Startup, Friend, Salary, and New Employee

My startup is pulling $20,000 a month and in the position to add a new technical full-time employee in order to gain technical competitiveness. However, I'm troubled by my current situation.

Few months ago, I asked my recently graduated friend to help me out while he's looking a full-time job. He's major is manufacture engineering while my startup is tech related. I'm paying him $1800 a month so he can help me out. Meanwhile, he can make some money while looking for a job in his field. He's more techsavvy than an average person but he came to the position with no knowledge related to our field (tcp/ip networking). Basically, he has been learning on the fly for the past few months.

My friend's help has been great because he is able to take over a lot of ticket answering and low-level technical works. However, what I needed the most is someone who knows way more than I do and can provide some technical expertise to elevate my business ahead of the competitions. I have been consumed most of my time in technical works and have no time to do strategic planning.

My plan is to hire a full-time tech person at around $5000/month. The trouble is this rate is way higher than my friend's rate so I don't feel right. On the other hand, I can't justify paying my friend $5000 because he does not have the technical specialty that I need because he's in a different field.

What should I do?

You pay a salary to reward someone for their contribution.

If the new hire is bringing in new and critical skills, and the value of their contribution is higher than what your friend's skills and experience, that should be a straightforward decision.

You're feeling uncomfortable, but you need to get used to this, if you're ever going to scale. There's no-one in the business - including you - who should be uneasy that a critical new hire may take home more than they do.

When it comes to business, you have to learn to separate friendships and business relationships. You pay someone for the value they provide to the company. It is irrelevant if this person is your friend or just an employee.

A lot of us helped out our friends and looks like in this case there was no expectation of full time employment, so you need to move on and do what is the best for your business.

Also, realize that $5K per month budget has to include all the taxes, insurance, etc. So what you realistically looking at is about $7.5K per month.

Using your friend in your business is a good idea and you can let me him groom with more of your help and slowly engage him in strategic planning once you think he is confident enough and you have build reasonable trust. And if you think that he will persistently look for a job in his field of study and may dump you on a better offer, then you may try to hire a free lance contractor who has such experience and make a proposal of sharing benefits at a certain percentage with him. Make sure you make it legal!

Remember you are already making enough money that even if you spend 30% on salary to improve your business, its worth the hire.

What you should do nobody can answer that for you.

Still, you can do some things.
Besides technical expertize, the human factor is very important for any organization, even more for a small one. If he's honest, willing to work and to learn, he's an asset.

Is there a chance your friend is willing to take some course to improve his technical knowledge in the network field? Perhaps he could be willing to change his career. Since he already knows your business, he could build on that.

Another hypothesis you have is to find someone with expertize on the technical field. Either an experienced person, probably more expensive, or a recent graduate, cheaper. The former would probably get you a quicker answer to your needs. The latter, someone willing to learn, could prove to be an evolving solution.

Don't feel bad about paying someone with more expertise. This happens all the time in business.

If you need another employee with specific technical knowledge than pay them. They will be adding more value than your friend by building the product not just answering tickets.

As an aside, you don't have to disclose what you pay your employees. That's a private matter.

If you friend is a partner or can gain salary knowledge, then you have to explain to them that you are hiring an expert and they get paid more. In the end, it adds more value to the business and they should get that.

If they don't, then you hired the wrong friend.

Good luck.

Here's a potentially relevant post ("demoting a loyal friend ") on what to expect in this situation.

In your case, your friend is part time - but what is not clear is that after you hire the full-timer, do you still need his assistance? Is s/he going to stay on and report to this full-timer?

Once you figure this out, I would have a sitdown with your friend and explain that the function the full-timer will perform is critical for future growth and the company requires someone with their level of experience to commit to the company. If your post full-timer plans include your friend working with the company, I would ask your friend to work on bringing this full-timer up to speed, and clarify the part-time role moving forward.

Best of luck with this difficult discussion.