Q: from JD, Consulting engineer (from LinkedIn Q&A)
A: I’ll answer your question with some questions. Use these to help you assess your growth options:
– How easy is it for you to bring in more business? Is there business out there for you to get, assuming you have the time and resources to service it?
– How competitive is your market? If companies don’t work with you, who do they go to instead?
If your answers to these two are positive, then growth is worth pursuing.
– What about your pricing? I often find that sole professionals like you underprice – esp. those who charge by the hour.
– How do you feel about managing others? Some professionals love the work, hate to manage others. Some are control freaks: can’t let go. Others get a charge out of coordinating a team. The latter find it easier to grow.
– How do your customers view you? Are they hiring just you, or are they hiring your company? For you to grow by delegating work to other techs, you must train your customers to do the latter.
– What is your best role in the business? Tech? Business development? President? Set it up so you do what you love doing, and what you do best, and hire people (even part time) to do the other parts. I work with professionals who hire a general manager to run their company, so they can keep doing the tech work they love.
– How much is your time worth? List in a column the things you do in your business, then in the next column how much it would cost you (per hour) to hire someone else to do each task. For example, strategic business development, $250/hr. Tech work, $150. Bookkeeping, $35. Office tasks, $15. If you spend time on the office tasks, then you are overpaying your office assistant by at least $150/hr!
– Can you price high enough to generate the surplus you need to grow your business? Here’s how you can justify hiring employees:
— Tech person. You must be able to bill them out for at least three times what you pay them. (For a subcontractor: two times their pay)
— Admin person. They must free up enough of your time so that you can bill additional work that is AT LEAST three times what you pay them. That’s break even: actually they should free you up to bill many more times what they cost you.
— They free you up to take more time off.
– How much are you willing to invest in your company’s growth? Some are willing to grow only what cash flow will allow. This is slower. Are you confident enough in your prospects to invest, say, $50k in hiring and learning curve time for people who will then make you a lot of money?
– How good are you at hiring excellent people? If you don’t give yourself an A, get some help with this from an HR professional. The biggest barrier to growth for professionals like you is not bringing in good enough people.
Your answers to these questions will point to the best growth strategy for you.
My book, How to Grow Your Business without Driving Yourself Crazy, is about this very question. You can get it from my website http://www.businessownerstoolbox.com
Mike Van Horn