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Top 7 Hiring Mistakes for Startups Avoid these pitfalls and build a team of talented employees.

By Brad Sugars Edited by Dan Bova

Opinions expressed by Entrepreneur contributors are their own.

Building great teams is never easy.

A quick look at the sports world confirms this. Coaches come and go, players are free to seek new teams and owners are free to sign players who fit certain roles within the limits of payroll.

In business, it's equally difficult. Even established businesses suffer from hiring and team-building mistakes. Unlike a startup, however, those companies can afford to make a hiring mistake without significantly impacting their overall operations.

Unfortunately, startups don't have that cushion of profit to cover up a hiring mistake. That's especially true in a small company, where one person who is not the right fit could mean that 25 or up to 50 percent of your work force is now a big problem.

The good thing is there are some hard and fast hiring rules startups should follow. Most hiring issues occur as a result of looking to keep costs down or not having a clear vision about what the business is and where it's going.

However, my experience has shown me that cutting corners in the hiring process now can mean trouble for the business later. To avoid trouble, here are the top seven hiring mistakes many startups make:

  1. Hiring someone just because you know them. This means friends, former co-workers, family members or your own children. For a husband, this means hiring your wife. For a wife, this means hiring your husband. Even part-time. There needs to be a certain sense of objectivity and accountability in the workplace. Friends and family expect to be treated to a different standard--and they should. Away from your business, but never in it.
  2. Hiring someone to "help them out." Some owners have loads of empathy for workers on the rebound, or people in trouble. Being a "savior" to help someone may not help your business. Instead, hire someone who can add value to the company and its operations. Those are people who are eager and willing to go the extra mile. They also won't be in trouble or looking to take advantage of what always turns into a bad situation.
  3. Taking someone on as a partner because you can't afford to hire him. Business can be hard enough as a sole proprietor, but don't think it's an advantage to bring on a partner, especially if you can't afford to hire him as an employee.

    If you do, you give up 50 percent of your company to someone who may or may not thrive in an entrepreneurial setting.

    An alternative is to outsource projects or work on a fee basis. Better yet, work out an arrangement at an advisory or coaching level. Then 100 percent of your company remains yours. Plus, it's easier to walk away if something goes wrong.
  4. Hiring someone to do a bit of everything. A "jack of all trades" approach is fine--for the owner. But the specific functions of a business need to be staffed with people who are specialists.

    Instead of hiring one person to do the accounting and administrative work, think of this as two jobs for two different people.

    The reality is most people simply don't have the skills or expertise to do a variety of jobs. The key is to find people with skills that complement your own, and put those people in specific jobs with specific roles.
  5. Top-down hiring vs. bottom-up hiring. This method of hiring also leads to getting people on the team who are generalists vs. someone who's the right fit for a single job.

    Hiring from the bottom up means filling specific roles with specific skill sets with people who will be doing jobs that are typically lower paying but take up large amounts of time. This frees you from having to do time-consuming tasks. It also gives people an opportunity to add value and expand their roles, which ultimately helps grow the company.
  6. Not knowing what job you want to hire for. Just hiring for the sake of hiring, or hiring a generalist to bring some order to your internal chaos, is not a hiring strategy--it's just more chaos.

    Clearly define roles for any new hires. Not only will you avoid hiring a non-productive person in an ill-defined role, you'll start attracting people who'll add real value to their role and your operation.
  7. Hiring for the job you hate. Earlier I said you should hire people with complementary skills. This doesn't mean you should hire someone to avoid doing what you may do best. In short, don't hire a bookkeeper when you know how to do the numbers--especially when your top line sales may be suffering.

In this case, you do the accounting and be on the lookout for a really great sales person. The growth in sales will fund the accounting position soon enough. But you won't get there having two people in-house skilled at crunching numbers.

Hiring is all about finding the right skills, personalities and attitudes to fit your overall vision and mission for your company. Having those two guideposts in place will make it easier to make good hires that will benefit your business in the long run.

Then you can own one of the few big businesses that doesn't make as many hiring blunders as your competition.

Brad Sugars is the founder and chairman of ActionCOACH. As an entrepreneur, author and business coach, he has owned and operated more than two dozen companies including his main company, ActionCOACH, which has more than 1,000 offices in 34 countries.

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