One of the beauties of being an entrepreneur, as opposed to a solo practitioner or freelancer, is that you can leverage the activities and skills of all the people you employ. This is one of the secrets to building a personal fortune. And it’s one you can use even if you didn’t happen to be born with a silver spoon in your mouth or an oil well in your backyard.
The decision of how many people you want to manage is entirely up to you. It depends on the time commitment you cannot make to do other tasks or the need to perform skills that aren’t your strengths. Part of hiring other people is to have them handle aspects of the business that you cannot or should not be doing. After all, we have different personalities, interests, and passions.
There are very few one-person businesses unless you are including independent contractors. Businesses are run by teams of people, from two or three to thousands, and team members excel in many areas. You also need to factor in how much you expect to grow. Some entrepreneurs want to retain a small, easy-to-manage business, while others want to build an empire.
“For many businesses, personnel is the largest expense, so it’s important to think through the forecast and make adjustments to the timing of planned hiring based on your revenue projections, profitability, and the cash you have available to meet payroll obligations,” says Noah Parsons, COO at Palo Alto Software. “You’ll also want to think about how your business is organized and what the management structure will look like. You can use tools such as an organizational chart to help figure out your personnel plan and then add that to your business plan.
An organizational chart, or org chart, graphically sorts your company into its major functional departments—finance, administration, marketing, production, etc. It’s the quickest, clearest way to say who is in charge of what and who reports to whom
To help you in your strategic staffing projections, consider these factors:
- What are your key business objectives? (Hint: These may be things such as increasing sales or reducing costs. The idea is to make sure that your hiring decisions fit your strategy. If, for example, geographically expanding your retail store chain is a primary objective, a staffing plan will have to include managers for each new location.)
- What skills will your employees need?
- What new skills will current employees need to possess? (Hint: You may find you are better off with fewer workers who are more highly trained or have different skill sets.)
- Which of these skills are central to your business—your core competencies? (Hint: You may want to outsource peripheral functions. Accounting, legal matters, and human resources are frequently outsourced by companies whose main business is elsewhere and who find it doesn’t make sense to spend the effort to attract and retain skilled employees in these areas.)
- List the jobs and job descriptions of the people it will take to provide these skills. (Hint: The idea here is to identify the employees whose job titles may mask their actual function in the organization so you can figure out how many people, and what type of people you really need to include.)
- Determine how many people you will be hiring and what your budget will be for these positions. Will there be any job sharing? (Hint: Make sure your salaries are commensurate with the going rates in your region. If you can pay more, you can attract a higher level of employees. If you pay less, try to find nonmonetary benefits that you can offer, such as telecommuting, which saves employees time and money on getting to and from work each day.)
Now, you should be able to accurately predict how many and what kind of people you need to achieve your long-term objectives.
Adding and retaining key employees
If you want your business to grow, you’ll want to have key employees who share your vision and goals. Sometimes, you will find an established individual, like a highly acclimated chef for your restaurant or an art director with years of experience for your company. You may not always know what the future holds when you bring someone on board, but you believe they have what it takes to become a key employee. These are individuals that you can envision moving up the path of ascension. Either way, you should make it clear in your business plan which key positions you want to fill and how you plan to find the people to fill those roles.
Of course, the economy will factor into your decision on whom to hire and how much you can afford to pay them. In a struggling economy, more highly skilled employees will be seeking work, but you may be unable to risk high salaries. In such instances, you may opt for trial periods before committing to full-time salaries. You may also look for independent contractors for key positions. Remember, it’s much easier to find skilled people in various aspects of business than it is to learn everything yourself. When the economy is going well, however, you will have to up the ante to bring on key employees because there is more competition. Then there is your plan to hold onto key employees, which is important to include in your business plan.
An organizational chart graphically sorts your company into its major functional departments—finance, administration, marketing, production, etc. It’s the quickest, clearest way to say who is in charge of what and who reports to whom.
What employees care about
The things that make employees want to come to work for you and stay vary. For employees, choosing whom to work for is a highly personal decision. That’s why it’s crucial to understand the individual needs of your key employees so that you can give them exactly what they want. If you offer only a higher salary to an employee whose most important concern is that she works at a job offering flexible hours so she can care for an elderly parent, then you probably won’t retain that employee.
Here are some common concerns that drive employment decisions:
Benefits Paid holidays and sick leave, health insurance, and retirement plans such as 401(k)s are among the benefits listed as most desirable by employees.
Compensation Salary, bonuses, stock options, profit sharing, and auto mileage allowances are among the most important compensation issues to employees.
Other perks On-site childcare, flexible schedules, telecommuting, paid memberships to business groups, and health perks such as yoga classes or free medical screenings are also important to employees
This list is by no means comprehensive. Employee needs are as complex as humanity. One person may stay because she likes the view out her window on a high floor; somebody in an identical office may leave because heights make him nervous. One of the most important needs, especially for highly motivated employees, is maintaining a constant atmosphere of learning, challenge, and advancement. If you can find a way to let your employees grow as your company does and feel a sense of ownership and inclusion, they’re likely to be more conscientious and motivated.