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Paying Employees During the Startup Stage

When getting your company off the ground, there are ways to compensate workers that won't break the bank.
June 7, 2004
URL: http://www.entrepreneur.com/article/71108

Q: I need to hire three employees to help get my business started, but I don't have enough financing to pay the salaries for all three. Should I try to raise more money before hiring anyone or should I hire just one employee and hope that I can make it work with limited resources?

A: Every entrepreneur faces the question of how to pay employees during the startup stage when money is tight and the business has yet to prove itself.

You'll be able to determine the right answer to your question by understanding the nature of your business and your appetite for risk. If your business growth is best executed in small steps, your staffing strategy should be very different than if your business needs financing in large portions. For example, if your business is a restaurant, it would be foolish to try to launch it without adequate staff and equipment. Alternatively, a one-man army could be the best way to start an import-export business or consulting practice.

If you're convinced your business needs three employees to get off the ground, you shouldn't launch it until you can hire all three. This is a surefire way to increase the possibility that your business will fail due to poor execution. If you don't have enough money to pay for three employees, there still might be a way to make it work. Here are some creative ways to compensate your employees during the startup stage: