A major aspect of starting a business is to find a successful balance managing your resources, and that includes people. Hiring too many too soon or too few too late can ruin your recipe for startup success.
“The number of people you have in your company at any time is a very important part of getting the company building process right,” writes prolific VC blogger Fred Wilson. “Too many and you will slow things down, burn through too much cash, and increase management overhead for no real benefit. Too few and you will be resource constrained and unable to grow as fast as you’d like.”
In a post for his AVC blog, Wilson provides what he suggests is a general rule of thumb for the optimal headcounts at each stage of a developing business — five employees for startups in the building product stage, 10 for companies in the building usage stage, and 25 for the building the business stage, “when you’ve determine that your product market fit has been obtained and you now want to build a business around the product or service.” Read Wilson’s full post for more on the optimal startup headcount at various stages of your company.
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When expansion-stage companies plan for growth, human capital needs to be one of the biggest investments. Read this post for the six roles expansion-stage companies need most. And while hiring is paramount, as you grow don’t forget the importance of conducting exit interviews in gathering invaluable feedback.