5 Ways To Pay Your Employees When Your Startup Is Just Getting Started

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Note: This post was originally published on OPEN Forum.

Call it the Catch-22 of startup life.

You need talented employees to help grow your business. But without enough cash flow, you can’t get the money to pay them.

“It’s the dilemma every early-stage company faces,” says Rosalind Resnick, CEO of Axxess Business Consulting in New York.

Certainly, you might be willing to work 24-7 with little financial reward for many months. But you can’t expect an employee to do the same.

So how can you compensate the top-level talent you need to boost your business?

Consider these steps.

Offer them stock

Tie salary to meeting milestones

When Paul Emery co-founded a Campbell, Cal-based telecommunications company four years ago, he promised employees a salary that was 60 per cent of the market rate for compensation.

But, he also agreed to raise compensation substantially and at regular intervals, as long as the company met such milestones as alpha and beta test completion and successful fund-raising.

After about a year, according to Emery, employees' salaries were raised to 80 per cent of market rates and, six months later, to 100 per cent.

Hire interns

It's a good way to grow your own talent at a low cost.

By hiring promising employees who are still in school or are recent graduates, you can bring on board talented people with a lot of potential--at a price you can afford.

Look for people with a cash cushion

Forget about hiring full-time staff

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