As a small business owner, the biggest challenge I underestimated—in terms of both difficulty and importance—was hiring. The reality is that hiring matters to every small business.
When my business got busy enough to move from a non-employer (just me as an employee) to having a staff, I was excited. I figured that hiring people to help me meant more money, more profits, and less work for me. That couldn't have been further from the truth.
I also figured that hiring people would be easy. I thought to myself, people need to work to make a living so obviously, they will want to work with me. Hiring the right people for your small business is similar to finding customers. You need to attract, convert, and retain employees just like in sales.
Below are the reasons why I feel hiring matters to every small business.
Employees Are Key to Scaling and Exiting
If you are going to scale and eventually exit your business, you are going to need a team to do that. It is really hard to grow a business on your own and even harder to exit that business successfully.
Once you have a great idea and you've documented your vision as well as put solid processes in place, you will need to hire people to help you execute. The key is hiring employees who are smarter than you are in every aspect of your business. Finding those types of employees, inspiring them, and then retaining them is hard; in fact, it is an art.
Not only can employees help you grow your business, but they are an important ingredient in helping you exit your business. Hiring great employees is what will allow you to move up and eventually off of the organizational chart. If you want to exit your business, you must eliminate the need for your services within the organization.
Without a Team, You Have a Job
If you don't have a team of employees, you don't have a business, you have a job. In the last section, I explained that successfully exiting a business where you are the only employee is really hard, if not impossible.
Entrepreneurs don't want to acquire businesses where the owner is a vital part of the business. There is too much risk in that type of acquisition because they don't know if the customers are doing business with your entity or you as an individual.
A business that has good recurring revenues, a strong and committed (by contract) management team, and an owner who is not an important part of the business is one that is more likely to be acquired, and therefore, set up for an exit.
Employees Can Accelerate Growth
Notice my choice of words: Employees can accelerate growth. They can also slow it down or halt it completely, and that is why hiring is so important. The true cost of a bad hire goes well beyond the financial and cash flow aspects. Bad hires can not only be major setbacks for small businesses, they can cause damage from which you may not be able to recover.
In contrast, good hires can accelerate growth and create new opportunities for your business. Remember, it is a lot easier to grow quickly with a solid team around you than it is to scale a business on your own.
Hiring: the Biggest and Most Important Challenge
As I said in the beginning, the importance and difficulty of effectively hiring for your small business is something that I drastically underestimated when I started hiring. So how do you get good at hiring?
One option (and my preference) is to hire an individual in that space to own it. It seems ridiculous to hire a human resources professional when you are the only employee. However, hiring is so important that I wish I could have afforded an employee to manage human resources right from the beginning. Most small businesses can't afford to hire a human resources individual and don't see the value in doing so because they haven't felt the pain.
Another option is to collect as much good information as you can and practice. One resource that has helped me with hiring more than any other is a book called Who by Geoff Smart and Randy Street. This books gives you a template on how to source, interview, and hire employees effectively. Smart and Street take a complex subject and make things overly simple. This is a book I have recommended over and over again to people struggling with employee acquisition and I have got good feedback from nearly everyone who's read it.
Hiring for your small business is probably the scariest and toughest thing you will face as a small business owner and it really does matter if you want to run a successful business.
What advice do you have for hiring employees for a small business?