How to Build a Team Without Losing Income
I received an important question recently from Suzanne who asked…
How do I make sure my own income doesn’t backslide too much while I build a team?
Eventually, you’re going to get to a point where you just can’t continue to do everything yourself in your business. You need help.
Having a team is a great way to take some things off your plate so you can focus on growing your business… but what’s the best way to do that without cutting too deep into you own income?
Watch today’s video for my answer…
It is totally possible to Hire someone! You just need to plan for it…
They key is to make sure you only spend the Cash you are netting to bring on a new hire. You don’t want to go into debt to do this.
You can hire people a few ways…
Set a Growth Goal for yourself and use the Extra Income to pay for your hire. For example, if you are making $10,000 a month, aim for $12,000 before you drop the hammer and hire someone.
Live Below Your Means. This means living on less money than you make, both in your professional and personal life. Also make sure you save as much money as you can in your business, and put that extra cash into a Rainy Day Fund.
Every business needs a Rainy Day Fund. The reality is that it’s not a matter of “if” your business will need the extra cash…it’s a matter of “when.”
Hire with your Cash Reserves. Don’t spend money you don’t have on a new hire.
You’ll also want make sure that anybody you bring on is a Revenue Producing Employee. This is especially true if you are 6 or 7 figure business. It’s best to Justify a new hire by making sure they bring in a solid ROI for the business.
Building a Team, or hiring one person should all be viewed as an Investment that Pays Dividends.
What do YOU think?
What’s been your experience with adding team members in your company?
How do you go about planning for it?
Let’s talk about your thoughts & questions in the comments.
This was a strong reminder on how I’ve been managing my money! Not a recent pattern, but one that started when I got my first job several years ago! I can blame my parents for not setting a “savings” examples, etc. etc.,, but the bottom line was up to me! So here’s the deal in a few short sentences: I’m a creative and artistic visionary woman. So that might mean “so what” when it comes to money, but it has it’s difficulties to start. I never saved money while working, and never saved money while going to film school. So now I have an MFA in Writing and Directing and have been developing my business pan and projects over the years. So I’m literally starting from scratch, and definitely not like those 10k techie businessmen you’re approaching. Do I need advice? You betcha!
No time better to start than now Kasandra. I’m glad the video was helpful!
Great video, great topic- this is something early-stagers struggle with all the time.
One other suggestion- if this new hire frees up any of your peronal time?
Take HALF that time and invest it into structured, strategic THINKING about your business.
It’s almost a proverb that business owners free themselves up, only to stuff all of that newly available time with a whole lot more DOING.
Which is not only a big mistake, but it’s DEMORALIZING.
So… think before you decide what to do with that time. 🙂
GREAT point Robert. Thank you!
critical step is the revenue producing new hire..if they can’t bring revenue quickly don’t do the hire!!
There are bound to be certain hires that are not revenue producing…a bookkeeper for example. But for most of them, I completely agree!
Great post, Josh! I think, though, that much of your comments apply more to someone with an established growing business. What about a start up? There seem to be three ways to go: 1. Hire contractors (as Gary suggests above); 2. Outsource some of the non-core activities (different in emphasis to #1); 3. Analyze your own strengths (i.e. things you do well) and look for a partner who can take on what you are weak at, while not draining the cash flow as much because of their equity involvement (and that doesn’t mean giving away your majority control, as people respond well for even small equity ownership. What do you think?
Those are all great ways to look at it Nick. I am not a big fan of giving up equity, but if it’s truly a scenario where this new partner can help significatnly elevate the business…it can make sense. A smaller percentage of a much bigger pie, is more valuable than 100% of a small pie.
Another thing I’ll add…for startups, unless you have a bunch of cash to play with, you are going to be wearing a bunch of hats until you get cash flow to a place where you can justify your first hire, outsourcing certain things, etc. So while you may not be able to do any of that when you are literally just getting started at square one, in my experience the approach discussed is still applicable for start ups.
Thanks for the video Josh. Yes, any hiring should be done with an return on investment in mind. If your gross profit is say 50% and you are hiring a full time employee at $4,000 per month, you may then target an extra $5,000 per month in sales so your Income is not impacted dramatically. Of course your new resources need an on boarding process and training to ensure you have every chance of success!
Definitely. You need to be thinking about cash flow in this decision, not just gross revenue. And making a hire without clearly thinking through how you will get this new person trained is asking for trouble! Doing that will set the new hire up for failure and a much longer ramp-up period before they are effective and achieving the desired goals.
Hey, Josh. Thanks for sharing your experience and knowledge. You mentioned putting enough money away for a rainy day — for a business, do you have a method for ball-parking how much that should be?
Hey, thanks Eric. Greg Crabtree who wrote an amazing book called Simple Numbers recommends 2 months of operating expenses in reserves. I think that’s a good rule of thumb.
Well said Josh, keep up the great work!
Thank you Brian!
Perfect timing, like law of attraction.
I was just thinking of this issue since few days ago and started advertising for intern yesterday, and today your email came in.
Great, hope it helped!!
Great timing. I am almost at the breaking point where I can’t manage all the work myself. This is a great ‘problem’ to have and yet, knowing the expense of what it costs to hire an FTE is pretty daunting. I am going to go a different route. I am outlining what projects/tasks I can hand off. Once I’ve done this then I know what kind of contractor I really need. I am going to hire part time hourly contractors to fill as many roles as possible without having it effect the end product. I presently spend about $150 USD on contractors a week right now and I need to increase this while decreasing my spending. Thanks again for the posts, very informative and valuable. 🙂
That’s a great way to go Gary. Building a team doesn’t have to mean full-time or even part-time “employees.” Contractors are a great way to go, no matter what stage you’re at. Great to hear that you are doing so well…being in the place where you are so busy you almost can’t do it all yourself is an amazing accomplishment.
What do you think about hiring interns.
I think it can be good as a way to get the most basic of work done. But primarily as a way to groom talent for the future. If you have a system for bringing interns into your company, it can be a great way to find amazing young talent that can grow with you.
Expanding my business is constantly on my mind. I seen my business doubling this year but I don’ know if I can handle the growth on my own. Your videos bring real value. It’s time to write a Linkedin posting which always gets results. .Thanks for the tips and keep them coming.
If you foresee that you can’t handle the growth on your own, and it’s coming quickly, the time is now to start making plans. Because when you critically need help, it’s usually too late to train somebody. Glad you are enjoying the videos Dan!
This topic is right in time. I really needed to hear what you said.
I am a broker and I work along. I would like to build a team this year. Any help I can get will be appreciated.
Hey John, I can say from a lot of trial and error…you can never have enough help when building a team. Keep pushin’ forward!
Thanks for sharing Josh, hiring is such a crucial thing.
John, what kind of CONCRETE HELP are you looking for concerning building your team ?
Keep on rocking!