Startup pro tip: build remote teams

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As entrepreneurs, we are always looking for winning strategies to turbo-charge our growth. One of the big struggles entrepreneurs face early on is building a strong team because cash is tight and equity is not worth much on paper.

This problem is further compounded if the startup is located in a city like New York or San Francisco, where the cost of living is extremely high and competition is fierce. Highly skilled people in these cities typically have multiple offers and optimize for different variables like job challenge, work satisfaction, culture, salary, and equity. Balancing all variables can be a real struggle for startups

Luckily, there are a few great strategies to help your startup create a strong team without having to break the bank. Building a remote team is one such strategy. Having remote team members is a trend that is currently on the rise, thanks in part to advances in real-time communication technology.

I am a serial entrepreneur, and over the past several years, I’ve built and scaled both on-site and remote teams for my startups. Based on this experience, here are some of the top reasons why building a remote team can be a winning strategy for startups if it is done right.

Save critical dollars

Simply put, you can get great talent at much more competitive prices. This is due to the optimization of the supply-demand economics and getting people from remote areas where they do not have similar opportunities.

This worked really well for us; we saved over 50 percent in team packages. Also, if there are fewer people working in your office, then you can get by with a smaller space. Considering that the average price for a square foot of office space in a city like San Francisco is currently around US$72.26, this can be extremely significant. I am not even including incidentals like furniture and electricity here.

Larger talent pool to choose from

If you are trying to hire an employee or a contractor who lives within a certain radius of your company headquarters, then this significantly limits the talent pool you can select from. Instead, with a remote team, you can choose workers from all over the world.

Having a much larger talent pool to choose from can help increase the chances of finding the ideal person for your position. It also helps you streamline your recruiting process and makes it more efficient to accommodate the increased volumes of potential candidates.

Time to evaluate long-term need and fit

The human capital demands for many startups ebb and flow significantly. For example, a startup may need five full-time developers while the software for the company is being built. However, once the primary software is constructed, the company may only require three developers.

It is far better for startups to have a flexible workforce that can respond to change instead of a rigid one that can’t.

Remote team members typically start as consultants, and that gives you the opportunity to evaluate both your long-term needs and their culture and performance fit before deciding to make them employees.

This is a huge benefit as it allows you a better chance to avoid a high burn rate due to overstaffing and bad employees — two of the biggest drivers of startup failure. We had a rule of six months: any remote team member had to be in a consulting role (can be full-time) before being made an employee.

This kind of flexibility can be extremely helpful for startups that need to be nimble and agile as they are completing the early stages of growth. It is far better for startups to have a flexible workforce that can respond to change instead of a rigid one that can’t.

Flexibility appeals to a lot of people

Help in market evaluations in their region

Availability of customer support