Why Startups Pay More And Why You Should To

Small businesses tend to pay less that other types of businesses.

In my travels recently I’ve come across quite a few small businesses that are paying their staff peanuts.

It’s these same small business that when asked about hiring say that their number one issue is finding good people.

See a connection?

Ding! Ding!

It's that small business owner mentality of being a penny-wise and a pound foolish that plagues the small business community.

Please note.  I’m not saying pay to people salaries that aren’t warranted.

What I’m saying is…

You get what you pay for.


Wrap your head around this one.


If you pay below market you’ll get below market talent.

If you pay at market you’ll get below market talent or at market talent.

If you pay above market you’ll sure as heck demand you’re getting above market talent.


Which brings me to why startups pay more and in many cases attract better talent.

Startups pay more than small businesses and here’s why.

There's the notion that if you pay more you expect more.

Startups also typically set a higher bar with regards to expectations.

Here’s how they do it.

Using vision, culture and environment during the hiring process sends a clear message that a candidate needs to deliver a higher value and produce more output.

And in turn, most people when given the opportunity, will rise to the occasion.

But what if they don’t?

We’ll, then the person gets replaced right away.

At least that’s how it’s been in my experience with startups.

Then again I’m usually the one doing the hiring.

Startups also have a shorter runway.

Meaning that their first round or second round capital investments will only take them so far.

They have to deliver or they're at the mercy of their VC or worse.

Out of business.

Back to the small business.

Small businesses don’t typically have the same pressures as a startup.

But that doesn’t mean they shouldn’t adopt some of the same practices of a startup.

Startups have a vision, a mission, and goals.

They want to move quickly and show viability in the market.

Isn’t that what everyone wants?

Well…  Not really.

Many small businesses are complacent.  

They’re happy with how they run their businesses.

They’re happy with where they are.

At least that’s what they tell me.

They also tell me they have trouble finding good people.

To which I say - Why not fish upstream?

You’ll land better candidates.

And you’ll have better results.

Insert one caveat.

That is if you on board and manage properly.

But that’s for another day.

To sum it up.

To get better people pay a little more.

You’ll get more.

It’s worth it.