Why startups should stop hiring people

Table of contents

Final thoughts on alternative hiring

Relax, we’re not suggesting startup founders not hire anyone ever. But it’s vital to reconsider the old hiring practices that are making less and less sense in today’s economy.

The employment landscape is changing and evolving. Full-time employees are working remotely more than in the office, with 28% switching to a hybrid model, and 16% of companies working fully remotely without an office at all, according to Forbes. McKinsey reports that 36% of the US workforce identifies as independent workers, meaning they are working on temporary gigs and freelance.

For startups, the new hiring and employment trend could be a game changer and an upgrade from how things were done in the past.

But how did companies hire employees traditionally?

Before, hiring always followed a clear pattern:

Create a job application and post it on job portals
Sort through candidates’ applications
Run a series of interviews
Make an offer
Onboard the new hire for 1-3 months
Start the active working process

Combined, these steps could take up to 6 months or even a year for senior hires.

This process is very much alive and well today, and most employees who are hired full-time go through this circle. For medium and large businesses, such an approach to expanding the team is still working well, despite its length and the costs involved.

For startups, however, spending months and thousands of dollars on hiring can be detrimental. There is no guarantee that the final hire will be a good fit, and by the time you realise it, the resources are wasted, the momentum is lost, and the competition is getting ahead.

At Emphasoft, we work with countless startups, and we found that many founders choose traditional hiring for two main reasons:

It’s how they know things are done in companies they look up to, so they mimic the process.
Vanity factor. Having a full-time team is often perceived as a symbol of entrepreneurial success, just like having a fancy office.

Here is why alternative hiring is better for most startups:

There is no workload yet to justify a full-time position.
Why hire full-time when there’s only enough work for 15 out of the 40 hours?
It’s a huge resource saving.
The process of hiring is expensive by itself. You need to pay recruiters, and online platforms, and dedicate your own time to final interviews too. Additionally, you’ll be paying not just monthly salaries, but also taxes, health insurance, and other benefits. Investopedia calculated that the average cost of recruiting an employee is $3500.
Risk management.
ind of linked to our previous point – hiring full-time is expensive, and a large team puts immense financial pressure on the startup.
Termination flexibility.
Depending on where you are, you might be forced to pay up to a year of the employee’s salary if you want to fire them and wait for several months before you can do that. While it’s mostly relevant to Western Europe, termination costs can be high anywhere. So if you just need someone for a project or short-term, hiring them full-time would be a mistake.

The beauty of freelancers and contractors is that they can do almost anything for your startup:

Accounting and taxes
Marketing campaigns
Website management
Business consultancy
Design (graphic, product, UI)
Software development

Today, there are countless professionals out there who will gladly outsource part of or the entire process from the founders’ shoulders, helping them stay laser-focused on truly important things.

Final thoughts on alternative hiring

Hiring part-time freelancers and contractors is not a fool-proof solution, but, for startups, it’s much more beneficial than the alternative. It saves your resources and allows you to skip the lengthy selection process that puts you at additional risk.

If you’re not sure whether you need a full-time hire or not, reach out to Emphasoft. We assist startups for years, helping them with consultancy, MVP, and other software development projects. We’ll be happy to match you with professionals from our team who will give you excellent results at a fraction of the cost and within your deadline.