hiring

My answer to a question by Brent Russell

Anybody can start a business. It’s pretty easy. Having a profitable business? That’s harder!

First, have something that someone else wants to buy.
Sell it to them for more than it costs you.
Sell enough of it so that the surplus between cost and revenue (i.e., the Gross Profit) is enough to:
— cover your other business costs, like marketing and admin, and
— make you a living.

After you’re sure you’ve got this part down, then start the business officially. Get your business license, tax ID, insurance, rent an office, etc. But spend no overhead before you have to.

When to hire help. To justify hiring, the employee must help the business bring in enough additional revenue so that his/her wages (including payroll taxes) are covered by the Gross Profit from the additional sales. Your employee can do this in several ways:
— Sell more of your products or services
— Do billable work for your customers
— Free you up from admin stuff so that you can sell more
— Bring an essential skill to the team so that everybody’s productivity is raised

Where to get start up or growth capital. First, where you won’t get it from: VCs, bank loan, the government.

Most small business start up capital comes from
— your savings
— personal loan, or 2nd mortgage
— family or friends (very risky)
— initial contract that pays some money up front (very savvy if possible)
— charge it on your credit card (very stupid)

Where your initial sales come from. Knowing you have potential sales out there is the reason to start a business. So if you don’t know the answer to this question, you shouldn’t be starting a business.

 

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I hear this from both solopreneurs and owners with a handful of employees:
“I can’t find good people to hire.”
“I’ll train a good person; then they quit and become my competitor.”
“I had an employee. It didn’t work out. I’m not hiring anybody else.”
“My work is so unique, only I can do it. Too much trouble trying to train someone else to do it.”
“I can’t rely on my managers to make good decisions.”

What I see. If you fail to get needed help, if you opt to go it alone, if you have people who only follow orders and take no initiative, this guarantees you remain a small operation. This may be what you want, but if you want to grow, you’ve got to overcome this attitude. You must learn to ask:

“What is the highest skilled person I could bring in to free me up to focus on growing the company?”

My recommendations. (From our “Finding and Keeping Good People” and “Employer Assertiveness” ebooks)

— Make sure you hire the right people. If you have trouble interviewing and selecting quality people, get help from someone skilled at this.

— Start with a job description that answers the question just above. Look for, not just work skills and experience, but personal qualities and attitudes as well. For many jobs, the latter are more important.

— Help your people do the job you hired them for: training, clear direction, trust, feedback, systems and tools, acknowledgment.

— Be firm, fair, and consistent with your people. Employees leave because they don’t like their boss!

— It someone is not working out, let them go. Hire slow, fire fast!

— For every job that you think only you can do, look for the pieces that you could hand off to others.

This is a major theme in my “Top 3 Barriers to Small Business Growth—and how to overcome them” program.

 

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