The number of professionals who have changed their job title to founder or co-founder in the past year has increased by 13%, small business owners have risen by 8%, and those formally adopting the title of entrepreneur (4%) or owner (1%) has also increased during the pandemic.
In total this signals a 26% increase in the past year of people who want to be recognised as business or start-up owners in the past year, according to professional services recruiter Robert Walters.
In a year of job uncertainty and furlough, the number of professionals leaving employment to start up a business by themselves has hit record levels – with the ONS reporting new business creations was 28% higher in Quarter 2 (April to June) of 2021 than in Quarter 2 in 2020. Industries that showed significant increases in business creations included business administration and support, and construction industries.
The pandemic has bought about widespread uncertainty for professionals, with almost 10% concerned that their current skillset will be completely redundant within five years. As result 84% of professionals stated that they would be willing to retrain or learn a completely new skill to secure their future earning potential.
Lucy Bisset, Director of Robert Walters comments: “In a year of remote working, digital upskilling, furlough, reduced hours, and lockdown, professionals have had ample time to think about their career path and what they want to do with their future.
“Added to the economic uncertainty; the removal of office structure, and the lack of facetime with management has had a negative impact on progression rate – which in turn has sparked a culture of ‘will it be better to work for myself?’
“The increase in people starting businesses is not concerning at all, and in fact in times of economic upheaval we do typically see a spike in creative and entrepreneurial thinking – resulting in some of the most successful businesses we have today.”
Success Rate of Start-ups
With funding in 2021 for start-ups currently sitting at $89bn, the country is firmly on track to surpass the $98bn raised for start-ups in 2020 – a sign that the UK is birthing more start-ups with ‘high growth’ potential than ever before.
Lucy adds: “With growth comes the need for exceptional people to lead the way, and one of the biggest mistakes a high growth start-up can make at this stage is to hire the wrong people.
“In fact, the cost of a bad hire for a start-up in the UK is estimated somewhere between £25-50k, not counting the time wasted during the hiring process, or the opportunity cost of the growth and forward momentum you could have been gaining.
“Your first ‘head of’ hires will also have an enormous impact on the development of your company culture — a non-negotiable for attracting and retaining top talent.”
According to the Robert Walters research, 20% of new businesses will close their doors within just 12 months and 60% will go-under within three years. Whilst product and market fit are the leading factors for start-up success, third in the list is the team and people you hire around you.
The Robert Walters Guide for UK Start-Ups lists best practice advice when approaching those all-important executive hires – starting with the most in-demand roles advertised by UK start-ups across Product, Engineering, Go-To-market, Design, Information Security, Finance, People/Talent, and Legal.
Lucy Bisset – Director of Robert Walters – provides her 8 top tips for high growth start-ups when faced with the challenge of trying to build a winning team:
- Emphasise your employee branding and purpose
Employer branding is incredibly important for start-ups since you don’t yet have an established reputation. The first thing a potential candidate will do is gather all the information they can about you online. Don’t underestimate the value of a company mission statement page. Airbnb does this extremely well. Consider sharing your company’s origin story, particularly if you built the business to solve something that was impacting you personally.
Ritual also does this extremely well, basing much of their marketing and advertising on the story of its founder, Katerina Schneider, who built her vitamin company when she struggled during her pregnancy to find a prenatal vitamin free from questionable ingredients. Just as people want to buy from people and not an “entity”, people also want to work for other good people who share common values.
- Sell your employee proposition to attract the best talent
Understand that as a start-up, you are perceived as a high-risk (but potentially high-reward) opportunity. Every founder believes their product or service is the best new thing to hit the market, but convincing top talent at a well-established company to leave their high comp strategic role and roll up their sleeves to work at a start-up requires more than just passion.
Developing a strong elevator pitch now will be important for the interview process later. This should be different than the elevator pitch that you gave to potential investors, where the focus was financial. Later, open every interview and close every interview with this pitch and be sure you have buy-in on your vision before pursuing a new candidate.
- Use company equity to attract top talent
Not everyone has an equal understanding of equity. Learn how to sell equity if that is a benefit you will be offering potential candidates. This will be particularly important for candidates who have never worked at a start-up before.
To help you estimate the value of your equity package based on various scenarios, we recommend you check out this Compensation and Equity Calculator.
- Look beyond the job title
Titles within start-ups can easily become inflated, failing to accurately describe the level of responsibility someone had in a previous role. Focus on what a candidate accomplished rather than what titles they have held. Be conscious that candidates will be looking for a title that fits their own personal branding (an individual who was formerly a Head of GTM or Marketing will likely expect the same titling or higher in future roles).
- Define your business goals
Define how the success of a first hire will be measured. Don’t make the mistake of seeking a hire “because your VC partner said you needed one”. Really sit down to assess what you need. That might be new traffic, new business generated, growth, or profitability. Defining that in a clear way will help you identify candidates that have a proven track record for achieving those goals.
- Agree spread of equity
Don’t run out of cash-runway. Decide on a budget and determine how equity will be distributed. Will it be distributed evenly among executive level roles? How will you approach the equity conversation when speaking with new talent? What are the (realistic) salary expectations for the roles you are hiring for in your area?
Salary and pay rates for start-ups can vary based on what stage funding you are at, the sector you operate in and the equity you have to offer.
- Pipeline future talent pools
Always be building a talent pool. In the beginning, lean on personal referrals and advisor networks. Once you have exhausted personal networks, you may consider posting your roles publicly.
Common start-up job boards include AngelList, BuiltIn, and of course, LinkedIn. Lean on your recruitment partner to assist with job descriptions, head hunting, and sourcing strategies.
- Avoid homogeneity
You can’t build a 100-person team and then later decide to incorporate a diversity and inclusion program. If you hire based solely on referrals, or only choose people who “remind you of your younger self”, you will ultimately create a stagnant environment.
Build your team with diversity and inclusion in mind from the start, and you will have better engagement, employee retention, creative problem solving, and higher profitability. (It’s been proven time and time again!)
Click here to download A Guide for UK Start-Up’s – How to Build a Winning Team.