Employee Salary at Start-up phase

August 12, 2007

by Tetsutaro Mameda

During the start-up phase, many entrepreneurs need to deal with tasks by themselves. It is hard that one person possesses all kinds of business skills. Therefore, entrepreneurs hire whoever they support the business. However, start-up companies do not have enough finance to hire enough talented employees. “Cash is King!” If cash is running out, a business ends as Eastwind Trading Co. case. An entrepreneur wants to keep money but he/she wants to hire employees who have business skill for help out. One of the option to generate salary is that using equity and stock options. The option does not need to cash. It also tends to motivate employees. However, the business owner may lose control the business if someone owns share even though it is 1% even though the owner have control it theoretically. It is because the business owner needs to start dealing with the shareholder.

How should we deal with that situation? Hiring one by cash and generating revenue then hiring more employees?

I think that a business grow faster if hiring enough employees at first, but other thought is that do not lose control for the business and profit when the business is successful.

Which ways are better for you?


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