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The Start-Up Stage: Paying Employees
February 22, 2007
Q: I’m opening a new jewelry store in Charlotte, NC and I need to hire two employees plus a jeweler to help the store get started, but I don’t want to tap too much into our personal savings and having a full-time jeweler gets expensive in addition to the build-out, insurance, security, architects, general contractors, etc. Should I try to raise more money before hiring anyone or should I hire just two employees and a contract jeweler and hope that I can make it work?
Saving money during the start-up stage is tough. You have the urge to put all the money you can in build-out and inventory—but I know I have to save for those “rainy days,” which might hit me in the beginning. Getting ready to develop a more in depth financial plan, aside from the enormous construction costs—I’ve come across some creative ideas on how to compensate employees during the start-up stage (any comments and/or ideas would be of great help):
- Part-timers. I’ve come across numerous advertisements for “flex time” employees in local papers and was surprised to see the qualifications were the same as for a full-time employee, yet the salary being offered was half the amount of a full-time sales associate. I’ve contemplated hiring two part-timers and one full-time sales associate.
- Delayed Compensation. Talking amongst my friends—one idea was to hire employees who would accept deferred or delayed compensation. Different ways to approach this: a deferred cash bonus until the business generates a certain amount of revenue, an increased salary when the employee hits performance milestones, back-pay provided when the business becomes profitable, or the hiring of sales associates solely based upon commission.
- Hire a jeweler on a contract basis. In Florida, there are a slew of local jewelers who will pick-up and deliver your customer’s repairs right to your store. The catch is that the merchandise is repaired off-site, but the jewelers only charge per piece. Personally, I don’t like my customer’s jewelry to leave our store unless it is going back to the manufacturer who designed it. I’ve also encountered jewelers who will come into your store and work a limited amount of hours (whatever it takes to finish your jobs) and are paid either by piece or by hourly. Has anyone had experience with these types of jewelers?
Most entrepreneurs say the best way to pay for three employees when you only have the financial resources to hire one is to either generate more revenue or to hire “the ultimate sales-associate” who will get you the closest to generating sales so you can afford to hire the other two.
Posted by Shanu Singh Guliani on February 22, 2007 | Comments (2)
