You’ve launched your business and things are looking positive. You feel like it might be time to take on some hired help, some committed and talented people who can help fill the gaps in your knowledge or skills.
However, there is one very serious risk to consider; it could cause cash flow problems. Running low on cash is one of the top reasons startup companies fail, second to ‘no market need’ and ahead of ‘not the right team’.
Part of the issue with hiring an employee at the launch of your business venture is not really knowing what their job role might be, or why you hired them in the first place. When you are tired, desperate, and stressed-out is not the time to make a hasty decision to trust that a new hire will elevate the pressure and solve problems that you can’t.
The other issue with entrepreneurs seeking their first hire is a lack of direction and an eagerness for support. If you aren’t sure of the job role that you want to be filled, you are likely to hire the first person who comes along and sounds like they vaguely know what they are talking about. You might be so desperate that you don’t take the time to consider what this person would bring to your business, how they would fit with your overall vision and what expertise they have that would be of benefit to your venture. Too many entrepreneurs just hire the first person who comes along, rather than taking the time to interview many candidates and narrow down their choices. It is a costly mistake.
So, where should you start? As a solo entrepreneur, you could consider hiring a co-founder. A recent study found that teams with more than one founder outperform solo operations by 163 percent. The valuation of a team-based venture is 25% higher than that of a solo operation, so considering taking on a co-founder might be the best first move.
However, as this person will be working closely with you on your project, it is important that you choose the right person to establish a fruitful partnership with. While their complementary skills and experience are important, being able to connect on an interpersonal level is vital to your success. You will come into conflict, you will talk every day, perhaps more than you would to family or friends, and you will need to be transparent with your business partner about things that you might not be comfortable with if you need to discuss legal or financial issues. Look for a co-founder who:
- Shares similar values with you
- Has a high level of emotional intelligence
- Understands your vision and goals
- Is self-motivated and invested in the project
- Is flexible and honest
Remember, take your time to find this person. Your relationship could make or break your project, so it is important that you can depend on this partnership.
So what are the signs that you need to add a member of two to your team? While some of the following examples might look like a business in crisis, they are often indications that you are ready to take the next step and hire help so that your business can begin to thrive.
Your customers are complaining
Having customers is amazing! Having unhappy customers still means that you have customers, for now. When complaints roll in, it’s time to step up your customer service game, which can increase your revenue by double.
Out of 26 unhappy customers, only 1 will complain. That means that firstly, you’ve had customers, so that’s good, but you can also do better.
Customers generally complain if they experience:
- Bad-quality product
- Poor customer service
- Problems with your website
- Long wait times
And these issues are, generally, easy to fix with some adjustments and the right team members.
Customers all abandon you for the following reasons:
- Feelings of apathy from the company
- Poor customer service
- Competitor persuasion
- Customer relocates
You need to discover what the cause of your customer dissatisfaction is before you hire someone to fix the problem. If it is your website, you’ll need a designer, if it is your attitude, you’ll need a customer service expert. If it is because of better competitor offers, you’ll need marketing management.
You’re turning down work
If you can’t handle your workload your business will suffer. The cost of customer acquisition is far higher than the cost of maintaining customer relationships, so you need to be ready to expand and accept work when it comes.
This is one of the main reasons that solo operations never get off the ground. People often take on more than they can handle, have no plan for customer management, and inadvertently send their business to the competition.
The quality of your products or services are declining
Without quality control measures and the workforce to support your production (or services), the quality of your work is likely to falter as your demand increases.
When you are the manufacturer or service provider, it can be difficult to see your own mistakes or oversights. Hiring a professional who can perform quality control tests, such as proofreading, product testing, or service testing, as well as a general review of business output can help to improve your product or service consistency and even improve your offerings.
You’ve identified expansion opportunities
If you can see the advantages of reaching into new territory, introducing new products or services, or otherwise expanding your business, it is prudent to take the opportunity to consider a new employee as well. It might be that you need a logistics expert or a team of customer service agents. If you are ready to expand, and you have clear revenue stream opportunities, you might have to spend a little to make a lot. Hiring the right people to support your business expansion, rather than trying to go it alone or overburdening your current team, can actually increase your revenue opportunities rather than cost you money.
You are neglecting your daily financials, bookkeeping, and paperwork
You have to make time to do your paperwork, because if you fall behind you run not only the risk of losing money but missing important deadlines that could bankrupt your venture, such as paying taxes. While there are tonnes of software options that support small business accounting and bookkeeping, making it faster and easier to keep track of your business, you still need the time to input the information and follow through on business. Hiring a business manager, accountant or financial officer might be what your business needs to ensure that it is robust and adhering to the rules.
You need someone with a specific skillset
While you might know everything about your project, you most likely do not know everything about every aspect of the business. If your Fintech company expands to a new region, you might require a finance lawyer to help you navigate the transition, or a translator to update your website, or a code writer to improve your products. You don’t have to be an expert in all things, it is important to allow others to support your company with their expertise and knowledge.
You work all the time
If you find yourself replying to emails as you sit at the dinner table unable to hold a conversation with friends or loved ones because you are busy with work, then you need to take a step back. Taking time away from work is important for productivity, creativity, and relationships. There is a difference between working hard and putting in the hours in the first few years to launch your project and being addicted to work. If you find that you are missing out on life events because you are always putting work first it might be time to invite an employee on board to help share the load. You need time to sleep, relax, switch off, and allow your next big idea to burst through. When you are stuck in work all the time, you don’t allow yourself time to think, and your creativity, productivity, and ability all suffer.
You need more than one freelancer
Freelance workers are a great way for a business to start. It means set costs, no ties, and no need to supply office space, which is great for fulfilling short-term contracts. However, there are drawbacks. The quality of the work is often out of your control until after submission, and this can become complicated if a freelancer worker refuses to rework their final product if you do not like their submission. If you are not an excellent communicator, you might struggle to have your brief met unless you can speak directly with the freelancer (which in many cases you can) and work with them closely. Too many entrepreneurs are unwilling to pay for work and choose cheap options that disappoint them because they did not speak with the freelancer or using an intermediary company rather than finding the professional help they need themselves.
The benefit of hiring your own employee is obviously greater oversight, more closely aligned values and goals, and a person who is solely committed to working for you.
Hiring your first employee is a big step, but it could be the step that transforms your venture into a serious business and your business into a competitive company.
The few key things to remember are not to hire in desperation, not to hire just anyone who applies for a job and to ensure that you have a clear job role with specific tasks to offer your new hire.
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