Why Start-ups Aren't Hiring

Ten reasons why the country's smallest businesses aren't building up staff.


Start-ups help march economies out of recessions, but today's smallest businesses aren't hiring. Here are 10 reasons why:

1. They don’t have the money. Banks are not lending, angel investors have run to the sure-thing public market, and venture capitalists only invest when you are profitable and have demonstrated success.

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2. Entrepreneurs are multi-taskers. They can use today’s technology to do all sorts of things for which they used to have to hire. Outsourcing tools, free how-to content, and collaborative websites all leverage the get-it-done mentality of the entrepreneur.

3. They hate layoffs. A lot of entrepreneurs have been bosses and have had to fire people or have been laid off themselves. There’s nothing worse. Like the trip to dentist, it's something they want to avoid.

4. People are not always hungry enough for a start-up. I am incubating a start-up, and all I can afford is a commission-only sales force. I cannot find one person willing to work for commission only. One actually said, “As long as my unemployment benefits keep running, I don’t need to find a job.”

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5. There are too many unknowns. What’s the deal with healthcare, how will that affect me? Who can explain it? Taxes? What if I have to fire someone after a month? Whatever. As soon as you have the entrepreneur even wondering about these peripheral issues, he is not getting his widget built.

6. A lot of the new startups don’t need people. It is relatively easy to start a new business with a laptop and a Starbucks card. Not so easy, of course, to make it work. Until it works, and most of them won’t, the entrepreneur will not hire.

7. Generally, we support entrepreneurs; specifically, we do not. We all tell positive stories about the guy who started in his garage and hit it big. But then we talk about how risky these businesses are, and laugh at some of the outlandish business schemes and ideas. It is a solitary environment, one that is not explained until success is reached. We do not search them out and explain how we can help them.

8. Start-ups want to hire with some sort of success metric. We do this and you will earn this. People with this amount of self-confidence are hard to find. If they exist, they will go work for a larger, more established company.

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9. The typical entrepreneur today is a techie, not an ex-manager or leader. The latter are comfortable getting work done through others, the former are not.

10. Companies and people want to make safe decisions. Startups, by their nature, are offering new solutions. If you are lucky enough to be still working, you are most likely not about to risk your career on a new product or service.

G. L. Hoffman is a serial entrepreneur and venture investor/operator/incubator/mentor. Two of his companies have traveled the entire success path from the garage to IPO. Currently, he is chairman of JobDig, which operates LinkUp, one of the fastest-growing job-search engines.. His blog can be found at WhatWouldDadSay.com.


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