So you are now an entrepreneur and you are planning to get busy. You have the wonderful idea. You’ve gotten the entire business concept nailed, modeled and mapped out. Clients are lining up to pay you money and you are ready to start ringing the register. In a short time, you’ll be able to take a vacation whenever you feel like it because there is no end in sight to the cash machine you have built. You just need somebody to open the door and ring the register. What’s next? Hire somebody to open the door and ring the register right? Easy…..
Remember, we have already determined that if you are going to succeed, you’ll need to become an employer. There are certain businesses that can work with one sole proprietor but the great majority of those with larger opportunities will require multiple disciplines.
Think about it, if you have a business that relies only on the owner, it has to close down when you are sick or need a vacation. What if you fall and break a wrist or have a family emergency?
Unfortunately, there are significant issues in ramping up a staff. Here are a few things to think about
1) You will eventually get too busy to do all of the jobs. What jobs are you planning to offload to your first employee?
2) What is the work progression plan for the business
3) Will the skills you need to hire in the future be different than the skills you need in the present? Unless you turn water into wine and spend your time walking on water, that answer is going to be a yes. The issue is that you have to figure out how to hire people now that you will be able to teach to do the things you will need in the future.Otherwise, you’ll have to find a place for them or replace them with the bigger and badder version later.
4) Will the skill sets you will need in the future be affordable to you at the level of revenue at which you will need to hire them?
5) Are the skills available in your area that you will need? If you will require somebody that speaks French and nobody in town speaks French you are going to have a problem.
6) How stable is this staff? Are you dealing with part time retirees or are you dealing with 20 year olds who change their mind about their career, living arrangements and needs on an hour by hour basis
Remember when we mentioned this advice will be given“by the business owner” and “for the business owner”...We meant it. This is a group effort and employees and owners are both needed for team work to make the dream work. You as the owner hold all of the risk so you deserve to be compensated. Employees are required to perform certain tasks for a certain agreed upon payment and they deserve to be compensated as promised. Now that we’ve gotten the ground rules down we’re going to have to discuss a laundry list of things including but not limited to:
Types of employees that will perform their promised tasks well for an extended period of time
Pre-hire personality surveys can be worth their weight in gold to employers. Knowing how an interviewee is wired before they even sit down will often make or break an interview before it even gets started.
You can be whatever you want to be. You can do whatever you want to do. These are lies that we have digested since the day we were born. Look…..we all have our limitations in various avenues of life. I will never dunk a basketball or become a rock star guitarist. Those professions require skills that you are born with. Can I sit at a desk in the basement of a dingy office building for a steady paycheck while I play solitaire all day and complain about the man keeping me down? Sure….that’s not that hard to do. There’s just one problem….I’d freak out after about a week and quit.
Most small businesses have a cycle of employee types they will have to progress through in order to get to a level of profitability and stability. At the beginning, they need rainmakers. These are high A alpha drivers who sell sell sell to begin to drive revenue into the business and get it off of the ground. Once some revenue is coming in, they will need some aggressive analytical types to put the revenue to its optimal use, begin to construct company culture and structure and lay the groundwork for future growth. Once the company is on solid ground and it has progressed to an order taking platform, it will need a high dose of people who can be counted on to do exactly what they are told over and over again so that production, timing and risk aversion are kept in check.
Here’s a secret….those are 3 different types of people. This means that jobs will have to be handed off over and over again and needs and descriptions change. If a job lands on the desk of the wrong person, the task could get seriously messed up and the employee will probably eventually get frustrated and quit.
Breakdown of departments and responsibilities
Everything on day one is pretty much 1 department. By day 1,000 you will find that everything can’t run through one desk. This means that an organizational chart will need to be produced and reviewed regularly so that each person knows how much and of what they are responsible for. As this is an evolutionary process in a small business, it’s a big challenge to keep these lines of production rolling in the right direction.
Company structure near and long term
Usually the founder handles everything day one. However,each founder has strengths and weaknesses. We are only human and if we end up spending our entire day doing the jobs that we despise, we’ll end up owning a really great business that everybody enjoys but us.
What are you good at? Where do you see yourself in your ideal position? Are you the head salesperson? Are you the money guy? Are you the strategist? Are you an ace sales and marketer? Where are your strengths and what part of this business do you enjoy the most?
Begin building your company structure to offload all of the tasks that you are ill-equipped for. Find employees who love doing the things you do not.
Hiring and Firing. Who’s doing it? When do they do it?
Who’s in charge of finding the help and weeding the garden when necessary? This is one of the most difficult jobs of a small business. You just don’t have any room for error. It costs too much time and money to make mistakes with personnel. It’s like drafting the wrong QB in the first round. You feel like you have to give them an extended chance but end up driving your team into the ground while they fail only to have to start over 3 years later.The most successful sports franchises are the most stable from top to bottom.The Pittsburgh Steelers and New England Patriots have had the same quarterbacks for 15 years or more and have won a lot. The Browns and Dolphins have had 20 quarterbacks in 20 years and have wasted so many resources finding one, the rest of the team has been neglected and they are in a perpetual cycle of losing.
Hiring is fun. Who doesn’t like a new puppy? Firing is awful. It’s like chopping your own arm off and beating yourself with it. You’ve already wasted time and dragged the organization down. Now you are admitting defeat and getting rid of an asset that you have poured time into only to have to spend more time finding another. Hiring and Firing have nothing to do with making money but have everything to do with long term success and sanity.
Unemployment Review. Do you understand the unemployment claims process and how it affects your bottom line?
Unemployment is another colossal time and resource waster. We’ve written another blog devoted totally to this topic. Check it out.
Non – Competes. The owner deserves to be protected from his employees. There are rules to this game. The players aren’t allowed to play for whoever they want once promises have been made.
If you are teaching and training, growing client bases and providing the secret sauce for your people, you MUST have paperwork that explains very clearly they can’t take your secret recipe to your competition. Employees tend to feel over time that their book of clients belong to them. Speaking as a fellow business owner, I can tell you that’s BS.
In addition, your competitors will try to recruit your employees and take your hard earned assets.
If you let it happen once, you may as well hang a sign outside your shop telling competitors you are going out of business. In addition, if you ever try to sell your business, the buyer will want guarantees that your production is locked in and predictable. As the owner you need to lock in as many variables as possible.
Handbook. Nobody wants to talk about this but you’ll need one
Handbooks are absolutely necessary. You won’t feel that way day one and you won’t know how you did without one shortly thereafter.
Handbooks are intrinsic in laying out the policies of your business. Things like attendance expectations and the rights of the employer are laid out in the document. 99% of the time, you will never need your handbook. You’ll find it invaluable the first time you have disciplinary trouble with an employee that results in an unemployment claim.
Payroll. Who’s handling the calculation and tax withholding?
Payroll really isn’t that difficult to calculate. You’ll have to decide if you are paying salaries, going hourly, commission or a combination of the 3. Regardless of how you will do payroll, you’ll need to chose and pay for a company to process your payroll. There are just too many different taxes and documents that need filed quarterly and yearly and the risks are just too high not to use a service. They really aren’t very expense and well worth the time saved and risk averted.
You will probably have to nominate an employee to physically calculate and enter the payroll twice a month. Make sure that your payroll-enterer is a very trusted employee. Earnings are nobody’s business but ownership and can easily cause rifts if everybody is in the know about everybody elses business.
Here’s another fun one. You just want to sell stuff, make money and grow the company and two mployees decided they don’t like each other and need somebody to decide who’s right and wrong.
I’d suggest having an internal mediator who everybody respects if possible. If the boss has to decide, they run the risk of being too close to the fire. Additionally, there is nobody to escalate a larger situation to if the boss is the first line of defense.
Dealing with poisonous employees that destroy the attitudes of their co-workers on their way out the door.
There’s nothing quite like an unproductive employee who takes a steaming crap in the middle of your business so that you can remember them when they tell you they quit and file an unemployment claim. You will find as a business owner that you often see the positives of your people because you are rooting for them to succeed. Most owners are loath to make a quick change. Unfortunately, that’s usually the wrong way to go. You run the risk of the rotten apple continuing to rot while they also spoil the whole barrel.
At the first sign of concern, you need to address it hardcore. Lay the law down, fill out the paperwork, whip out the handbook, be extremely clear and put them on notice. If you don’t see improvement, cut bait quickly. The last thing you need is a person, who will never be an asset, tearing down all of your other assets. Remember, this poisonous person has failed before. That's probably why they were looking for a new opportunity in the first place.
The most successful people on the planet solve the largest problems with as few variables as possible. Guaranteed wonderful results are what we are striving for. Unfortunately, most small businesses require large amounts of unpredictable employees to run them. Employees are the single variable that can completely wreck all of the hard work and dreams put in by the founders.
Additionally, most if not all employees think they are“only” sticking it to the owner when they don’t try their hardest, poison others and ultimately walk out the door. The truth of the matter is that poor employee behavior hurts the entire organization including all of the other employees who enjoy their position and are working together to make it better each and every day.
We cannot of course promise that many or all of these things won’t happen at your business. However, our team has spent over a decade refining our process so that the only issues are the ones that are truly unpredictable.
In my opinion, human resources is absolutely the worst part of owning a business. You are a business owner, not a psychotherapist for an adult day care center. If I've hit a nerve with the information above and you are having issues with running the day care portion of your business, I'd love to hear your story and help. I've cleared off the couch and broken out the ink blots. Just click the link below to claim your free adult day care psychiatric session with Dr. Micah.