Adding a senior employee can bring short-term costs but long-term gains. Here’s how to tell if the time is right for your business.
When you’re the owner of a small business, knowing when to hire a senior employee isn’t always easy — but it is important. By freeing you to focus on high-value activities where you have true expertise, it can help you take your company to the next stage of growth or, in some cases, simply ensure its continued viability.
“Entrepreneurs are accustomed to hiring ancillary employees and pawning off smaller tasks on them,” observes Dave Poulos, chief consultant at Granite Partners LLC in Sparks, Maryland. “But at some point, they discover that they’re working their tails off and still can’t be everywhere they need to be or do everything they need to do. That’s when they need to make a high-level hire.”
While cost can be an issue, Poulos says companies should consider how much they might be able to boost revenues with a new player on the management team. Ideally, it will more than cover the additional salary.
Chuck Cohn, CEO of Varsity Tutors, a Washington, D.C.-based tutoring service, says that over the past several years he’s “fired” himself from various duties and brought in expert replacements to handle, among other things, bookkeeping, sales and advertising. “Each time it’s had a dramatic impact on how effectively that role is done, my happiness, and our ability to grow — because my time became available for higher-level projects,” he says.
Wondering whether your company is a candidate for a high-level hire? Here are five signs it may be time to expand the executive suite:
1. You’re working long hours but missing operational goals or revenue targets. Julie Sue Auslander, president and chief cultural officer at cSubs, a New Jersey-based provider of outsourced subscription services, says a bell tolled for her when she realized that she was doing “a lot of work” but never seemed to have any money.
“I hired cheap, tried to do it all myself, hired multiple part-timers, and, as a result, missed out on growth opportunities,” she says. Taking a new tack, she outsourced payroll and brought in a bookkeeper who discovered that some invoices were being paid twice or in the wrong amount while some of her own clients weren’t being billed at all. “The revenue I realized from her correct work covered her salary,” she says. “In addition, offloading those activities freed me to do work that nobody else could, and in turn helped my company reach the Inc. 5000 list.”
Auslander has since hired a part-time controller, which has helped her secure additional funding for her business, enter comfortably into strategic partnerships, and even plan an exit strategy for herself.
2. Critical parts of your business are proving error-prone or inefficient, and you don’t know how to fix them. Eric Thomasian, head of business development and strategy for Blayze Inc., an online video company, says his firm knew it was time to hire a chief technology officer after its technology systems, which had been outsourced to a third-party developer, turned out to be bug-ridden and not true to their original design.
“As soon as we made the hire, our CTO hired more coders to create an internal technical team,” Thomasian says. The results were impressive. Turnaround time on system changes rose by 800 percent, funding became more easily attainable because investors felt safer when they could actually meet the company’s technical team face-to-face, and customer satisfaction increased by 90 percent.
3. Essential tasks are going unfinished. Brianna Sylver, president of Sylver Consulting, a business consultancy with offices in Chicago and Brazil, says she knew it was time to bring in high-level help when “we got into a situation where I needed to be able to duplicate myself in order to get everything done.” After documenting her specific pain points, she brought in a director of global insights and innovation in May 2011. “The results have been fantastic,” Sylver says. “She’s a great addition to the team in multiple ways and has helped us grow as a company.”
4. Business initiatives yield poor results because you’re not an expert in that facet of your business. Brock Blake, co-founder and CEO of Lendio, an online service that helps small businesses find bank loans, says he decided to hire a vice president of marketing about a year ago after realizing that his own marketing initiatives weren’t helping the company meet its goals. “I wasn’t cut out for that job,” Blake concedes. “We were just going in circles.” After a three-month search, Blake found the right person to take the job, and the results, he says, have been phenomenal. “We've doubled in size, both in revenue and in our number of employees.”
5. You’re continually telling customers you can’t meet their needs. “If your customers are constantly asking, ‘Do you have this?’ or ‘Can you do that?’ and the answer is always ‘No, because we don’t have time,’ you’re making a mistake,” Poulos says. One of the advantages of being a small business, he argues, is the ability to act quickly and nimbly to meet customer demand. “The answer to ‘Can we do?’ and ‘Do we make?’” he says, “should almost always be ‘yes.’”
Making a high-level hire can be intimidating, especially if you’re accustomed to doing everything yourself. But it can also make you happier and more productive, and your business more profitable.