Take-home Pay vs. Payroll in a Stage 3 Business
Back from vacation. It was a great week in Hawaii. As I said last week, it’s almost impossible for a business owner to take a relaxing vacation without having good employees to man the shop while you’re gone. But, deciding whether to hire another employee is tough. In a stage three business with four to 10 employees and revenue typically between $300,000 and $1 million, getting the hiring decision right begins to take a huge weight off the business owner’s shoulders.
In stage three, marketing and service become critical. Finding “good help” that will treat your customers right is a priority at this stage. The business owner is no longer able to do all of the customer-facing work. And there’s nothing more frustrating than seeing an employee treat your valued customer poorly. You simply can’t afford hiring mistakes in stage three. Here are three tips to help you get it right.
- Articulate your core values and hire people who share those values. Your core values are the philosophical foundation of your business. You don’t need to hire clones—you want to compensate for your weaknesses by hiring good people around you—but you do need to hire people who share your beliefs. What do you stand for? How do you do business? Spell out six to 10 values that matter to you and then hire people who fit those values.
- Hire versatile employees with a can-do attitude. It’s important in a four to 10 person company that your employees can fill in where they’re needed. You don’t want “everyone doing everything” because role specificity and some specialization are important. But you do need people who will pitch in where needed to help the business. People with experience working in small and family owned businesses naturally understand this.
- Hire growers. At this stage, it’s critical that you hire people who want to grow. Young, hungry people who want to learn are invaluable to stage three businesses. The best way I know to identify growers is to find people who read a lot—especially books on business and personal development. If you find an applicant that devours personal development and business books, odds are, you’ve found a grower.
Growing a business to $1 million in annual revenues is a ton of fun. It’s also very challenging. Less than 5 percent of businesses ever get there. To do it, you need smart, versatile, hungry employees who fit your core values. When you build a team like that, you’re sacrificing some take-home pay when you add these hires, but you’re investing in your future and you’re building equity value in the business that will pay off handsomely in the future.
SBS Idea of the Day: Take the time to articulate your core values. Jim Collins’ book, “Built to Last” explains how to do this on pages 222–224. Don’t delay. Articulate a draft of your core values today and then start looking for employees who share your core values.
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