Myth: You Need to Hire a Bunch of People to Scale and Expand Your Business

Building a business is a long process. Many good ideas die simply because people aren’t willing to hustle—or to hustle long enough. It’s on you and your co-founder to hit the pavement, listen to your customers, and close the deals you need to achieve the market credibility required to move your business forward. And as you add a few customers, you might want to start thinking about what you can do to scale and expand your business. Hint: It doesn’t mean hiring a bunch of people.

The Systems Principle  

I remember when our business started getting too big for me to handle by myself. It was a pretty great feeling, actually: we had so many sales leads that I was having trouble keeping track of them. And apart from our source code, sales data was probably the most important information we had going.

It really wasn’t that many prospective customers—maybe fifteen to twenty-five—but knowing their details, where they were in the sales process, and what I had quoted them was getting beyond my current method of writing an email to myself with all that information. I was losing track of when I had last spoken to a customer and forgetting to follow up efficiently.

You’re probably like, “How did this guy not manage to keep this organized in his head?” I know it seems pathetic, but you have to remember that I was also covering six or seven functional units—sales, marketing, HR, legal, implementation, et cetera. I was our exclusive salesperson and did everything from finding customer contact information (prospecting), to running demos of the software, to closing the deals. Oh, yeah, and I was the primary customer success contact for our clients, too. The entire project—everything from the signed contract to going live in the app stores— was managed by me, Co-founder Dave. Things were getting missed, and it wasn’t acceptable.

My first (terrible) instinct was that we needed to hire someone. Surely we could bring someone on who could not only manage this information but also start drumming up business of their own.

Thankfully, Chris saved my butt—our butts—again. He knew that just bringing someone on to AppArmor was a bad idea. He stressed that our best move was to create systems around our work. The next day, I signed up for a free CRM system that spoke to our G Suite email platform.

While it wasn’t the best piece of software, it did what I needed, and my interest in hiring someone to help me faded away.

The systems principle is a cornerstone of a different business: Avoid hiring by implementing systems to move your business forward. Hiring people is not the first step in scaling your business.

Systems take on different forms. Don’t get caught up with how grand the term “system” is; we’re talking about processes, methods, or ways of doing work that make you more efficient and don’t require more people.

More Headcount, More Problems

As time would go on, focusing on the systems principle would continue to serve us well. It turns out that using systems is vastly less costly than bringing someone on, in terms of both time and money.

For a bunch of reasons, hiring is hard. Any businessperson will tell you that managing the people at the organization is one of, if not the, most difficult and time-consuming processes of business. Here’s why adding people is brutal, especially early in your startup’s life:

• It’s a material investment: You have to invest a lot of time and money into finding, interviewing, negotiating, training, and managing. The average cost per role, according to the Society for Human Resource Management, is $4,129 per job—ouch. You also won’t have an HR officer because you don’t have the cash, so you’re doing this yourself. Even if you hire an HR officer first, you absolutely still need to be actively engaged in the recruitment and ongoing HR needs of your company. There are no no-brainers in HR.
• Systems are needed for staff to be successful: You can’t just plop folks into your company and expect that they know what you’re doing and what your business is about. They need guardrails so they can become autonomous, so you can do your work, and so you all can move your company forward. If you don’t have structure, you’re toast. While you may thrive in ambiguity, your staff prob ably won’t.
• Your company is uncultured: When you start bringing people on, they need to feel a part of something and have a general sense of “what they’re doing there.” The fact is you’ll have to make an enormous investment into your culture for people to want to stay. Otherwise, you’ll be stuck in the revolving door of talent acquisition.

Here’s the thing, though: you’ll want to hire people. So. Bad. You’ll be drawn to it like a moth to a flame. I bet that even now, when you imagine your business booming, you see a big office with lots of people doing stuff. One of the strongest temptations you have to resist as a founder is the desire to hire people when you get busier.

Why is this temptation so real? As usual, it’s about perceived credibility, validity, and legitimacy. Headcount is one of those nonsense startup things that you think brings you credibility when it really doesn’t. Headcount is the ultimate vanity metric. People will ask you, “How many staff do you have?” You’ll find yourself trying to find ways to exaggerate the number; you might have three people including yourself but say, “We have a headcount of seven,” so that you can seem more impressive. (I still get this question now, even after the exit. We had a headcount of twenty but actually sixteen staff when we were acquired.)

This is total garbage. Why are we trying to impress people with how many staff we have? Is it actually an indicator of stability, solvency, or success? Straight up: It’s not.

Profit is the marker of legitimacy, not people. One thing is for certain: the more you rely on people and the more you hire them in anticipation of growth, the further you will be from profitability and being a different business.

Bigger Teams Make Bigger Problems 

The final thing to “get” here in this people-versus-systems argument is that there’s another underlying and pervasive myth about adding team members: throwing people at problems solves them. That’s very unlikely, particularly based on where your company is at this stage. Even the biggest companies with some of the most talented employees on the planet still have failures when they attack big problems with more people. Bigger teams increase complexity and costs and sometimes fail to solve the business problem. It’s one of the reasons for the concept of a skunkworks unit: a small team separate from the big company is needed to actually produce results.

I’m not saying that it’s impossible that a bunch of people could help. You could hire a “unicorn” star employee and be killing it in a month, but that’s super unlikely. Also, it’s scalable, Systems scale, whereas people substitute in when you can’t adequately figure out an efficient system. If you’re finding you need to keep hiring a bunch of people for your company and it’s outpacing your revenue, then you may have to confront a scary reality that your business may not be scalable, or at the very least needs a fresh approach or tools to reach the next level.

Let me be clear: I like people. Going to work with an awesome team is the best feeling ever. And, yes, you will eventually need more people. But don’t go there till you need to; first, figure out how to operate the business with automated, efficient systems. You’ll need those methods and systems anyway so that staff can come in and do their jobs. It’s not realistic to imagine an employee as a “jack of all trades”—you’ll need specialists. You need to put new staff in a position to be successful when the time comes.

And when does the time come? There’s a pretty easy way to know when you need to start growing the team: you’re working your butt off every day trying to keep up with your customers. You see the physical and mental limit of your ability to do the required work. You are also running out of “low-hanging fruit” business problems around which you can build systems. Then it’s time to start adding to the team.

Excepted from Startup Different: The Myth-Busting Blueprint for Your Multi-Million-Dollar Business by David and Chris Sinkinson.

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