10 Startup Tips
Chapter 22: Recruiting Employees
So your business has grown,
you have enough money for yourself
but are overloaded with work.
Is it time to hire staff?
Can you not hire someone?
“Production,
sales,
PR,
designer,
research…
When can I hire someone?
It’s never possible to work hard
and have a great time at the same time!”
(Ruth, flower dealer)
Hiring your first employee is a big step for small businesses.
Basically, you will be worried because:
• The cost is too high
• Administrative procedures
• I can’t trust someone to do a good job like me
Expenses: Salary will be an important expense.
Before committing to full-time employees,
you need to consider the possibilities of outsourcing,
freelancers,
and part-timers.
There are tax categories for hiring employees,
but they are not required.
However, before hiring employees,
you need to remember:
Calculate opportunity cost.
Here’s a useful lesson from the economy:
Q: You are shipping
– a job that costs £10 an hour to hire someone to do.
Does that mean you’re making a profit of £10?
Wrong answer!
Your goal is to grow your business at £100k.
That would require an additional income of around £2,000 a week,
or £60 an hour.
So for every hour you’re doing a job
that doesn’t help your business increase profits
(eg bookkeeping, paperwork, shipping, production)
you’re actually losing £50!
In the short term, it may seem like you are losing money,
but in the long run,
your business will grow.
Administrative procedures:
Business owners often have trouble with administrative procedures.
We are hiring a sales manager.
However, we cannot use the word “ambitious” in our job ads
as it would cause age discrimination. Unbelievable.
However, if you are a reasonable and understanding boss,
you need not worry too much about that.
If you’re worried about breaking the law,
then you should become a member of the Small
and Medium Enterprises Association.
For a reasonable annual fee,
you can get a free consultation
(in Vietnam, you can visit: www.hasmea.org
or call (043) 32910129/39425640).
I can’t trust anyone:
The biggest reason people don’t hire is the fear that
something bad could happen.
I can see this from Ruth’s example at the beginning of the chapter,
the reason she does this is that she doesn’t want to delegate.
That’s fine if you’re a small business,
but short-sighted if you’re looking to grow.
The content of the assignment below will give you some ways
to deal with this fear.
Other options:
outsourcing and freelancers
Before hiring a full-time employee,
consider other more flexible options.
Outsourcing to professionals
or freelancers can be quite expensive.
However, they have more proficient expertise.
You should also consider the “opportunity cost”
– for example, how much you could make
if you went out selling and didn’t have to drive a truck.
Here are the areas where small businesses can outsource.
Shipping: If shipping isn’t a vital part
of building a customer relationship,
hire someone to do it.
Keep accounting records (see Chapter 20).
Production:
This may seem quite difficult for a product business,
but you have to ask yourself
– am I capable of doing the manual work for each product
or am I good at selecting materials?
for product,
packaging or sales promotion?
McClaggan Smith sells a variety of popular porcelain mugs.
They used to hire a porcelain kiln operator to make these cups.
However, this made their labor costs quite large,
and then seasonal problems,
quality control, etc.
Then they started transferring production to a specialized supplier
of porcelain cups
and just did the work stamped design
and packing at home.
Their real talent is finding talented designers
and good sales channels.
What to look for in an employee?
If you’re ready to hire,
there are two golden rules when looking for employees:
1. Need attitude, not talent
When it comes to hiring more employees,
people often feel nervous.
As we read in Chapter 12 on guerrilla marketing,
when faced with risky buying and selling,
often people don’t look for the best,
they’ll look for the least bad.
Let’s revisit the following scenario:
You get interested in someone during an interview
and are really impressed
by their can-do attitude.
However, they do not have much experience in that field.
Then a former employee of a rival company arrived.
He doesn’t give a very good interview and seems a bit slow,
but he has a degree and most of all,
your opponent hired him…
Do not do that! Trust your feelings.
Remember,
you can
quickly train people with most skills.
That’s very close to not being able to change someone’s attitude.
If they are grumpy and negative,
the attitude will spread to your entire company and customers.
2. Don’t rent your copy
“As an entrepreneur,
I tend to let go of things
I don’t like to focus on new things.”
(Al, training company)
Obviously you need starters and salespeople,
but you also need to have the same number
of people getting the job done in the office
to be able to deliver on the promises made by “important” employees.
Eight is also yes,
the official also nods” offered.
If you are an extrovert,
you tend to hire other extroverts around you.
This can be a real danger to your business.
According to a hiring consultant:
In business,
you can’t just be surrounded by boisterous people
– you need a lot of mature,
simple people
– who will actually do the work.
As such,
you cannot be held accountable in all areas.
No matter how big your sales are,
if someone doesn’t check the quality
or follow up on overdue invoices,
sooner or later you will go bankrupt.
How to find talent?
Your potential employees are one of the most important investments you have.
You need to take the time to be sure
to find the right person.
You need to approach this in exactly the same way
you want to grow the market.
Start with someone you know.
Ask friends and family.
Gifts can be given to those who have referred a good employee.
However, don’t stop there just
because it’s cheap and safe.
If you find the wrong person,
the problem is reversed.
Reach out to local businesses,
career offices,
or similar organizations.
They may have a useful job referral program for you.
Be flexible.
You can find excellent candidates in groups
such as fresh graduates,
women working after giving birth
or retirees looking for work.
You will feel satisfied with their dedication and enthusiasm.
Stay in touch with your competitors,
and especially their employees.
Consider posting ads,
but don’t look for obvious choices either.
If you are looking for a young and dynamic employee,
the guides of local entertainment companies can help you
and are cheaper than advertising in the newspaper.
At the same time,
you should search on job sites.
Always looking.
If you have a website,
provide details about the recruiter.
Also, keep your old CVs
– these candidates are also worth keeping in touch.
Business secrets:
Be careful when hiring friends and relatives
Chances are you want to do it this way.
You think you know them,
you will save on interviews and ads,
you can always smile and help them do boring tasks.
But at first, it makes them feel worthless.
From the moment they walk into the room,
they might think,
“She hired me because I was a friend.”
You will have less time chatting with friends.
Think about having to be strict with them
when they can’t do the job?
If you’re determined to do this,
you’ll also need to go through a formal interview process
and consider other applicants.
Interview process
Method:
The interview sample below will help you conduct successful interviews.
These templates are also available at www.fromacorns.com
Step one: Write a job description.
When doing this,
limit the list of tasks that the person has to do
and think about the work attitude they must have.
If they have to serve customers in your sandwich shop,
describe a friendly personality
as more important than food preparation skills.
Conversely, if you need someone to oversee the production process,
your ability to pay attention to detail is more important
than making a good impression on them.
Other attitudes to consider are their ability
to work under pressure,
whether they are aggressive
and you don’t have to keep an eye on them,
whether they fit into your company “culture”.
Step two:
Before the interview, brainstorm
and write down questions
that will help the candidate become more open-minded.
You should have open-ended questions like:
“How do you like the working environment?”
“What did you like and dislike most about your previous job?”
“What kind of work would you like to do in the next five/ten years?”
If you ask:
“Are you trustworthy?”,
only a fool would answer “No”.
Step three:
Interview.
Your goal is to make the candidate feel comfortable and stress-free.
This isn’t just about being “polite”.
You want them to be as natural as possible,
so you can get an accurate idea of who they are.
Also, keep in mind that if this is a potential hire,
you need to sell to them.
Take some time at the beginning of the interview to introduce them
to the company and tell them your business vision.
In addition to interviewing,
you can also make them a grave
test. In some highly technical positions,
you need to test their skills.
It also gives you a chance to see their working style.
Step Four:
Immediately after the interview,
conduct an assessment of the person.
You will easily decide according to your feelings,
so you need to analyze the scoreboard
and objectively calculate on a 10-point scale about their attitudes and talents.
Then you can consider how important they are to you.
Step Five:
Ask referrals and listen to them.
Because either people can’t find referrals;
or the person you are communicating with may not be very enthusiastic.
Job Description Salesperson
Interviewer Jennifer Hopeful
Required Attitude Friendly
and enjoys working with people Reliable:
arrive on time Sales experience Enthusiastic:
share work
Note
Score 10 Friendly Trusted Experience Enthusiastic
How to be a good boss
1. Empowerment
One heavy and important task you face in building a business
It is delegating authority.
There is no magic trick here.
It sounds sad and scary
– but then you have to empower.
My friend’s father built a large business
with many employees and was successful in retail.
My friend and his newlyweds flew from the US to the UK
to spend two days off with their father,
but every 5 minutes he got a call
from the staff asking about very trivial issues like choosing a carpet color.
Imagine you are observing a salesperson serving customers.
You feel unsatisfied,
so you go ahead and do it yourself.
By doing so,
you have satisfied yourself with your work
and the work goes faster.
However, you:
Frustrate that employee completely.
It’s like telling them you don’t trust them.
Show them that they don’t need to make their own decisions
or take responsibility for their actions.
Show your customers you don’t trust your employees
(so why should they?).
And who says your way is right?
If you give full responsibility (rather than duties),
your employees will feel more confident and motivated.
They will control that entire business and set you free.
My father gave me great advice
that I didn’t really understand
when I first heard it
(obviously Voltaire’s sentence):
If you are overwhelmed by every job
that you and your employees do perfectly,
then you may be missing out on many other great opportunities.
A reader,
Al, sent me a quote from General Patton1
that could be put into this context
(since “war” is translated into “business”):
The best is the enemy of the good.
“Don’t delay.
The best is the enemy of the good.
I mean, a good plan now has a better chance of being perfected
than a perfect plan next week.
War is a simple thing,
and determined individuals are confident,
quick,
and daring.
None of these traits can be perfect,
but all can be good.”
2. Employee bonus
Sometimes the greatest rewards aren’t money.
By joining a small and growing business,
one has the opportunity to gain more responsibility,
experience,
recognition,
flexibility,
diversity,
training and space to grow than in a large enterprise.
This also means you don’t have to pay them
as much as the big competitors.
Share your business success with them,
be it in the form of year-end bonuses or a party,
sales commissions
or even shares in the business.
3. Talk to the staff
This sounds obvious,
but few people do it.
In your work schedule,
at least after six months you should have one conversation
with each employee.
This is an opportunity for them
to talk about what they have done,
areas they want to improve,
develop,
or have a lot of training issues.
This is also a great opportunity to hear about how they feel about the business
and the areas you should improve.
4. Inspire employees
If you want to build a boat,
don’t let everyone bring in the wood,
divide the work and give orders.
Let’s instill in them the desire to reach out to the vast ocean.
(Antoine de Saint-Exupéry,
The Wisdom of the Sands).
By sharing a powerful,
compelling vision and passion,
you can gain the voluntariness of your followers.
McKinsey2 management consultants talk about the “sunflower principle”
– when all the people at the top of the business turn
to the inspirational leader.
And if you are the lucky one,
this can be a compensation for your impatience,
disorganization,
lack of division of work and perception,
unreliability, etc.
When an employee resigns
This will definitely happen.
For the first time,
you’ll feel like you’ve been kicked.
My first employee left
after five working days to switch to a higher paying job.
For the next week,
I stayed up all night asking myself,
“Did I say something wrong?
Should I try harder?”
Remember, it may not be your fault.
Try to figure out the exact cause of this,
and don’t let it happen to the next person.
At the same time,
try to let them leave comfortably and happily.
Recruiting “baboon” salespeople
If business is the animal kingdom,
the salespeople are baboon.
They’re strong,
curious,
witty,
and spend a lot of time circling around with long strides,
puffing out their chests proudly,
admiring each other’s red ass.
These types of employees can make employers uncomfortable.
They can be insolent, exaggerated,
rude, greedy,
arrogant, and impatient.
However, without them,
your business will never grow.
A salesman worked very successfully for a publishing company
and after a while he was given a Porsche.
Soon, he got bored
and told his boss he wanted a Lamborghini.
After the shock,
they bought him that car.
They took him to the parking lot to give him a new car
and exchange the keys to the Porsche.
He said,
“Who said ‘change’?”
Out of pride, they let him go.
This person quickly left the company
and jointly started a new company worth 10 million pounds.
However, it is very difficult to hire
and motivate good salespeople.
1. Find good sales people
If they are good salespeople,
they will do well in a good position.
If they are in an open market,
or are approaching you,
there should be wake-up calls for you.
Just like finding new customers,
a good way to find salespeople is to find change.
For example,
they may move to a new location,
their business changes,
or they return to work after maternity leave.
You can entice them out of their current job in other ways.
Maybe they’d rather sell your product than have to search the classifieds.
Maybe they are looking for more experience and responsibility.
I won’t repudiate a newbie doing good work
– remember,
you’re looking for someone with a positive attitude.
You can teach them to work quickly.
It is also possible that
they are looking for a stake in your business.
I don’t have to evade this
– after all,
it’s better to have 75% of a £1m business than 100% of a £250,000 business.
However, make sure they earn it
– set a sales target where their commission can be redeemed for shares.
2. Interview
In essence, salespeople are good at persuasion,
so they will perform very well in the interview.
However, what you are looking for is someone
who can constantly pick up the phone
and offer you new business.
That quality will be difficult to assess in an interview.
Ask for some of their successes in previous jobs.
Find out what bonuses they get.
Mark, an experienced sales entrepreneur,
gave me this advice:
Ask them for the last pay stubs of recent work
– it will prove their success.
Let them know you will be contacting the referrer,
so they won’t be able to make up stories.
Finally, I always record interviews.
I find this makes them more cautious about
how they might exaggerate their abilities
because there will be tape recordings of what they say.
You can also create a test that is a sales call,
or try some of the tests that measure morale.
If they’re a great candidate
but they aren’t about to quit their current job
because they’re doing so well (which is a good sign),
Mark offers the following advice:
I called a local auto dealership
and told them to bring a new car to sell.
At the end of the interview,
I went up to them and said,
“Here is the solution to this problem if you sign us today.”
It showed we were serious,
it helped us close the deal,
and it wasn’t very expensive either:
a rental car for £300 a month.
This amount is nothing compared to what a good salesperson brings.
3. Rewards and incentives
Money is never annoying.
Make sure the pay is commensurate with their performance,
maybe low base salary,
but high commission based on sales.
The commission should increase gradually,
when they sell more,
the commission rate also increases.
Sales can come in a little early,
so you need to look for evidence
that they’re filling the sales funnel:
appointments are set and sales are progressing.
You can use the sales funnel template on www.fromacorns.com.
If they’re working,
I won’t upset them by forcing them to be on time.
I can also buy them cute little items to make them feel good.
Of course,
I also don’t let other employees see these items.
