Tip of the Week – When to hire or outsource
March 26, 2012
Since the fall of 2010, we’ve hired 4 new employees (two in house and two remote “outsourced” workers). But how, as a business, do you decide when it’s time to hire? Or time to outsource? Or how do you make the decision between the two?
Increasing the size of your business is scary. It’s scary every time we do it. Basically, you are betting on the future based on your current situation. As a business, you are saying, “my income is going to hold steady or it’s going to increase, so I can afford to hire another person.” And the bonus is, if you bet wrong, you either get to fire that person, or slowly go out of business. Fantastic! That sounds like a lot of fun.
In this tip of the week, we’ll discuss how we make the decisions on when and how to hire and how YOU might make the same decisions or the decisions on whether to outsource some of your work.
Whether or Not To Hire
This is really the key question and there is a simple way to figure out whether or not to hire. A business is fueled by customers. Without customers, without money coming in the door, there is no business. As the business owner and photographer, it’s YOU who bring in the income. When you are out networking, making contacts, mixing it up, that’s when you are generating income. As you post your photography on your blog and get it out there on social media, bringing in clients, that’s when you make money. When you are shooting! That’s when you make money.
So, what’s my point? If you are so busy with organizing your calendar, processing your files, calling back clients, etc., that you don’t have time to be out networking and generating more business, that means you need to hire someone or outsource. The busyness is killing your business.
So, it’s simple. If you have no time to keep up with marketing your business and generating new clients, something has to change.
When To Hire
Now this is all fine and dandy, but if there is no money left over to eat, we can’t very well hire anyone else. Ain’t that the truth! So, when do we hire? First of all, make sure you are charging enough, so that when you’re busy, you’re making more cash than you need (i.e., there’s money left over). Make sure you are organized, so you can push yourself to the limits and still be making money and still be marketing yourself, etc.
This is how I gauged my first hire. When the company first started, I was doing everything from development design to marketing to support. Revenue was still increasing, I was still communicating and marketing, but I was starting to slip on support, the part of the company that was stealing most of my time. So, that was my first hire. It freed me to focus my energy on “growing” the company, not on “maintaining” or taking care of the company. This is key, as the business owner, all your efforts should be on company growth, not maintenance.
Who To Hire
Don’t hire yourself. Let me repeat that. Don’t hire yourself. What does that mean?
Our first instinct is to hire someone just like ourselves. It got us this far didn’t it? “If I could just clone myself,” we tell ourselves, “I could do twice as much work.” The problem with this line of thinking is that we just end up doubling the same problems we already have.
Usually, we need to do the exact opposite of hiring ourselves. We need to hire someone who completes our weaknesses. All of the fantastic people I’ve been lucky enough to hire, have all sorts of amazing skills that I don’t have. And that has made all the difference. If you are a wonderful artist but are an organizational nightmare, your first hire should be an office assistant. If you are a wonderful photographer but take 2 days to process a wedding, then your first hire should be a digital tech, or outsource to wonderful places like Lavalu or Evolve.
Very important–never hire another photographer, unless you are hiring an assistant photographer for your studio. If you need raw processing and office help, the worst thing you can do is hire another photographer. Why? Because they don’t want to process RAW files or manage a calendar, they want to photograph. That said, as your business grows, and you want to expand beyond one shooter, definitely hire a photographer, pay them well and treat them well, so they never want to leave.
How To Hire
My first rule of thumb is to never hire friends. Why? First of all, it’s too easy. Since it is so easy we do things like, “well he/she’s never been an office manager but he/she can do it.” And then when it doesn’t work out and you have to fire your friend, guess what? End of friendship.
You know the saying: “If it ain’t broke, don’t fix it.” When we get ready to hire, we put an ad about (usually on Craig’s List), interview a few of the applicants and choose the best one. Usually, we start out part-time or 3/4 time due to financial constraints and then as our business grows we move the person to full time.
This is very important, new hires should be viewed as “leverage.” If you hire a new person and your revenue stays the same, you’ve just lost revenue for the same amount of work. You might want some more free time, and that is great. But every new hire should be profitable. That means, that after paying the new hire’s salary, you should have more money left over for your personal income than you did before. Of course this won’t happen right away. At first, you’ll be making less money than you were, but within 6 months your profitability should be up.
How To Manage The Paper Trail
Now, the government likes to do fun things like make the tax code and paper trail for employees about as easy to understand as a foreign film with no subtitles. Seriously, I have an MBA and can’t figure out how to fill out simple quarterly tax information. The secret? Don’t do it! Don’t pay taxes…. (just kidding).
We use Intuit’s Tax Service. We signed up under my executive account at Costco. It costs about $30 a month and they calculate all the state and federal taxes, in addition to the workers’ compensation insurance. We get an email when it is time to pay something, we click on the email link, log in and click pay. Intuit draws the money from our account and pays it. For $99 a month, they’ll do everything for you. You don’t need to even pay attention.
At the end of the year, I click a button and it emails out all the end-of-year tax forms for the staff and bam, I’m done.
A business is an organic beast. It’s always in motion. Either a business is growing or it’s shrinking, but it’s never staying the same. We hope your business grows. At a certain point, the only way for a business to grow is to have other people doing the work for you, whether these are in-house employees or outsourced workers, they must be part of the business.