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It's a Great Time to be an HR Tech Startup
Human Resource Executive editor Phil Albinus likens the HR tech start-up market to a gold rush. “HR technology is experiencing a boom that resembles the tech gold rush of the last two decades,” he writes. “After business and personal apps saw their heyday, human resources is getting the full attention of software developers from large-scale companies like SAP and IBM and start-ups with five employees and a dream.”
HR tech spending went up 57%, and HR tech budgets tripled in 2021. According to HR tech guru Job Bersin, 12.1 million employers across the country spent over $5 trillion on HR programming, and that’s not forecasted to slow down.
It’s an excellent time to be an HR tech startup.
It's Hard to Start a Startup
While there’s never been a better time to get into the HR tech space, starting a startup is hard. 95% of startups fail, 50% make it to the five-year mark, and only 40% ever become profitable.
A CBS study found that 42% of startups fail because there’s not a big enough market for the product or service they created, 19% of startups can’t differentiate themselves from competitors, and 58% of startups are working with less than $25,000 to get going and thus, run into cash-flow problems.
Here at HiringThing, we’ve defied the statistics. We’ve made it to the ten-year mark and joined the 40% of profitable startups. We consider ourselves one of the little companies that could and want to share what we’ve learned. We’re passionate about using HR tech to better the world of work and helping fellow tech businesses grow and thrive.
Startup Survival Tips
- Recruit (and Retain) High-Quality Talent
- Address Recruiting and Analytics in Your Tech Stack
- Have Strong Onboarding
- Delight Your Customers
- Have Realistic Expectations
- Additional Resources for HR Tech Startups
Recruit (and Retain) High-Quality Talent
Recruiting and retaining top talent is the top problem facing 52% of small businesses (which most startups are).
Additionally, 86% of tech companies cite hiring quality talent as a significant challenge.
Hiring talent is time-consuming and expensive—the cost of onboarding can average $4,000 per new employee (which could add up if you have a high turnover rate)—and good talent could make or break your business. Disengaged employees cost companies an average of $16,000 a year, and toxic employees mean it’s 54% more likely that good employees will leave.
When you’re in the tenuous startup state, it’s more important than ever to ensure you’re hiring an excellent team. That means creating a well-planned hiring strategy that includes candidate personas, so you know exactly what qualities you’re looking for in each role.
The HiringThing Guide to Increasing Your Applicant Traffic includes this template for creating a candidate persona, as well as numerous other strategies for upping your applicant flow.
Recruiting top talent also entails investing in your employees. We know budgetary restrictions are a huge challenge for startups (and part of why hiring a quality team with strong ROI is crucial), but skimping on employee salaries and benefits is not the answer—the greatest tool in your arsenal is your people.
Benefits don’t always have to be compensation-based. Today’s employees consider things like flexibility, autonomy, transparency, and inclusion big benefits. Cultivate your company culture so that it’s something that brings your employees value—56% of workers ranked a strong workplace culture as more important than salary.
Address Recruiting and Analytics in Your Tech Stack
The 2022 HRIS Software Report says the top reason businesses of all sizes purchase HR Solutions is that they want to gain greater functionality—today’s HR technology customers are looking for one solution covering the full breadth of the HR cycle.
That tells HR startups that no matter your core competencies, you should have additional solutions or easily be able to integrate into other HR tech solutions to provide your customers the best experience.
The PwC HR Tech Survey 2022 found that overwhelmingly, the two biggest HR tech challenges facing businesses today are finding good HR insights/analytics, as well as recruiting (and retention) solutions. Savvy HR tech startups will have solutions that address these challenges, even if that’s not their primary focus. Private labeling is one-way HR tech startups can quickly and efficiently add these solutions to their competencies without compromising the hard work it takes to keep their core competency excellent.
Private Label New Solutions
Private-label software is purchased from a SaaS provider and customized with branding and bespoke workflows. Private label purchasers work with private label providers as a mutually beneficial partnership versus the traditional buyer/client relationship. End-users aren’t aware of this partnership, which strengthens the brand and scope of the private label purchaser’s offerings.
Private labeling is a good tool for companies looking to grow because it allows them to quickly and cost-effectively add new solutions, go to market fast, and expand the bandwidth of an organization’s team. Private labeling is often called white labeling, but the two have subtle differences. White labeling software is when a developer rebrands their SaaS solutions to be sold by others. Private labeling goes beyond branding to include customizations and features that fit a business’s unique needs.
Here at HiringThing, we private label our applicant tracking system to streamline, automate and strengthen recruiting for our partners’ clients. Below, you can read more about why all HR technologies can benefit from a Private Label Applicant Tracking System.
Have Strong Onboarding
Reducing churn is a high priority for any SaaS solution—a 5% increase in customer retention can increase profits between 25-95%.
You could have the best marketing and sales departments, but if buyers aren’t using your product, customers won’t renew. Every good startup will invest time and resources into sales and marketing, but you can’t overlook onboarding.
The PwC 2022 HR Tech survey found that many companies didn’t have robust onboarding and, as a result, lost users—(they also found a whopping 82% of HR tech users struggle with adoption). Make sure your customers have an outstanding customer experience during onboarding and while using your platform. Ensure that they know where to find solutions and how to troubleshoot, so they are always delighted and never have any second thoughts about utilizing your platform.
Successful startups have an onboarding strategy guaranteed to increase adoption and ensure users are masters of their new solution. The chart below, also from PwC, shows how SaaS companies onboarded users effectively.
Delight Your Customers
86% of customers are willing to pay more for a great customer experience. This is especially important to new startups who can use valuable word-of-mouth marketing to grow their business. You can delight your customers by:
- Asking for feedback often.
- Proactively communicating with your customers.
- Making it easy for customers to find product solutions.
- Having a top-tier customer support team that makes every customer feel like a priority.
- Having a robust knowledge base that is easy to access and navigate.
- Educating customers, not just on your product but on anything to do with your core competency.
- Sharing current and upcoming HR trends—customers will continue patronizing your business if you establish yourself as a valuable tech tool and HR resource.
If you’d like more insights into how to delight your customers, check out HiringThing’s How to Delight SaaS Users post.
Have Realistic Expectations
Remember the stats we discussed at the beginning of the piece? The unfortunate reality is that the odds of startup success are stacked against you. Many startups tend to set unrealistic expectations that often can’t be matched. Not every company’s growth explodes right away. For every giant like Facebook (and the funding backing Facebook), there’s a HiringThing, a startup that has steady, sustainable growth, which is nothing to sneeze at! Sustainable, steady growth is the name of the game.
If you do experience a boom in success, don’t let it go to your head. The startup graveyard is full of companies that burned bright and then fizzled out. Remember to have plans to scale, plans for addressing bad times, and learn from setbacks. Slow and steady is realistic for most of us, there’s nothing wrong with that.
Conclusion
Remember, starting startup is challenging, but there’s never been a better time to be creating and growing an HR Tech startup. In order to best survive, make sure you:
- Recruit (and then retain) high-quality talent.
- Address the biggest challenges customers are facing in the HR world.
- Have strong onboarding for your customers.
- Delight your customers
- Have realistic expectations.
Good luck with your startup! We can’t wait to see what you do.
Additional Resources for HR Tech Startups
- Grow Your Startup By Private Labeling New Solutions
- Breaking Down Common SaaS Growth Barriers
- Five Ways to Make Your SaaS Stickier
- Five HR System Challenges and How to Solve Them
About HiringThing
HiringThing is a modern recruiting and employee onboarding platform as a service that creates seamless talent experiences. Our white label solutions and open API enable technology and service providers to offer hiring and onboarding to their clients. Approachable and adaptable, the platform empowers anyone, anywhere to build their dream team.
