Nature by Tiltti

One of my lovely clients is ready to scale up his business. Until now, he’s been the only full-time person in his company, and has been using freelancers whenever he’s had a big job on. Over the last 6 months he’s had an upsurge in business, mostly due to taking my sound advice to get out networking in his industry and to build a much better website to demonstrate all the great things he does.

So, now he’s unhappy because he’s got far too much work to do, is constantly fire fighting and isn’t having any fun. He’s making lots of money, but hasn’t got any time to enjoy it as he’s working 10 hours a day and pulling his hair out because he risks letting down clients. He doesn’t have much left, so he can’t afford to lose any more follicles.

He’s got a plan in place to bring someone else into the business as a project manager and he can afford to recruit someone to actually do the work, rather than using freelancers on an occasional basis.

He asked me an interesting question. Of all the businesses I see which scale up in this way, what are the problems they’ve experienced, so he can avoid these. I thought I’d share this with you guys as well.

First thing to avoid – cash flow nightmares

My guy is in a good position, because all the money which has come into the business is still there, so he has a lump of cash to pay some extra people. The usual pattern when you take on extra people is that for the first 4-6 months they seem to be dead weight, because you’re still the main fee earner, and you’re supporting the salaries of the people you’ve employed. So you actually see a dip in profits for the first while, and this takes some courage to get through. It’s tempting to think, I won’t employ anyone else because that’s going to cost me money. It will cost you money at first, and it will take a while for the efforts of the new people to pay off.

Plan out your cash flow for the next 6 months, and make sure you either have the money in the bank, a nice overdraft, or work that you’re pretty sure of getting. Or all three, if you like belt, braces and elasticated trousers.

Next – don’t recruit your mates

Very often, a small business’s first hire is someone they know already. Your cousin needs a job, and is good at computers… that sort of thing. You might trust these people to remember your birthday, or buy a round, but you have no idea if they’re any good at their job. A bigger company will be used to recruiting and will have lots of great candidates to choose from, which means you’re more likely to make the right choice, so act like a bigger company right from the start.
I didn’t actually tell my client this, as he’s already offered a job to a friend of the family. Fingers crossed.

Don’t assume that people know what they’re doing

When you work primarily on your own, you’re used to knowing how to do things. That’s how you got to this stage in the first place, by being really, really good. The people you bring in might be really good but they’re still going to need to know how you want them to do things. They will quickly absorb the culture of the organisation, so if you get in late every day, they will start to be late as well. This doesn’t follow for staying late, by the way. Set an example of how you expect the work to be done, how customers should be treated.

And set time aside for training people, especially if you’ve recruited someone quite early in their career. I cannot stress enough how important it is that you spend time with new staff and help them to learn how to do things in the right way. I know it’s a nuisance, and you’ve got a million things to do, but it’s your job to support all the people who work with you and make sure that they are being as productive as possible. It’s a much more important investment into your business than any amount of cash will ever be.

Other articles on scaling up your business

If you found this useful you might also want to read:

From freelancer to grown up business

Your first member of staff

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I wrote recently about the businesses I can’t help, so I thought it was only fair to write about whom I can help.  It’s tempting to write this as a sales pitch, but I’ll resist temptation and try to be more objective instead. My strap line is that I help small businesses who want to be bigger businesses.  I specialise in businesses with less than 30 employees because the smaller businesses are the sexy exciting ones. The businesses where I can make the most difference are the ones where the owner is committed to growth, and knows that he or she needs some help and support to get there.  Where the owner wants to get to be a bigger business, but doesn’t really know how to go about it. Imagine a two-person design partnership.  They’ve developed some demand, and have some good clients, but they are uncertain how to move from doing all the work themselves to being able to manage other people doing the work.  If you’ve read any of Michael Gerber’s Emyth books then you’ll know that there’s a key growth stage in stopping doing the work yourself, and getting others to do the work, while you become responsible for developing and running the business.  The temptation for our design company is to carry on doing all the work themselves, getting more and more worn out by servicing clients, or by not spending any time on marketing, they risk running out of new business.  Or both. In this situation I can:

• Identify what sort of work the lovely designers need to go after
• See what how they need to price their work to remain competitive, but have enough to be able to afford to pay other people to do the production and improve their profits
• Help them work out what marketing activities are going to work best for them
• Refocus them on marketing, so they can attract new clients
• Make sure they do the marketing, by being there and reminding them of what they promised to do

Of course, my lovely designers could do all of this themselves, but what do they get extra by paying me to help them? I’d say they get:

• The courage to charge more money
• Some fantastic new ideas about marketing, which they maybe wouldn’t have been able to come up with themselves, because I spend all my time seeing what works and stealing other people’s tactics
• Someone to be accountable to – so they can’t just slip back to their old habits, but are reminded that now we’re doing business in a different way.
• Someone who gives a damn.  This sounds obvious, but how often do you have someone who actually really cares about whether you succeed or fail, and have that person be someone who knows what they’re talking about.

Let’s take another scenario, this time of a bigger business.  Here’s a company which has been running for a while.  They have 12 staff, so they’ve got over the delegation issue, and they’re nicely profitable.  But, the director knows that she doesn’t want to spend the rest of her life running this business – at the moment it’s still fun, but she wants to sell up in 3 years time.  And, she wants to have enough money to do something else after that, or to do nothing at all for a while.  In fact, she knows that she wants to sell for upwards of £1.5m. Why would she want to get the woman with the curly hair and glasses in? Our director (we’ll call her Alice) needs some help to achieve her target of a sale in 3 years with a price tag of £1.5m.  Where I can help is:

• Assessing how much turnover and profit she needs to bring in to make the business worth that million and a half, and make sure that the business is working in a way which will maximise the sale value.
• Working on a much bigger marketing strategy to build up the business
• Helping with the recruitment of a really hot sales director to bring in the big sales which are going to add up.
• Supporting Alice in all the little problems that come with growing a business, so she’s got someone to go through things with her.  Again, this is about giving a damn, and getting help from someone who has been through this themselves.

That should give you an idea of the sort of businesses I work with and how I make a difference.  If you would like to talk about how I can help, you know where I am.