When should you raise the salary of your employees as a startup?

You shouldn’t have salaries for employees of a startup.

Steve Blank’s distinction of startup is most important.

A startup is a “temporary organization designed to search for a repeatable and scalable business model”, while the small business runs according to the fixed business model.

So as a “startup,” you don’t have a competitive, repeatable, and sustainable business model. You literally can NOT promise anyone recurring compensation.

You may have some customers and some revenue. You may even have some recurring customers and think you’ve figured it out. But as long as you are still a “startup,” it means you have not.

You remain temporary, very likely to fail, and certainly not in a circumstance with predictable costs and revenues.

But you’re going to promise people employment??

Do they know you don’t yet have a clear path to stability and recurring revenue? Are you letting them know that you may have to cut that compensation or likely let them go? I hope so. That’s a startup.

WHEN you have figured that out OR if you actually already have a model, you’re a business or company.

Businesses and Companies raise employee salaries for primarily two reasons:

  1. They’ve earned it
  2. The market demands it
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