A lot of our readers are getting older so we assume this post will be more valuable. At the end of the day, if you could only choose one skill to be incredibly good at it would be “hiring the best talent”. If you have a big check book, the only thing you really need is the ability to hire the best people and retain the best talent. Even top entrepreneurs will admit that they are rarely the smartest person in the Company, in fact, it is highly unlikely that they are the smartest (the real sharp ones eventually quit and work on a new start-up). You see this happen all the time. But. At the end of the day, hiring the best talent is probably the most important skill to have. We’re certainly not experts in this (you’d have to talk to a billionaire who will unlikely give you real answers), but we’ve done well enough to give a framework if you’re interested in being a multi-millionaire.
Low Headcount: Before we begin, remember that “overhead walks on two legs”. This is a common saying as people cost a lot of money. You have to pay for their salary, healthcare and take on risk that they may sue you in the future. This doesn’t even count their job performance where they might not be good at the tasks they are given. Doesn’t sound like a proving start does it? That is also reality. Before we even jump into hiring someone, we would emphasize that you want to either 1) outsource, 2) find a technology way to do the task and 3) look at contractors first. This is simply the best way to start. With all three, if the task fails you can simply move on with no future headaches (no law suits, no future costs) just the sunk-cost of prior payments. If this paragraph sounds dire, it should. Hiring is probably the worst task and the highest return on investment as well. That’s generally how life works.
Two General Strategies: We are going to assume the first paragraph was dire enough that you’ve found a few tasks where you absolutely *must* hire someone. This is expected as it is unlikely that you’ll be able to scale by yourself past 7 figures in total revenue (in the future you will be able to do this but that is for a topic on another day). As we sit here today, there are really two rough strategies: pay up for top tier expertise or pay for an employee where you have specific knowledge on oversight. There is no real “best” answer here as we’re generalizing the two strategies.
Example of No Oversight: If there is a specific task that you need done, you might not have a clue on how to do it. We don’t know what type of business you’re running but lets say you’re terrible at product design and don’t know where to start. You’re an expert in advertising, landing pages, seo, traffic sources, building a brand etc. But. Designing an appealing product is just not on your list of skills. In this case, since you have no legitimate knowledge and cannot tell the difference between a “good” and “great” design, you probably want to pay up for the service. You can either hire someone to do the SKU or you can hire someone to work for you on multiple SKUs which is more likely an employee. As usual there is no “right” answer in this situation. All we can say is you shouldn’t cut corners on things that are not within your core competency (more on attracting the best below)
Example of Oversight: The secondary type of hire is a person to do a task that is taking up too much of your time. Using the most annoying example: customer service and returns. If you run a clothing company you know the most annoying task on the planet is dealing with returns over and over and over again. They constantly happen and you have to deal with emails and packaging and sending items back and forth (product doesn’t fit, color wasn’t right, so on and so forth). In this case we would wager that you *do* know what good customer service is. After all, if you are looking to outsource this task it means that you have a successful product (congrats!). In this case, the hiring process is a lot easier as you can identify a good customer service person, put them on your payroll and move on.
We’ve simplified it a lot in the two paragraphs above, but it’s a good general guideline for the two major issues you’re going to run into. In simple terms, the second hire is typically the least risky with the least upside. The first type of hire (or company you work with) is much higher risk and much higher reward. Not much to explain there but outsourcing a task where you could take over if the person fails is a lot less risky than spending a lot of money on a task where the person could screw up (without you knowing!). With that we’ll go ahead and jump into the items you should know before considering a hire.
Decide on Your Core Skills: You don’t need to be an expert on everything, but you should be very good at several tasks. This is the only way to succeed. If you are amazing at ads, “good” at customer service, great at manufacturing and terrible at obtaining influencers you’ve got a decent skill-set. We’d say that you need to be good at a minimum of 3 of the 5 major tasks: 1) advertising/copywriting, 2) product design, 3) manufacturing, 4) branding/social media and 5) identifying talent. Of the five if we had to choose, your ideal three would be advertising/copywriting, branding/social media and of course identifying talent. Naturally, this isn’t something that is guaranteed. You might be great at 3 different tasks and it won’t impede your chances at success. Our point here is to make sure you’re good at three tasks before moving onto other tasks. In 2018, there are too many tools to help you scale up without hiring a single person and this is only going to get better in the future.
No Oversight Solution: “You get what you pay for” this is essentially the mantra when you don’t have experience with the task. This is the best starting answer in 90%+ of situations since you don’t want to have a major error. We say 90%+ since there are situations where you may not need the best product. Sticking with the product design example, if you’re selling to a lower income demographic, the “coolness” of the packaging can definitely be lower. No one raves over the design of basic white T-shirts, Hershey’s chocolate bars or the colors at Mc Donald’s. This is because they don’t need to tailor their brand to the high end and instead focus more on large amounts of sales and making sure the colors are correct (Mc Donald’s uses yellow and red since it causes people to feel hungrier – yes seriously feel free to look up the impact of colors). We assume that you’re going to have a niche market so you might not need a $250,000 design job (we doubt it) but you do want to make sure the design is appealing to your core audience.
The basic steps are as follows: 1) same story of going to trade shows for your industry, 2) find the product that is selling the best and look at their design, 3) don’t trust what you believe looks good – remember it isn’t a core competency, 4) ask yourself if the design is tailored to the same group of people ex. women age 25-35 or men between 40-60 years of age and 5) don’t be shy about picking up all the packages from high selling brands and taking a photo of the manufacturer on the back of the product. Pausing here for a second. One major common mistake is going with something you feel is “good”. This is a big problem and something we’ve also failed at in the past. If you don’t have expertise in product design, it is unlikely that your tastes will align with the core audience. In fact, it is more likely you will be wrong. If you’re a rich person your tastes are already different and won’t match up with a product targeted at say low-middle income families. The ability to differentiate between what you’re good at and what you’re not so good at is something that will help you pass up your competition over and over again. Egos are hard to overcome.
Now that you’ve got say three places to look all you have to do is track down both the manufacturer and the designer. If it’s a well known brand a simple google search will reveal the designer. If it’s a niche brand you can usually talk to someone on the manufacturing side who will eventually track down the designer. If all of this fails, you can always swing for the fences and 1) try to ask the company directly at the trade show and 2) take a bunch of photos and have someone create a similar copy. The funny thing is that many people believe they need to have some “new” way to design something. In reality, someone already has a well designed product and just like stealing a landing page and making edits you’ll be doing the exact same thing in this situation.
So there you have it a basic step by step example on solving your issue with a problem that you personally can’t address. After that you’re going to pay up for the best quality you can get relative to the niche. Since we’re using product design in this example, it shouldn’t cost you more than low five figures. We’re making a rough guess based on the number of item’s you’re selling and the high quality firm you will be hiring. It could be lower but we’ll stick with that estimate since there is no way we know the number of SKUs you’re going to have.
Oversight Solution: “Praise and then Money” one of the strange things about hiring an actual person to work for/with you, is that praise is apparently just as important as money. When you work with someone in the prior situation (not under your company) they expect to have a “client/customer” relationship. Basically, they expect you to complain and rarely give out praise since you’re a customer for them. In the hiring example, the situation is a bit different. People who enjoy working for companies and don’t plan on starting anything themselves simply want to feel important. This is odd since you’d think they care more about the money, but in a ton of cases they care more about feeling good. Don’t get us wrong, money is important, we’re just highlighting this nuance since it can help you retain people longer and reduce churn.
If you’re in product sales we’re going to go ahead and guess your first item to outsource is customer service/response. Anyone who has sold more than 10,000 units of anything knows this is the most annoying part of product sales. Good customer service is actually quite simple (respond quickly and be careful to phrase each email nicely). That’s really what it comes down to. This is something that can be taught pretty quickly with boiler plate emails and a basic CC on all email chains (no need to go that far but if you want to do it you can for the first 6 months or so).
Putting it down into steps what you’re going to do is: 1) create a basic boiler plate for common customer emails, 2) find someone who can do this basic task at a time frame when you’re typically busier/unavailable, 3) try to pay slightly above market rates instead of giving out equity since it should be a hourly wage type position, 4) be sure to praise liberally on all correct tasks and 5) depending on how high strung you are, require a BCC for the first few months before taking yourself off the emails (no one likes being watched for long, so giving autonomy is key later on in the process). With this basic structure in place you should be able to find yourself high quality help in all the tasks you no longer want/need to do.
Increased Transparency: The second biggest item to be aware of is the direct incentives you give people. Without incentives it doesn’t matter if you have the best or the worst employees. In fact, it’s better to have a mediocre staff that is correctly incentivized than top tier talent running in the wrong direction. We don’t know what your outsourced items are but for simplicity: 1) tie all sales compensation to units, 2) make sure they are not allowed to double book, pull in orders or mess with any long-term relationships for near-term pay increases, 3) find a way to incentivize people over multi-year periods – best example is investment banks giving you deferred stock so you’re forced to stay, 4) make the return of the group more important than the return of an individual which forces people to work together on the same goal and finally 5) have a full transparency protocol. The last one is harder to explain in a post but we’ll try anyway. Essentially, high performers don’t like to be told they are wrong or messed up on anything. Despite the best people in the world failing at many different things, high performers rarely admit fault. Instead the try to “pass the buck” which means put the blame on someone else even if they are at fault.
This is probably one of the most important items to get right. You want to find a way to make sure that everyone is treated fairly and this structure continues in the future. We don’t know what it’s like with 100s of people, but even if you have 10 people or so this can still have issues. You can create some stability with 1) a weekly or monthly call, 2) anonymous reviews where you allow each person so send a physical version of their review in – nothing electronic will get you real results since employees will assume that they are being tracked and 3) bring up any consistent issues immediately, if it’s minor just talk broadly about each item. One thing is important here, without anonymity and without direction its easy for incentives to get mis-aligned. Everyone knows how easy it is to get onto a “group” conference call only to have one guy ramble on and on about nothing. We’re simply giving out the three easy ways to do it assuming you execute accordingly!
Avoid the Suck-ups: Pretty funny to mention the topic of ego given the name of the blog and the content to generate interest, but, we’ll do it anyway! One of the main issues with suck-ups is that it works. We love dogs/animals because they are thrilled to see you regardless of if you’re doing good or bad. Naturally, they then take up a ton of attention. In the work place though you don’t want this to happen. As a note, you should never “fault” a suck-up, instead you should give the vibe that sucking up doesn’t matter and it is all about performance. Get used to saying the phrase “Thanks” or “Thank you” or “Very Kind of You, Thanks!”. Get this down to a point where it’s automatic whenever someone gives you a positive complement.
Here is the key part, do not put this into your personal folder. Instead you want to ignore all the praise and just focus on performance. The guy who doesn’t complement you consistently? Well even if he is anti-social, if his sales numbers are good and his ads always convert the most… he deserves that promotion for sure (or pay raise etc.). Even if you’re doing more of the positive commentary saying “good work!” to him, he could just be a strange shy person. It doesn’t mater. What matters is making sure the results are showing up and recognizing that sucking up doesn’t pay any bills. As an item of warning we would say this is 1,000x easier said than done. We’re just leaving it here since it needs to be said and is an important part of scaling/growing your business/project.
Q&A Update: We had a issue with hosting so we’re going to do multiple posts this week. In addition, we will be hosting our Q&A on Friday for 24 hours. Thanks!