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How do You Know It’s Time to Hire?

How do You Know It’s Time to Hire?

Running your small business by yourself can be a lot of fun.  But, if you grow, sooner or later you will have to hire some help.  Here’s a great post to help you decide if the time is right.

 

BY LISA FURGISON

Is It Time to Hire an Employee?

If you own your own business and find that you simply don’t have enough time on your hands to be able to do all the things you need to do, you may be asking yourself should you hire an employee? 

If you’ve already got employees, your question will be similar, when is the right time to hire another employee? Regardless of the structure of your business, there will be times when you need to make this decision and it’s not always as simple as acknowledging there’s too much on your plate…

To help you figure things out, we asked entrepreneur Kurt Johnson, a Los Angeles resident who has created several businesses including his most recent fitness venture, Swollforlife.com, to help us figure out what to consider before hiring.

Start with a list of advantages and disadvantages

Figuring out whether the time is right, may be as simple as making your own pros and cons list. This is a good first step before you look into cash flow, last year’s financials and your workload. Consider this testing the waters. Here’s an example list:

Advantages of hiring a new employee:

  • You’ll have more help to handle the tasks that are overwhelming you.
  • A new employee can breathe new life into your business and generate new ideas.
  • Someone will be there to share those exciting moments. As Johnson says, you’ll have “someone to high five” when things go right.

Disadvantages of hiring a new employee:

  • An employee costs you money.
  • There are more tax forms to juggle.
  • A new employee requires a big time investment upfront.
  • You’ll carry added stress of another person being dependent on your business.
  • You’ll need to manage and monitor the new employee.

Once you’ve created your list, and perhaps once the advantages outweigh the disadvantages, you can move on to the next step – genuinely trying to work out whether or not you should hire a new employee.

Should you hire a new employee?

Administrator of the SBA, Maria Contreras-Sweet, believes there are 4 things to consider before you take the plunge:

  1. What is your vision for your business? Do you really need staff or additional staff or could you do just as well with virtual assistants or temporary workers? At this stage you’ve got to be honest with yourself – do you want to keep the business small or do you want to become a larger business?
  2. Where do you need help? Review your workload and your project pipeline. Is there anything you could offload on a new employee and if so, what ‘type’ of employee does this work suggest you need to look for? Perhaps a sales rep? Maybe a cashier? Or what about an accountant? Even if your goal is to hire in order to free up your own time, make sure you have a good handle on where that time should be spent so that you can look for someone with the appropriate skill set.
  3. Can you manage people? This is an important consideration. What have your past experiences taught you? If you believe you’ve got the ability to manage, what about the ability to make a good hiring decision? Do you need help?
  4. Can you afford it? Right, so this is probably one of the trickier parts. Take the time to build a picture of the costs and overheads your business will incur as a result of a new employee. Some things to consider: wages, unemployment tax, workers compensation insurance, medicare and social security taxes, recruitment and training costs, benefits, payroll costs, new equipment, software licenses, etc. Once you’ve got a realistic idea of the potential cost of a new employee, try to align this cost with the benefits you’ll get from that new employee. How much new work will you be able to take on? Take a look at your income and expenses from the previous year to assess whether you have the capacity to afford someone. If it looks possible and profitable, consider your pipeline and cash flow. Can you live with not being profitable in the short term or will this cripple your business?

If you’re still unsure about whether or not you can justify hiring an additional employee, it may be worth sitting down to to see if you can pinpoint those signs that say you really should bite the bullet.

Four signs you’re ready to hire

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1. When you turn down work

If you have to turn down work because you can’t fit another project into your schedule, it’s a good indicator that your business is ready for help.

“If you’re growth is being inhibited by the hours in a day that you can work, then it’s time to start thinking about another employee so you can retain all available revenue,” Johnson says.

No business owner doesn’t want to earn more money, but some don’t want the added work or complications that come with hiring someone new. Again, you’ll need to be honest with yourself.

2. If you identify a new revenue stream but need additional skills

Diversifying your business is a smart move. Along the way, you’ll probably find a new source of revenue that you could tap, but might lack some of the skills necessary to really dive in.

“Sometimes you will come up with great business ideas that you are just not personally equipped to execute on,” Johnson says. “This is a great problem to have and the right employee can truly make the difference in taking your business to the next level.”

3. If complaints are rolling in

If you’re spreading yourself too thin, it shows.

If customers start complaining about your work or about your timeliness, it’s a sign that you’re spread too thin. If you’re not able to commit yourself to each and every project, you’ll want to hire an additional employee. Bad word of mouth can damage your reputation and revenue, so you should hire someone soon if this is happening at your business. Even if you are just bringing someone in to answer your phones, field emails, or tackle your accounting practices, you will get those hours back to commit to clients.

4. When you have a steady stream of revenue

It takes a while for businesses to gain a steady stream of income, and you don’t want to take on an employee until that happens. An employee can help your business grow, but before making any staff additions, you’ll want to make sure you have the revenue available to pay him or her.

Weigh your options

If you decide that your business is ready to hire an employee, you do have several options. You can hire someone full or part time as a W2 employee, or you can hire someone on an as needed basis as a 1099 employee. If you hire someone as a W2 employee, you are responsible for paying taxes. If you hire via a 1099, the employee is responsible for his or her own taxes.

Johnson suggests starting with a part-time 1099 employee to see how much help you need and how the additional employee works within your business. Once you’re ready to bring on a full time employee, Johnson suggests consulting an attorney to make sure your business complies with all tax and healthcare regulations.

If you began your business on your own, when did you decide to hire your first employee, and what made you decide? Share your stories and advice in thecomments below.

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Lisa Furgison

Lisa Furgison is a journalist with a decade of experience in all facets of media. Follow Lisa on Google+

 

How to Find Success

How to Find Success

“You can get everything in life you want if you will just help enough other people get what they want.”

Zig Ziglar

Think about this simple statement.  It almost sounds too easy doesn’t it?

The great myth.

As Americans, we are all taught as children to aspire to success.  What does it really mean and how does one get it?  Is it a bigger house, nicer car, more money in the bank?  Do you have to work 16 hour days, 7 days a week, plot to destroy your competitors or anyone else that gets in your way?  This is the great American myth.  The way to happiness is paved with the accumulation of more “Stuff”.  Put another way it’s, “He who dies with the most toys wins”

What is success?

If we want to achieve something, don’t we have to define it first?  There’s an old Yogi Berra quote, “If you don’t know where you’re going, you’ll end up somewhere else.”  So, just what is success?

First, I believe success, like happiness is an inside job.  Only you can decide what success is for you.

This is the hard part isn’t it?  There is no one arbitrary, one size fits all, definition of success.  There’s no check the block list that, once completed, earns you a certificate from the US Department of Success.

If you win the nobel prize in physics but don’t have a dime in the bank, are you a success?

Then there’s the nagging question, what happens when you get there?  Do you then “live happily ever after?”

So, What’s the Answer?

I believe success is not a place or a thing.  I believe success is a wonderful, long, never ending journey.  One that is filled with sorrows, joys, trials, tribulations, celebrations, and fascinating traveling companions.  For, if we are fortunate enough to attain success, we will not do it alone.

How do I get started?

This brings me back to Zig Ziglar’s quote that led off this article, “You can get everything in life you want if you will just help enough other people get what they want.”

What this means to me is that life is really about service to others.

No, I am not talking about giving away all your earthly possessions, taking a vow of poverty, and moving to a monastery.

What I am talking about is simply devoting your time to helping other people get what they want.  When you do this,  people are glad to pay you for your assistance.

I used to be a mortgage banker.  I originated residential mortgage loans for people.  What I was really doing was helping people to buy homes.  I got paid very well for helping potential home buyers get what they wanted.  At the same time, my employer wanted mortgage loans to add to their servicing portfolio.  So, by helping home buyers, I also helped my employer get what they wanted.

See what I mean?

Ask yourself, “What am I passionate about?”  Make a list of things you really love to do.

Now pick one or two things on the list and ask, “How can I take this one thing I love to do and use it to help someone else get what they want?”

It’s a two way street

When you think about it, success really is a two way street.  We can only be successful by helping someone else be successful.

Let’s look at an example.  With apologies to accountants everywhere, I’ve tried to pick something that sounds pretty boring.  Taxes.  Did you know that at the end of 2014, the Federal Tax Code was 74,608 pages long? (http://www.washingtonexaminer.com/look-at-how-many-pages-are-in-the-federal-tax-code/article/2563032)

Let’s say you are an accountant.  Your specialty is taxes.  You are passionate about being able to pick apart the tax code to find all the little inconsistencies, faults, loopholes, etc., that people can use to reduce their tax bill come April 15th.  The more complicated the issue, the happier you are.

I’m a guy with a very sophisticated business situation involving multiple partnerships.  I’m trying to find someone to help me get my taxes done on time, yet pay the lowest amount due.  Do you think I would be happy to pay your fee to help me accomplish my goal?

You betcha!

In Conclusion

Joseph Campbell became fascinated with mythology.  He theorized there was a single myth (the monomyth) that was the pattern for all great myths no matter their origin or time of creation.

“Wow,” you say. “That sounds pretty dull.”

A professor at Sarah Lawrence College, Joseph Campbell became one of the most prolific authors and teachers of the twentieth century.  One of his most famous books was The Hero With a Thousand Faces.

This book has influenced untold numbers of writers and film makers in the art and practice of story telling.

George Lucas used the ideas in this book to shape the stories in the Star Wars Trilogy.

Joseph Campbell, was the one who said, “Do what you love and the money will follow.”

I believe this is true.  I also believe, if you follow this course of action, you will be both happy and successful.  But, remember…you are the only one who gets to decide whether or not you have achieved success.

Pick something you love to do.  Find some one who needs it done.  Go do it for them. Be patient and persistent in your service.  Have lots of fun along the way. Most of all, don’t let anyone else define your success.

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Want a Successful Business? Here Are 5 Keys.

Want a Successful Business? Here Are 5 Keys.

As small business owners, we all want to be successful.  That’s why we started our business in the first place.  But..in order to get there, we must be mindful of certain things.  Here is a great post from the Small Business Administration giving you 5 things you need to know.

5 Pillars of Small Businesses Success

By Marco Carbajo, Guest Blogger

Published: January 13, 2015

What does it take for a small business to achieve success?

Whether you’re already in business, or preparing to start a business, it takes hard work, tenacity and drive to achieve a high level of success. Lori Greiner, star shark of ABC’s Shark Tank says, “Entrepreneurs are willing to work 80 hours a week to avoid working 40 hours a week.”

According to Elizabeth Wilson of Entrepreneur Magazine, while some 40 million businesses are started each year, a paltry 350,000 break out of the pack and begin growing and making money. So how can a small business owner overcome some of the common business pitfalls? Marcus Lemonis, CEO of Camping World and star of CNBC’s prime time reality series The Profit, knows all about determining the success or failure of a business. Lemonis says, “Business success is about the three P’s: People, Process and Product.” Here are five pillars that make a small business successful.

1) People

If you want your small business to succeed, you need a fantastic team. Russell Simmons, Entrepreneur and founder or Def Jam Recordings says, “Surround yourself with people that are smarter than you.” A company can accomplish amazing things when it has leadership and a team who is inspired, hardworking and believes in the company’s mission.

2) Plan

“Quality is the best business plan, period,” says John Lasseter, chief creative officer for Pixar and Disney. Just about everyone in the business world agrees that having a plan is important. And that doesn’t mean the big formal business plan document you fear like a term paper. It starts small and may grow in time. At a start-up, implementation is everything. That means it’s essential to establish responsibilities, set goals, and track performance. You will also need to answer key questions, such as:

  • Have you identified your target customers?
  • What problems are you trying to solve for them?
  • What will be the most effective marketing and promotional strategies?

3) Process

Dr. W. Edwards Deming said, “85 percent of the reasons for failure to meet customer expectations are related to deficiencies in systems and processes…rather than the employee.” It’s crucial that you have a full and clear understanding of your company’s processes and have the right systems in place.

4) Product

Does your product solve a problem? Does it exist yet? Is there something that is out there that your product does in a different way? Is there a demand for your product? Success in business requires doing something you’re passionate about that fills a need in the marketplace. Debbi Fields, Founder of Mrs. Fields Bakeries says, “Once you find something you love to do, be the best at doing it.”

5) Profit

When it comes to measuring a successful business, profitability is probably the first thing that comes to mind. Is the company making money? A critical component of running a successful business is knowing your numbers. “If you want to be successful in business, you need to become proficient at handling certain numbers. You need to be able to read and understand your financial dashboard” says Dawn Fotopulos, Associate Professor of Business at The King’s College in New York.

Starting and running a successful business can be a fulfilling and rewarding experience. You as a small business owner should never stop learning, innovating, planning and growing. “Leaders spend five percent of their time on the problem and 95 percent of their time on the solution. Get over it & crush it!” says Tony Robbins.

About the Author:

Marco Carbajo

 

Marco Carbajo

Guest Blogger

Marco Carbajo is a business credit expert, author, speaker, and founder of the Business Credit Insiders Circle. He is a business credit blogger for Dun and Bradstreet Credibility Corp, the SBA.gov Community, About.com and All Business.com. His articles and blog; Business Credit Blogger.com, have been featured in ‘Fox Small Business’,’American Express Small Business’, ‘Business Week’, ‘The Washington Post’, ‘The New York Times’, ‘The San Francisco Tribune’,‘Alltop’, and ‘Entrepreneur Connect’.

If you enjoyed this article and would like to recieve more like it, sign up for my email newsletters by using the form on the right.

 

5 Dangers of Fast Growth.

5 Dangers of Fast Growth.

As Small Business Owners we know growth is the name of the game.  But, did you know you can grow too fast?  Here’s a great post warning you about what can happen.

5 Dangers of Overly Fast Small Business Growth Strategies

By Suzanne Kearns
Posted in: Small Business

 

Comments1

business growth team plantWhen you start your own small businesses, you immediately start thinking about growth. Maybe you just dream of eventually opening a second store, or you might envision becoming a huge conglomerate or one day franchising the business.

Growth isn’t just admirable – it’s expected. But often, small business owners don’t consider that growing a business too quickly can eventually cause the company’s demise. You can easily find yourself lacking working capital, which is one of the biggest contributing factors to the failure of one in six new small businesses.

You and your business can avoid the dangers of overgrowth. By managing your business correctly and scaling up at a good pace, you’ll guide your company on the path to success. Whether you’re running a home office or a company with many employees, the key is planning.

Make sure you know the five biggest risks associated with sudden, unexpected growth.

1. An Overbearing Debt Loan

If you don’t plan properly for an increase in business, you can wind up taking on far too much debt. Growth takes money, and especially during the early stages of growth, working capital will be low. Many business owners take on massive debt to feed the growth machine, and a vicious circle begins. Increased orders require you to take on more debt, and so on. Too often, the cycle breaks only because the debt becomes so high that it topples the business. Even though more money is coming in, you owe even more and can’t cover debts.

 

For example, if you owned a housecleaning business and suddenly began to get more customers, you’d need to purchase more supplies and probably hire some more help. These positive developments would involve a lot of cash flow, and they can quickly turn negative by eating up all of your reserves. The new business is good, so you give incentives to your existing customers to send you referrals, leading to even more customers. Again, you need more staff and supplies. Perhaps you go as far as adding a company car with your logo to spread the word and support the increased workload.

Your working capital completely depleted, you take the next logical step: getting a loan. At first, it looks like the increased profits will more than cover the credit payments. But while the client list is growing, the debt is piling on more quickly, and keeping up with payments becomes a struggle. The growth was good, but it came too quickly and caught you unprepared as a business owner. Better fiscal management would have allowed for controlled growth based on revenue and profits.

2. Being Unable to Satisfy Your Customers

As a small business owner, you’ll be thrilled to be in high demand. But you need to be sure that you can supply the level of service your customers expect. Personal attention is a key selling point that attracts customers to a small business, especially when you’re involved in an active local community. In the face of unexpected growth, you’ll face the challenge of maintaining quality with the increase in quantity.

Consider the case of the home cleaning service. With a manageable number of clients, you can easily give each one the personal attention that makes your company special. In fact, that personal touch is what got everyone talking about you, spurring the recommendations and the increase in business. While it’s inevitable that the bigger a business grows the less interaction the owner will have with the clientele, unless you manage expectations, some clients may end up feeling put out – and they’ll stop coming to you.

The answer to this problem is – again – managed growth. Calculate how many new customers you can take on without turning your back on the clients who got you started. As you grow, bring on a customer support staff to promptly attend to all of your clients’ needs.

3. Forgetting Your Original Goal

In an effort to expand your business, you’ll be tempted to move into somewhat related – but unexplored – territory. The housecleaning business, for example, could be growing at a comfortable pace when a satisfied residential customer encourages you to bid on the contract to clean a commercial building. It’s tough to resist the prospect of big contracts and new opportunities, but straying from your original business model too quickly can create a volatile situation. While you’re striving to succeed in an untested aspect of your business, you’ll be forced to turn your back on the duties and client base that got you started in the first place.

Entrepreneurs naturally want to try new things, and success often requires taking a risk on new ideas in unproven areas. But you have to carefully consider how much time you can devote to a new plan, and budget accordingly. More importantly, make sure you maintain the safety net of your current customers and business model. If your expansion effort doesn’t pan out, you need to be able to rely on the original concept.

4. Losing Employees

Any small business owner will tell you that your best employees are the lifeline of the business. But when a business experiences quick growth, lines of communication can break down. If you’re surprised by your business’s growth, you’ll get preoccupied with keeping up, and if your employees aren’t ready for it, you’re in trouble. You need to let your employees grow with the business, but training them for management and leadership positions takes preparation. If you catch your staff members by surprise, and you’ll likely lose them. For a small business, losing employees – especially longstanding ones – means losing institutional memory, customers, and money.

In the case of our cleaning business, getting wrapped up in all the new business could easily alienate an unprepared employee in charge of the residential aspect of the business. Without guidance and support, that staff member is left in the field guessing at what decisions are best for the company. Since this employee isn’t trained for management and doesn’t have your insight into the business model, you’re probably going to be unhappy with those decisions, and your customers will be dissatisfied too.

5. Focusing on the Short Term

It’s amazing to watch a company in the middle of a growth spurt. Cash rolls in and business owners think that they’re on the way to the top. Profit and loss sheets look good, and it starts to look like worrying about bills and cutting  business operating costs and expenses will be a thing of the past.

 

But a dangerous trap lurks in these bright days. In the search for good news, you can make the easy mistake of looking only at short-term profits. Instead, consider the plans that you’ll have to implement to sustain long-term growth and success. Don’t lose control just because you see a few good weeks and months in store. Making rash decisions to boost one day’s profits can cost you something – your cash reserves. And if you’re unprepared, those good days will suddenly end.

Remember that company car with the cleaning service logo? It may have been a little premature to have taken on the expense of a brand new car and decal work. Celebrate your success, but don’t overindulge.

Final Word

For your small business to succeed, the name of the game is growth. But growth is very complex. It’s hard enough to grow in the first place, so make sure that you handle it properly when that success comes. Keep your eye on three areas of the business: your systems, your staff, and your cash reserves. Successful growth requires taking the time to plan and prepare to sustain all three as your business increases.

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