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Every now and then I field questions about how to put the first hired plumber on the road. Without a doubt, making the transition from self-employed artisan to employer is a huge step. It’s not the only huge step you’re going to make in business. Although it seems like a daunting milestone now, later on when you’re looking back you’ll ask yourself why you didn’t hire someone sooner.
At some point in your budding business cycle, as you’re struggling to make the phone ring, get the work done and keep the bills paid, the idea of getting someone else to handle the production duties will start to sound like relief. However, preparation for that time starts long before you accept that first job application.
Step One - Get Educated
So how do you transition from chief cook and bottle washer to manager? Once you start hiring, you’re entering a world you probably weren’t trained for. Instead of focusing on tactical chores such as how to make gadgets and systems work, your new tasks will be strategic - casting a vision, hiring people you can imbue with that vision, then keeping them motivated as they help you expand your empire. You should already have some of these skills, but there’s much more to learn.To put it into perspective, consider Olympic swimming star Michael Phelps. According to his trainer, Phelps’ body, with his long torso and long arms, is well-designed for swimming, giving him the raw material he needed to become an Olympic champion. But without training, without coaches and without hours of practice, he would have never made it onto a Wheaties box.
Begin your education by reading these three books:
1. “The E-Myth Revisited” by Michael Gerber. I regularly mention this one because it is a classic, timeless work which explains the importance of divided labor. Division of labor is the key to creating wealth.
2. “Rich Dad, Poor Dad” by Robert Kiyosaki. Kiyosaki expands the division of labor concept and shows how to turn money into a laborer for you. You need to have this underpinning rattling around in your brain to help you develop the vision necessary for leading your crew.
3. Round out the mix with the more practical, but no less important tome by Ellen Rohr: “Where Did The Money Go?” Read this one last because it will make more sense once you know the importance of the division of labor.
As a bonus book, if you’re so inclined, read “Good To Great” by Jim Collins. This book is also destined to become a classic and will encourage you to develop a business which transcends the bottom line.
Step Two - Raise Prices
It is important that you get this reading done before you make your first or next hire. You wouldn’t rough-in a plumbing job without first checking the prints and specs, would you? Your next step, of equal importance, requires funding. You could grovel before a banker to get a little help. You might even lean on family members for financial support. My recommendation, which isn’t easy, is that you help yourself.How do you help yourself when you can barely keep up with the load you have already? Why not just ask for more money from your customers? Let me restate the concept: I don’t care what your rates are now, raise them. You’re moving into the big leagues and it’s going to cost money. When you hire a production employee, that new resource will be doing some of the work you used to get paid for. This means that your paycheck now becomes overhead. Higher overhead means higher prices (if you want to earn a profit).
It’s time to train yourself and your customers to accept the prices necessary to support a business. Raising your rates will do a couple of things for you. You may lose a smattering of customers, which might reduce your workload a bit. What’s more likely to happen, however, is that you’ll find more to do for the customers who are willing to pay your price. Either way, you end up with less windshield time and better cash flow.
Be disciplined about what you do with your improved cash flow. Be adamant about saving up cash reserves because this cash is going to be important when you make your first hire. It may take you six months or longer to stash enough cash to buffer your payroll, so be patient.
Step Three - Examine Processes And Procedures
While working to build up your cash reserve, you should pay attention to the processes and procedures you use in handling service calls because they are what you must teach your employees. Are you going to require shoe covers? Will you require a minimum of two options offered for every service call? Will you require a signed authorization before you begin work?You need to practice whatever processes you’re going to require so that you’ll know what your employees might experience on the job. I can’t overstate the importance of this part of your process. If you haven’t been trained yourself, then you’ll have to learn and develop a process which works for your company. Don’t succumb to the temptation to be casual with your process just because you’re the owner. Practice your processes the way you intend to teach them to your people.
Step Four - Determine The Type Of Person You Want To Hire
As you’re saving up hard-earned cash to turn over to an employee, you should be thinking about the sort of person you want to hire. You can approach this like many contractors and simply require a pulse, some experience and, if you’re lucky, a clean driving record. Or, if you want fewer headaches, ponder the skill set most needed for your company. Although it might be possible to hire someone who is ready to go as soon as the ink is dry on his application, you’ll probably find out that recruiting the next “you” is going to be a major challenge.Finding your first hire is going to take time because it’s highly unlikely that this wonderful person is looking for a job. Your challenge will be to convince your prospect that a ground-floor opportunity with you is better than the steady job he already has. The “war chest” you’ve been accumulating will be useful for providing the continuity your new hire expects, while giving you an opportunity to let him ride along with you during the training period.
Did you catch that last sentence? Don’t be tempted to turn your new protégé loose without a few weeks of training and indoctrination. This is why it is important that you focus on developing your processes while building up your employee fund. If you don’t have a process, your employee will form his own and it may not fit with your vision.
During this ride-along period, you’re also going to learn the good, the bad and the ugly about your employee. He will approach technical and sales procedures differently than you do, so it’s up to you to define the standard. If you want top-quality materials on the job, now is when you explain to your new tech why it is important to his success. If you want options offered on every sales opportunity, now is the time to explain why options benefit customers as well as your bottom line.
Ultimately, you will have to decide whether this employee is worth the risk. But if you’re unwilling to do the vetting and training, then perhaps you need to rethink the whole employee idea. Perhaps you’re not cut out to become a leader.
Consider these steps as more of a guideline rather than a surefire plan for adding technical employees. For the success of your business, you need to know what your company is about; you need to charge the right price; you have to pay your new hire; and you must vet and train your employees. There are no guarantees that these steps will work for you. There are no guarantees that you’ll find the right person. But just as in hunting, your odds of hitting the target are much better when you aim for it.
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