united-states, employees, growthSpeaking more specifically about my situation, I’m a developer with an increasing workload. These days I’m finding myself too busy to even chase new leads. As my reputation seems to be growing, I’ve had a number of potential clients actively approach me looking for work to be done, but I just don’t have the time. However, cash-flow can be inconsistent. Are there any good guidelines that more experienced entrepreneurs have come up with about when is appropriate to make the leap and try to find a business partner to disperse the work? And even beyond that, how to find someone who’s willing to work on an uneasy basis? I need, in essence, a hybrid between a freelance contractor and a part-time employee.
I see lots of questions on here about equity, but equity in a company like mine would be worth very little, at least to start. My company does have a couple of flagship, branded products, but I’ve so far focused more on the approach of developing and consulting on contract for other startups.
This question can easily be adapted to a similar situation I’ve seen a friend go through: he has a business and does have active, part-time employees do work on the side, but is unsure of when to hire a full-time employee to share work with, or even more abstractly, when to start thinking about hiring a marketing person, or someone of a similar profession to cover an aspect of the business that’s currently left more or less unaddressed.
There’s a temptation to hold off until I’m in a more financially stable position, but then I fear that waiting could take years, and perhaps being able to accept more work would, in fact, warrant enough stability. It’s an indisputable fact that I would be making more money today if I had some help, but I just worry that that might not be the case come a couple months from now.
I’ve also thought about the idea of hiring on a paid or unpaid intern, but that still has some of the same issues behind it.
Just for the record, I do have office space. So the mechanics of working as a team wouldn’t be disrupted.
The way I see it, the problem you're facing is, more or less, when can I no longer ignore the fact that are necessary for my company's success.
The answer I provide: it becomes necessary if it will cost you to lose out on cash flow or productivity. Opportunity cost.
Take the analogy of building a house, since I think you were spot on in another post, regarding how you divide your time to be the most effective. It's the same situation as with hiring employees - you either fill the need or ignore it altogether - maybe this means you're carpenter and a painter, but the electrical work is suffering. That would be a case where you obviously need an electrician.
However, maybe your total skillset isn't too shabby, and between your friends and family (analogous back to current employees), you can cover everything well enough to get by, maybe with an unfinished basement.
But maybe your family (company backlog etc.) has grown to 8 kids, and you really need that basement finished. You know you don't have the time or skills, so naturally you decide to hire a person with the skill to fill the need.
Overall - can your entire family fit into the bedroom upstairs; is there dysfunctional progress or workflow? Is your time no longer expendable?
Hire when you need to, but only when you can. If you can't, figure out what's holding you back and solve the problem.
My standard rule on team expansion is based on when the lack of expansion is causing us to lose customers or preventing us from acquiring new customers.
That guideline can have multiple interpretations. For instance, if you can’t develop a critical feature that’s preventing you from gaining new customers, perhaps you should temporarily contract a developer. Similarly, if you lack the sales force to actively close deals, that’s another good application of the rule.
Bottom line, determine what growth rate makes sense for your company and hire to meet that growth rate. Also, always have enough staff to sustain a vibrant R&D program.
I'm a developer with an increasing workload ... I just don't have the time. However, cash-flow can be inconsistent.
Have you considered raising your pricing?
Bear with me a while.
While it's easy to think that having two people at work, you get almost twice as much done, and thus almost double the money pouring in, that's not necessary the case. It can take a while to mentor this new person to work as well as you do, and even then, you probably have to do some extra client and project management that's not producing you any money.
It can also be very stressful to work when you are responsible for other's wage.
These ideas are not my own, I stole them from Jason Cohen and others.
Should you raise your prices, you may very well notice, that you still get plenty of work offers. There's this book called Double Your Freelancing Rate that I found worth reading some years ago.
There's a temptation to hold off until I'm in a more financially stable position, but then I fear that waiting could take years, and perhaps being able to accept more work would, in fact, warrant enough stability.
I think that not all work and every task is worth doing.
Why bother with low price project if it isn't interesting to you? If it isn't interesting to you, what makes you think it would be interesting to your new hire? On the other hand, if you are offered a project and you find a person who'd be very interested in doing it, actual contract, salary and terms may not be that much of a concern.
Now, you may still want to do hiring and or partnering at some point. And that's fine. It's just that, from my experience, it's better if you can support yourself before you start relying on others for bringing income in. In fact, it's even better if you can pay their wages for some time even if they don't bring any money in for quite some time!
I have myself found that it's rather liberating to have enough savings to pay wages for some six months even if the other person doesn't produce any billable work. Of course it may not be the perfect hire in that case, but at least you don't have to stress them and yourself about that from the beginning.
If you can handle the risk for 2 months or more, I think that’s enough time to get the employee on board, train him/her and figure out if it’s working out for the business.
Assess your risks:
HTH
If you can hire someone at such a rate that he will do the work that you can’t handle while making the profit to you then I don’t see how can you not hire that person. Hiring people is key to successful business as one can only do so much work himself (unless it’s one of job and contractors cost more than you would get from clients). On the other hand if type of ignored work does not produce any gains (It would help if you would be more specific here) I do not see why you would spend your time or pay someone to do something of questionable value.
The bottom line would be ‘Yes if it’s worth doing’.
If you hire someone on the cheap, don’t expect it to work out. If they are good they will be gone in a few months, if they are bad likewise. If you are making the money to pay someone a competitive salary then sure go ahead. It sounds like you can only half afford to pay someone though.
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