I bumped into my friend Josh (great name right) the other morning. We had both turned up to the same cafe to sit down and work. I sat down to say hi and we ended up talking about his business for an hour or so.
Josh is a very talented graphic designer, with a knack for working out exactly what you’re wanting to communicate and then producing quality work that achieves this.
He started out running his business part time, after hours, while holding down a full time job. A few years ago he made the jump and went out on his own. Now he has so much work he is having to turn it away (this is a good problem).
Naturally hiring staff, and expanding were topics of discussion.
Hiring staff, or contractors, can be the most rewarding, and most frustrating part of a business. It can all seem a bit overwhelming and easy to feel like there is no right answer or approach.
After chatting with Josh I left him with 4 things to consider as he thinks about the direction of his business and whether that involves 100% staff, contractors or a mix of both.
Before we start I just want to encourage you that if you have reached this stage it is a massive achievement! For
First, Some Context
I have managed staff (and contractors) in some capacity since I was 17 years old.
At McDonald’s, I had a team of around 70 reporting to me. This consisted of a small core team of full-timers, 8 managers and a large number of part-time teenagers.
On the other extreme – the most recent business I was involved in, a housing company, was 100% contractor based, again with around 60 different relationships to manage.
The Silverspoon, a restaurant we owned for almost 7 years, was a good in-betweener with a mix of both staff and contractors. There was a core team of 10 -12 staff and a whole bunch of suppliers and contractors that we relied on. Not just the usual ones like the milkman, coffee roaster and butcher. Relationships such as the electrician, coming in on mothers day when you’re in the middle of your busiest shift of the year and the switchboard blows its main fuse.
These relationships needed to be strong for the ongoing success of our business. It’s fair to say I have learnt a thing or two about working with people to succeed in business.
The true cost of hiring someone
The first thing I encouraged Josh to think about is being realistic about the extra costs involved with staff. Straight off the bat, there is the obvious financial implication, the going rate for the skills you’re hiring for. However, It’s really easy to forget about the hidden costs.
As a rule of thumb add at least 20% to the going rate to cover the financial extras.
This covers your minimum obligations of
8% holiday pay
2% sick pay
3% – 4% public holidays, depending on your standard hours and when they work.
+ a couple of % for ACC, admin such as payroll cost and other miscellaneous costs and obligations (ie Bereavement Leave)
And Then There is the Downtime
Then you also have to think about the down time, this has an immediate two fold hit.
First, there is the time you will personally spend dealing with people instead of doing your own productive (billable) work.
Second, you cannot expect someone to be at 100% productivity all the time. Inivitiably for one reason or another there will be
I have talked to a few of my time based business friends and they say to allow around 20% – 25% of hours for
Develop a System Now, Even While It’s Still Just You.
As soon as you have to look after other people, checklists, guidelines and routines become crucial. Develop these before you need them!
It doesn’t mean you need to document every single movement. A good place to start is to identify the key steps or critical parts of your process. Map out how you, and your business, approach these critical steps. It could be a FAQ in Google docs, printed, or even a simple intranet page.
This becomes a checklist and guideline for how you would like things to be done.
I write “… I thought I was a pretty talented manager (high self-esteem!) but I realised that there are plenty of people out there doing just as well, if not better than us. I shifted my focus from being the person solving all the problems to teaching others to solve the problems.
We created sheets called “just to clarify” that covered everything from answering the phone, taking bookings and dealing with complaints. These sheets, along with other documents started to form an operations manual for the business that we created from scratch. I created a spreadsheet to help the chef cost his meals, and make stock counts faster. We created rules for managing
I go onto to explain two great, yet really simple, examples of how we tackled automation in the restaurant. Whenever I was asked a question, or even when I found myself googling on a certain topic, I would save a written copy of the answers.
At first these were just notes in my computer, gradually I started printing the most important notes out and storing them in a folder which I kept upfront by the till.
From the employees perspective they don’t want to interrupt you. By creating a guideline that they can read and look up you are saying to them “Hey, I know your a smart person and can think for yourself”
Reflect on Where You Have Come From
As you wrestle with the direction of your business stop and think about the following,
Where have you come from?
By that I mean “How is where you are today a result of accomplishing a previous goal?” It’s easy to get caught up with
On the blog, I have published my yearly reviews, reflecting on the lessons I have learnt that year and how I will use those learnings to guide my decisions going forward.
In “Yearly Reviews” I write…
For the past few years now I have put aside some time over the summer break to reflect and write a list of achievements and lessons from the previous year, inspiration from Tim Ferriss as he outlines here. The result is a collection of thoughts and aspirations being written down inevitably leading to a change in how I approach the next year.
Think About Where You’re Going
What are you trying to achieve? Do you actually need to grow? Close your eyes, think about Where you (and your business) will be in 3-5 years. You can’t and never will have your future mapped out 100% but when you think about the future this way it will give you a target to aim for.
Often we make decisions not because it lines up with our plan but because we assume “that’s what I have to do in business”.
Growth is not always the only answer, in Small
A Question to Finish
Funnily enough Josh asked me this question when he was doing some branding work for me.
If you were to summarise your unique ethos, what drives you, what common theme(s) would exist in every one of your ventures, what would you say?
As you start making decisions about growth, staff, direction stop and think, Does your decision measure up with where you want to get to? Or is it sending you further away from your original vision?