Here’s an EntreLeadership Podcast question from Neal McGuire:
How do you expand a small business, where the owners do most of the management and work, to a larger one, where not all the decisions are made by the owner and employees have less direct owner supervision?
Expanding a business requires two things:
- Net Profit – In order to grow, you have to be able to afford it. Increasing your bottom line is essential to every aspect of business growth. Without it, you are unable to hire new team members or pay for the marketing needed to grow the business. Therefore, it may take some long days and weekends of doubling your efforts until you can afford to hire.
- Talent – Once you have the additional cash, then you can start hiring very talented people to do two things: increase revenues or take the tasks off of your list, so you can increase revenues. Cost-justifying a team member is always vital, but it is critical in a small business. You just don’t have room to add expenses that cost more than you can make.
The next step, as your team grows, is to build layers of leadership. You need strong leaders, who will take more of the responsibilities and decision-making processes. But, as I always say in EntreLeadership, it is the leader’s job to make their team successful. You need to transition from focusing on daily tasks to doing everything possible to make sure your team has whatever it needs to be successful.
Too many leaders think that hiring talented people or putting people in a role of leadership means they can back off and take it easy. Nothing could be further from the truth. As a leader, you are still the heartbeat of your company. Expecting your team to win when you haven’t properly set them up is a sure-fire way to cause your business to fail. Get your team in place and serve them. Then, you’ll spend your time working on the business instead of in it.
Question: What are two requirements you think are vital to expanding a company when adding team members?
18 thoughts on “How To Expand A Small Business”
Two requirements for me are that I must have focus on the end goal and the employees/team members must have the same core values or we will be trying to row a canoe in opposite directions. I am that small business that is growing and expanding and the leader that is transitioning from the daily tasks…it is a strange feeling, but one that we are now ready for! I know that there are more learning curves ahead, but I plan to stay focused!
I think it’s important to have realistic expectations about 2 things when hiring new talent to help with your tasks and leadership:
1. Your new hire is going to take longer to do the task you used to do very quickly. Hopefully they’re also doing a better job at it.
2. You’re going to have to work harder. Most times it means expending more emotional energy or working smarter but running a worthwhile meeting is most times harder than performing a task.
Absolutely correct. In fact, I always tell leaders that you can’t wait until you’re so loaded down to hire due to the amount of time it will take you to train someone how to do it right.
1. Leadership ability. Why? Because as your company grows, your early hires will most likely be your future branch and divison leaders. Don’t hire great followers, hire leaders. No, strike that! Hire entreleaders!
2. Strong work ethic. Why? They’re being hired to kill it, to drive revenue, or free you up to drive revenue. This is no time to hire your lazy, best friend because you’re comfortable with them and they need a job.
HAAAA!!!! Preach it!!
Your post couldn’t have come at a better time for us–my boss is looking into whether or not we can afford new hires. I would say for our company it’s important to hire people who are quick learners and very capable of working independently. …Which would speed up the process of them bringing enough money in to cover their own paycheck plus. So…obviously we’re at a point where we’re looking at hiring in sales.
Absolutely. You can’t rush the hiring process. Quality when small is vital!
Reading your comment reminded me of several of Chris’ posts on hiring. Click the ‘hiring’ tag in the tag cloud on the right side of the screen. I just quickly cruised through several posts. It’s a nice playbook.
Hey thanks for the tip, Joel 🙂
I’ve read a few of those before and they’re great! Doesn’t hurt to review 😉
If you have employees now, start empowering them to make decisions. We started with a $50 decision. If it is less than that, go ahead and do what you think is correct. If more, bring me 3 options and tell me which you were going with. (just read that in ELBOOK also) We will discuss briefly and go with a joint decision. The employee starts learning what your process is and then as you feel more comfortable, increase the $ limit of the decisions made by the employee. This will keep some of the fires off your desk and free you up to do other things.
I like it.
I love it too Tom! Great way to train, learn and grow!
I know from experience that just adding employees does not necessarily “grow” your business!
A couple of things I have learned the hard way:
#1 – I should have a VISION of what my “expanded” business will look like and a plan of how to get there.
#2 – I should write a detailed description of the job duties and responsibilities of the new hires …..how will hiring these extra people grow my business and are the new hires a fit for the positions they will fill?
Maybe that is three or four?!?
Too many times I have said “ready, fire, aim” instead of creating a vision of what I am really trying to build (an expanded business) – and THEN hiring right individuals.
Nice. Good stuff!
I think it’s important to have people in your organization who are teachable and have a strong work ethic. I’ve met many talented people who were not teachable and their arrogance hurt the organization. I’ve seen leaders hire people based on their personality but the person wasn’t teachable. I can train someone to do just about anything if they are teachable and have a strong work ethic.
Exactly right Eric. I’m the same way. If someone is teachable I can teach them to do any task here. Some are unteachable and that shows up pretty quickly! I had a high school student here over the summer, and in 1 hour I had him running our most complex machine. The great thing was, he had no prior knowledge for me to fight against.
That, true, Chris! I think value addition by the prospective new member will be the key to decide on expanding a small business. When is a positive break even and return on investment, I believe the entrepreneur can go for additional hire.