(This post was originally published Sept. 3, 2006, but this will always be great advice for a start-up entrepreneur.)
These “advice wanted” posts appeared on Slashdot.org from user Shaper_pmp. You asked, so I’ll tell …
“I’m the CEO of the company and my salary is less than $60K/year. My techs are paid hourly — sometimes, during rough periods, they get paid more than I do. I manage to live just fine here in San Jose on a $50K/year salary.”
Funny thing – you’re starting out on a new(ish) business. You admit you still aren’t profitable. You (presumably) own the business, you have something invested in it, therefore you should accept lower wages since you’re making an investment for the future. Your employees (from the sound of it) do not have any investment, therefore they do not stand to benefit substantially from your business growing, therefore they will require their motivation in decent wages and good working conditions, not in jam-tomorrow “if the company grows we all benefit” rhetoric. The dotcom era is over. People no longer trust an entrepreneur with big ideas and a business plan that leads to staggering profits in five years, and certainly won’t exchange their present comfort for what amounts to a bet on your success as a businessperson. If people don’t own part of the business, they won’t be willing to trade present wages for future success. And frankly, even if you offer stock options or some other method of “ownership”, you’ll still have to find someone who really, really believes that you’re going to be successful.
“I’m a little bit better off now that I have my own business, but the fact is that most of my business’s revenue gets reinvested into the business. That’s what we have to work with. Sorry, folks. ”
Indeed, and this is the proper method for someone who owns a small business. However, you aren’t going to find employees who are willing to take the same risk as you without the possibility of the same reward as you. The company is your baby, so you’ll make sacrifices to help it grow. Either make the company your employees’ baby too, or make the pay for babysitting worthwhile.