Take-home vs. Payroll in a Stage 4 Business, Part 2
The tips I offered to stage three businesses still apply when hiring in stage four. But, there are some additional important factors that come into play in stage four.
In a stage four business, you’re generally doing between $1 and $3 million in annual sales, with 11–25 employees. You can’t have everyone reporting to you and you have to hire outside your network of friends and family. But your investment dollars in new hires would be more productive under your mattress if you don’t get the hiring right. Here are three time-tested principles to help you get it right:
- Relinquish control of some things. This is tough because the stage four entrepreneur built a seven-figure business through grit, hustle, sales, and marketing savvy and controlling every detail. These are the very skills that helped the business get to seven figures. But, the game changes at stage 4—now it’s more about leading people. Don’t get me wrong, you still have to sell. But now you need to relinquish some control to your people. I tell stage four and five businesses all the time that entrepreneurship is an exercise in relinquishing control. If they don’t do it, they’ll grip so hard they’ll strangle the growth of the business.
- Articulate your purpose, values, and mission. This is something you don’t relinquish control of. Your purpose, values, and mission are the soul of your company. When you make these clear and co-create them with your team, it becomes possible for the control-freak entrepreneur (it takes one to know one) to gradually relinquish control as the company grows.
- Hire a three-person leadership team that fits your purpose, values, and mission. With 11–25 employees, you’ll need two or three leaders who are a great cultural fit (they are 100 percent bought in to your purpose, values, and mission). When you have a leadership team like this, they’ll share your vision, they’ll execute according to your purpose and values, they’ll hire people who fit your culture. You become a true leadership team, taking a huge load off your shoulders, allowing you to let go of the details, stop sweating the small stuff and enjoy your business and life. It is miraculous for business owners when they get this right.
This is not easy stuff. My team and I teach workshops on this at Infusionsoft for stage four and stage five “Elite” entrepreneurs who want to get to $10 million and beyond. But if the business owner is gripping so tight that he won’t relinquish any control, it’s virtually impossible for the business to hire properly, thereby stalling growth and ensuring frustration for the business owner.
SBS Idea of the Day: Are you gripping too tight, choking your business growth and alienating your employees who feel disempowered by your micromanagement? If you are, welcome to the club! Now, resolve to co-create your purpose, values, and mission so that you can get out of the trap you’re in. Read Chapter 2 of “Beyond Entrepreneurship” by Jim Collins to learn how to set your purpose, values, and mission.
Subscribe to our newsletter
Fresh small business insights and ideas delivered weekly to your inbox, gratis.