The Entrepreneur Insiders network is an online community where the most thoughtful and influential people in America’s startup scene contribute answers to timely questions about entrepreneurship and careers. Today’s answer to the question, “How do you negotiate a raise at a startup?" is written by Justin Tobin, founder and president of DDG.
Asking for a raise at a startup is very different than vying for a salary increase at an established business, where simply doing your job competently for a certain amount of time is often enough to garner a bump. As a founder, myself, I know firsthand that managers are usually wary of granting straight salary increases because their young companies are often tight on cash, and because they fear creating a snowball effect among the rest of the small team if employees realize they’re making less than their colleagues. Much of the time, it’s easier for managers to just say no.
Though a salary increase may be tough to get, it’s certainly possible to negotiate a better deal for yourself. But the approach needs to be strategic. Here are a few things to consider before you make the ask:
Get intel on the budget
At most startups, budgets are tight. Managers are trying to do the most they can with very little, and payroll may already be stretched to its limit. There’s a big difference between a company that just received a round of funding, and one that’s struggling to scale enough to attract investors. Don’t waste your time or your manager’s by trying to draw blood from a stone. Do your due diligence on your company and its financial situation so you know when the time is right to ask for a raise.
Think outside the paycheck
If you know your company isn’t in a position to increase your salary, but you still feel you deserve more, get creative. Propose a bonus that would align with the percentage raise you’d otherwise be asking for, and tie it to some benchmarks for you to hit throughout the year. If you’re in a sales position, ask to increase your commission. Asking for equity can be tough, but is another way to negotiate within a young company that’s low on cash but rich in potential. Whatever you’re asking for, make sure it’s tied to continuous effort and growth.
Prove your worth
Startup employees are expected to help grow the company, so you need to arm yourself with an airtight case that proves you’re doing just that. From day one, keep a close accounting of your efforts and your successes. How many investors have you met with? How many deals have you closed? How many sales have you made? How much money have you brought in?
Make sure that the increase you’re asking for is tied to the value you’ve already brought to the company—not what you project you will bring in the future. If you’re asking for a 10% increase in salary or a 15% bonus, are you prepared to prove that you’ve increased billings or revenue accordingly? If your job performance isn’t tied to hard numbers, find another way to demonstrate your value. How many ideas have you floated that came to fruition, and what kind of value did those projects bring to the company? Make sure you’ve got the proof in hand when you step into the meeting.
At the end of the day, you have to put yourself in your manager’s shoes. The fact that you could make more money elsewhere doesn’t mean much to them, so don’t ever use that line. They care about how much value you bring to the business. Making an undeniable argument for why you’re an integral and committed member of the team is the only path to success.