a new product line, or technology upgrades all require talent.
Sometimes, the needs are short-term, just required for a few weeks or months. Instead of investing too much, you can leverage on-demand talent to quickly satisfy the needs.
Some initiatives such as technological upgrades may require benchmarking with different technologies before picking the best. Startups can leverage the huge freelance talent for creating prototypes and gathering necessary data towards benchmarking.
Having the right talent at the right time helps solve problems faster, achieve growth and improve overall business success. Today, when it comes to talent, there are many options available. By choosing the right combinations, startups can avoid talent constraints that hampered the growth in the past. FreelancingTeams is an on-demand platform that can help adopt, fix and grow your startups.
The main question is what is your talent mix?