Solutions to the dilemma of finding the client first or hiring the candidate first

Question

I am unsure if this would be the correct place to put this question, but I didn't find any other better site on StackExchange.

I have a very new software services Startup company, already dealing with one client, and that is sorted out. Now, I want to expand my portfolio and grow my company. But, here I am stuck with the Dilemma of whether -

1. Should we hire the employee(s) and keep them ready for the project, and then hunt for the client/projects?
2. Should we grab the client/projects first, and then hire the employees to work on that.

Here, the second option seems economical from the company's standpoint, but I am not sure if the clients can wait that long till we hire someone to work on their project.

But, if we go with the first option, then if it takes a long time (or we don't find any client/project in the worst case), then what should be our step for the already hired employee, as we are already paying him/her salary for nothing.

I am sure many beginner companies should have faced this challenge already, there must be some solutions to handle it. Can someone help out here?

Answer 1

Going with the contractors is the answer;

1. get the client
2. find the necessary contractors
3. complete the project

When you see that you always keep 1-2 contractors on your monthly budget, it will mean that you're business is running and you can convert your contractors to full-time employees or start looking for new full-time people.

Answer 2

This really depends on your business strategy. Professional services firms tend to operate with a rotating "bench" - a pool of consultants who are not currently committed elsewhere and can be quickly placed with a new client. The bench might be 10% or 20% of the available headcount at any one time for example. To do that of course you need a cashflow or some capital base to fund it.

Contractors are an option. Contractors are generally easier to find than new clients but contractors cost more than permanent employees and so they will eat into your profits. You can aim to start new work with contractors and then replace them with longer term hires as you get them. Hiring contractors has other disadvantages as well: they won't know your products, services or your team and when you hire quickly you have less opportunity to see if they are the right fit for you and for your client.