Sunday, June 12, 2016

When does it make sense for a one-person business to hire its first employee? Viewer Question - David C Barnett

Being a one-man business can be tough.  There is never enough time to do everything.  When is the right time to make that first hire?  One of my viewers wants to know.  Watch my answer in this video:

I love this question because it’s all about perspective.  Here’s my two step process for determining if it is the right time to hire that first employee: 

First: rack every task you do all day long.  Every 15 minute block must be accounted for.

Second: Once you’ve got a week of data, go back and decide if each block was spent doing a $10, $100, $1000 or $10,000/hr task.  Use colours.

$10/hr task are the menial, simple tasks that don’t add much value.  Photocopying, running errands, etc.

$100/hr tasks are things like sales and customer service, maybe difficult technical work.

$1000/hr tasks are sales of big ticket items or project management of big ticket jobs.  Think of a $25,000 renovation.

$10,000/hr tasks involve long term planning and strategic decision making.  For example, ‘Should we add this new product?’  This decision could mean hundreds of thousands of dollars in sales per year.   It is definitely worth the time of an owner.

Now that you’ve colour-coded our time audit we can see how much time is being spent on each category of task. 

Let’s take a moment and re-phrase the question.  How can an entrepreneur afford to spend 25, 30, 40 or 50% of his time doing $10/hr tasks? 

Once you hire that first person, usually an assistant or some type, you can unload those tasks and make room for more of the higher-value tasks.  Probably this will be sales or customer service, asking for referrals, etc.  These are the things that bring in more revenue and are certainly worth your time to do until you can expand again to offload the next tier of tasks.

Leveraging the efforts of others is the single biggest advantage of being in business.  It’s what allows businesses to grow and create wealth for their owners. 

If you’re not going to get others to help take the low-value items off your schedule you don’t actually own a business, you own a job!

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Do you live in Halifax or Toronto?  I’ve got two workshops coming up at the end of June in Halifax and three coming up for Toronto in September.  Book now to get early ticket pricing.

Thanks and I’ll see you next time.

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