Monday, September 18, 2006

Knowing When You Need More Help

Every business goes through growing pains. These times are good and bad for a number of reasons. Let us look at some of the decision making process necessary for deciding on the addition of more employees.

Usually it all begins with a one person or partnership company that finally breaks over the top. They suddenly come to the conclusion that they can’t meet the demands of their customers fast enough. This problem, as wonderful as it may appear, results in two possibilities, expansion or competition. Expansion should be seen as a good thing but more often then not it is feared and competition is allowed to flourish.

I realize that this is a rather simplistic view of competition but it is one of the contributing factors. If we can get a handle on this part of the game we can effectively grow our business. Failure to deal with the various parts of competition may end in a reduction of business or an over supply in the market place.

Most of us who have been in our own business can clearly remember the moment where we seemed to be working around the clock. We seemed to lose our creative energy and are caught in an endless production cycle with no innovation. We seem to lose some of the love that got us into business in the first place. Usually our first employee decision is hiring a family member. Many business owners will tell you this was the first bad decision that might have destroyed the company. I don’t have anything against family members but the lack of separation between family and business can be more tiring then the business itself. There are many advantages to hiring family but establishing a line between business and family is vital. Clear agreement on authority and direction needs to be firmly established before the hire. Don’t let a strong family member destroy your dream. Take charge of the situation and clearly define the help you want or need. Just because they are family, doesn’t mean you have to be a rug.

Finding the right employee is a daunting challenge but knowing you truly are ready is just as important. The big question is, “How do you know you have enough work to warrant another employee?” This question needs to seriously look at the cost of an employee verses the cost of not hiring.

The first most obvious cost is the amount of overtime you are paying current employees. Why would you pay someone 1.5 times their going rate when you don’t get any more for the extra expense? Sooner or later the cost of overtime will balance the hire. If you are paying for twenty hours of overtime a week that could be absorbed by a new employee, then you have three fourths of their wage covered. Let us not forget the reduced stress on your current employees that will help your business. We also need to consider the potential increased production time available.

I realize that a new hire will not be up to speed for a while but let us not forget the extra 10 hours for learning and ultimately business growth. There is some risk here, but the rewards are substantial. We are giving our business room to grow. We have to make a decision to invest in future growth.

Some people will wait until their full hours can be recovered. The expectations placed on the new hire become too high at this point. It is doubtful that any business can expect someone to walk in and do the full complement of their duty from minute one. Smart money would allow for growth and the learning curve. Let us not forget that you or one of your key employees will need to train this individual and this will take extra time. Once again, I stress the importance of investing in the future. We don’t want to take on too much risk. Play it smart and allow a little wiggle room. Patience and reasonability will make the choice a success and will garner a happy successful employee.

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Blogger GUYK said...

Yep, been there and done that.I had a small corporation that was owned by my wife and I doing manufacture and repair as well as retail of fishing rods and reel and tackle. I had a single store and shop and built the business on personal service and had found a nick in the industry that did well. I opened the second retail out let and saw gross receipts increase but percentage of net decrease..It really didn't make me any more mney that if I had stayed with the single store and increased the paperwork volume tremendously..did help on the price when I sold out though.

5:38 PM, September 18, 2006  

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