Staffing Tips For Optimizing Operations
You don’t have to be an entrepreneur very long before you confront the issue of staffing. Who do you need to hire? Why do you need to hire them? Who can I contract in? Even if you’re comfortable operating as a “single shingle,” your growth potential is linked to your team. Without a team, you are limited to what you alone can do. So, if you want to take a vacation or increase your earning potential, at some point you have to bring in additional talent.
That said, staffing creates its own range of headaches, so this is an important consideration to take seriously.
Your First Staffing Consideration
I get a disgusted feeling when I recognize places where I am wasting time and money.
When I think about staffing, my goal is to remove headaches and free myself up to grow the business. If I’m constantly buried in email or managing my calendar, then I’m not operating at my peak. Plus, it’s an easy trap to get caught in. I would want to hire – at the very least – a Virtual Assistant to help me manage communications and task planning. Even the most expensive VA costs a fraction of what I would lose by doing those things myself.
What tasks do you find yourself doing on a daily basis that:
- Bottleneck the growth of the company
- Waste your time
- Don’t play to your strengths?
“I’m Already Past That”
While many of my clients and readers are “solopreneurs” who should be looking seriously at hiring a VA, more are established business owners who have a staff already. For them, the VA isn’t an obvious first choice, but I want to challenge you on that.
Nobody pays you to read email. Calculate the time you spend on administrative tasks and figure out what you would have made if you had spent that time on billable activities. If that math doesn’t drive you to hire a VA, nothing will. But keep in mind that you’re probably missing out on a fortune by misallocating your time. If you already have an assistant, that’s great. Now, it’s time to look for additional things to push off your plate.
Anything To Offload
I want to offload as many tasks as I possibly can to people I trust, so I can focus my time on the activities that make money. For some people, that is a major roadblock. If you’re one of those people who believes that you have to do everything yourself because nobody else could do it right, then you are stuck where you are. Maybe your writer doesn’t write things exactly the way you would, but at least it’s getting done and you didn’t have to burn your own daylight to get it done.
Your ability to delegate is the throttle on your income. I’ve met talented people who could be bringing in much bigger checks, but their ego won’t allow them to raise up other people to do the work they love doing.
Your Next Staffing Consideration
Once I’ve hired a VA, I look for other things that I could do, but would be better-off delegating, like a social media manager or an email marketing manager. Now, if my core strength is writing content, then absolutely, I should focus on that. For most business owners, though, that’s not what they went into business to do, so off it goes.
It’s critical to know your strengths, and surround yourself with people who fill in essential tasks where you are not as strong. I’m not a great project manager, so I’m usually better off hiring that role. Home builders, for example, should probably hire a content marketer. Content marketers should hire a bookkeeper.
Play to your strengths and hire in the rest.
The Who v The How
The underpinning management concept I share with my clients is “The Who versus The How.” Rather than focus on HOW things get done, I need my attention on WHO can do the work without me.
I know I’m not going grow a 9-figure business on my own; it would kill me. So when I’m looking at an opportunity, I’m thinking about who I could bring in around me to build it. I’m thinking about the most talented project managers, bookkeepers, coders, marketers, and HR people I know and how to activate them.
Could I do all of those tasks? Sure – as long as I don’t mind keeping it small. But if I want to build something big, I want to surround myself with people who are more talented than I am and put them in positions where they play to their core strength, so I can play to mine.
Does it cost money? Yes. But not anywhere near what I could make with their help. And not anywhere near what I lose by trying to do it myself.
Front Office V Back Office
One important thing to think about when hiring is how an employee will interact with your clients. For instance, if you hire someone in a front-office (client-facing position), they need to be well-groomed and have great people skills. They need to be able to communicate clearly in the client’s native language. On the other hand, back-office roles, like bookkeepers and web coders, might not need to be as polished. I work with talented people from around the world whose spoken English is not very strong. I don’t put them in front of the client, either in writing or on the phone.
What To Do When You Can’t Afford To Hire Help
A key reason most small businesses fail is because they weren’t willing to spend the little bit of money to offload non-billable activity. They become a slave to the business, stepping over dollars to pick up pennies. If I had to start over from scratch tomorrow, the first thing I would do is hire someone to take tasks off my plate.
One of my good friends struggled in business because he believed he couldn’t afford to hire help. The truth was, he couldn’t afford NOT to hire help. Every time he checked his email, he was throwing revenue away. If he had paid someone $15 an hour to keep tabs on his email, he could have charge a client $75 to do what he was good at. But he didn’t see the math that way.
If you’re struggling to keep the doors open, your best bet is to focus on your core billable strengths and bring in just enough talent to manage tasks and solve problems without you.
No Margin For Staffing
If you’re charging fifty dollars for an hour of your time (you’re really getting about $30 after taxes), there isn’t much margin left to hire help. How do you rise above that?
Aim small, hit small. I recommend to people that they get a couple of hours of someone’s help each week. Negotiate a low starting rate. You don’t need a high-paid executive assistant 40 hours a week when you’re small. You just need enough to free up your time. Grow yourself over time. Increase your value and raise your rates. Increase your help accordingly.
If all you have is $100 each month, pay someone $10/hour and get a half-hour per day of help. Now, use that extra half hour each day at your hourly rate to do work for your client and you’ve way more than paid for it. Over time, the wedge between your hourly rate and the rate you pay an assistant will grow to a massive scale.
Leverage Help To Boost Revenue
Your first priority is to use the time you freed up by hiring an assistant to boost your income. Then leverage some of that increased income to pay the assistant to free up some more time. You’re basically reinvesting part of your revenue back into operational support to increase your revenue further. That’s always a good investment.
You also benefit from having an objective set of eyes to help you triage what’s important for you to think about and what is not. There’s no possible way that you have to touch everything that goes through your office.
My Wife’s Example
My wife is a great example of this. She has her own business, her own podcast, and our three kids. We had to make some choices: hire someone to do household tasks for $12/hour or have her do it and give up her billable time. You have to judge for yourself what is non-negotiable. We will never let someone else take over raising the kids, because that is non-negotiable to us. She is the only mom our kids have. But anyone can clean the floor and do the laundry. It’s a question of priorities and values, and I can’t dictate that to you. Only you know what you must do.
The Gig Economy And W2 Staffing
Know your numbers.
I recently saw a Harvard study (if I find it, I’ll post it) that said that the most successful companies in the world allocate between 20% and 30% of their revenue to employee costs. That’s a good number for most companies at all sizes to use as a benchmark. If your employee costs goes above 30%, that should be a red flag. Otherwise, it will start cutting into profitability or other pillars of your business. You need to look for ways to optimize your staff.
Cash flow and Accounts Receivable should drive your staffing. Gary Vaynerchuk hammers this in his materials. He explains that Accounts Receivables the measure of whether you are growing, stagnant, or failing. I like to merge that principle with the concept of forecastable payroll. The more stable my payroll is, the better I can project costs and profitability. Then the better I can project my staffing needs, or whether I should even accept a project.
When It Makes More Sense To Hire Contractors
When it comes to matters of risk and liability, it almost always makes more sense to hire 1099 contractors. With 1099 contractors, you don’t have to pay as much in taxes and benefits as you would with W2 employees. Now, there are some states where the law makes it advisable to take the leap and hire W2 employees. I’m not a lawyer, so I can’t speak knowledgeably about that, but that’s one of those areas where it is valuable to have good counsel on your team.
Contractors tend to be more flexible in terms of scheduling and aren’t as big of a burden on your cash flow during soft months. For young companies, as you’re finding your groove, this is usually the best way to go.
What Other Staffing Questions Do You Have?
Obviously, we could do a series of articles on issues of staffing and payroll, but I just wanted to give a high-level overview for now. You probably have some questions that are unique to your situation, and I want you to know that those questions are important to me. I really want to help answer those questions, because I know first-hand that these are the kinds of questions that keep business owners awake at night. Please write your questions in the comments for this article on either Facebook or LinkedIn (or both, if you’re not getting any sleep at night) and we will address them there or call you for more information.
One way I like to talk through your questions is to get face-to-face (or phone-to-phone). That’s why we schedule 45-minute “Fit Calls.” With the Fit Calls, we can talk about where you are right now and where you want to go, and then determine if it makes sense to work together.
Another great opportunity to get your questions answered is one of our upcoming “Unchained Entrepreneur” workshops, where our team rolls up our sleeves with 14 local entrepreneurs to workshop their businesses. Obviously, the space is very limited, so click here to see the schedule of upcoming events and get registered.