Although it can sound counter productive, there are times when expanding your team is a mistake. Entrepreneurs are by definition optimists and Recruiters are especially so, so it is easy to fall into the trap of winning a new client and hiring off the back of it, in order to service them properly whilst continuing to grow.

The danger of doing this is that a business can quickly go from being cashflow positive to burning through reserves, where the pressure to generate new income becomes all encompassing, straight away. This is a gamble which if you get it wrong will result in the business ending up with a worse balance sheet, along with a smaller team who become embittered by the process of seeing the business hire and fire as a result of overspending.

Therefore before expanding your team the first question to ask is, will the business still be cashflow positive and If not, what is necessary for it to be so. How realistic is that? How good is your balance sheet if you miscalculate? I.e. how long can you afford to run the shortfall for and is that realistic? Especially in recruitment, it can take up to 6 months to establish a desk to be profitable, where invoices may not even be paid for another 90 days, meaning in the worst case, for each person you hire, you need to be able to afford their first year upfront.

Also, how resilient is your business if you lose a key client? Arguably if losing a key client would mean you have to let people go, you should not hire at all right now, unless it is someone who can bring a client list with them to diversify your risk.

Therefore with hires, take the barbell approach. Either look for top level hires who can hit hard, win clients themselves and share costs and pain if there are some teething issues, or grow through hiring junior people, focusing on administrative tasks. Delegating down clerical tasks to people who are not career consultants looking for fat salaries, but happy to work part time helping you with the tasks that can kill your day, taking you away from more profitable activities. For example take clerical finance, book-keeping, invoicing and collections. When you start it may only take 1 hour a week, but this time insidiously increases. Be mindful of that by doing timesheets to determine where your time is being spent.

Even when you do hire into your business, you then need to factor you will still end up working longer hours, as you spend time to get them up to speed, whilst still needing to deliver on immediate priorities.

You then have to ensure you are investing into not just your product / solution, but also your company culture. Nothing is as big a waste of time and resource as someone quitting after 3-6 months, just as they were becoming autonomous.

Also people forget that an employee will not be as productively efficient as a business owner. they will lack the motivation end understanding of the business to deliver at the same level. Therefore if you hire them and need them to deliver at your level of productive efficiency for it to work, it is bound to fail.

Vacancy Analytics can help you map out client activity, spotlight areas of growth and highlight trends you should be aware of. For a consultation on how we can help, please contact us.

 

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