One of my lovely business advice 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. 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.
These are some of the first steps to what I call a grown-up business. 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.
You often 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.
Photo credits to Yolanda Sun, Nikita Andreev and Oli Dale on Unsplash