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Vintage threads from the first ten years

Hiring someone

4/28/2003 1:58 PM
Mark Hammer	Hiring someone As a mere tinkerer, it's never happened to me, nor is it likely to, but at some point, some of you are going to have to hire someone to be able to make orders, or simply tend to all the things you used to be able to do yourself but can't now that they have to be done so much more frequently. So, to those of you who have already crossed that bridge, I ask these questions: How did you know it was time to do it? How did you persuade yourself to do it? How did you go about finding and hiring someone? Would you have elected a different path knowng what you know now? What kinds of budgeting considerations would you suggest to those pondering it?

4/28/2003 1:58 PM

Mark Hammer

Hiring someone

As a mere tinkerer, it's never happened to me, nor is it likely to, but at some point, some of you are going to have to hire someone to be able to make orders, or simply tend to all the things you used to be able to do yourself but can't now that they have to be done so much more frequently.

So, to those of you who have already crossed that bridge, I ask these questions:

How did you know it was time to do it?
How did you persuade yourself to do it?
How did you go about finding and hiring someone? Would you have elected a different path knowng what you know now?
What kinds of budgeting considerations would you suggest to those pondering it?

4/29/2003 7:03 AM
Regan	I have to say, I think zach goes about it the right way, independent contracters working out of the house, probably piece work. Saves on rent, and is a slightly more casual arrangement, i.e. people can work the hours they prefer as long as their end of the deal is finished in time. I'm pretty sure that here in Canada, e.i. and pension must be paid if the you supply over 60%of the work to the subcontracter, but you would have to do this anyway. I think the way to do it is to hire a casual assembler when you are on the edge, and can keep up but don't have the time to develop new products. Regan

4/29/2003 7:03 AM

Regan

I have to say, I think zach goes about it the right way, independent contracters working out of the house, probably piece work. Saves on rent, and is a slightly more casual arrangement, i.e. people can work the hours they prefer as long as their end of the deal is finished in time.
I'm pretty sure that here in Canada, e.i. and pension must be paid if the you supply over 60%of the work to the subcontracter, but you would have to do this anyway.
I think the way to do it is to hire a casual assembler when you are on the edge, and can keep up but don't have the time to develop new products.
Regan

4/29/2003 9:13 AM
Joe Gagan	When I owned Gagan Construction Inc. circa 90 94, I peaked out at 20 employees at one point. I couldn't figure out why the employees seemed to hate me. Then I realized: 1.It is the American Way to despise your boss. 2. I was an A#hole boss.

5/6/2003 5:52 PM
LFOscalator	It takes a while to learn how to be a good boss. I cringe thinking about the first time I supervised people. I was a complete jerk. But in a funny way you almost need to go through being a jerk boss once in your life to really understand how to get along with your subordinates. It's a required real life experience. Hopefully I'm better today. The funny thing I learned about being an a**hole boss is that people detect this very easily and will sandbang you deliberately. When you show them respect, they work for you a whole lot better. And respect isn't just telling them they are doing a good job. Rather it has to do with treating them like you want to be treated. I remember reading in the book "The One Minute Manager" that it is usually wrong to constantly reward experienced people with attaboys for every little thing they do. Why? Because they already know they do a good job and feel patronized if they constantly get trivial positive feedback. Looking back at things, I have to say yeah, those trivial attaboys can be real annoying, and they breed the suspicion that there is no real payoff for doing a good job. Of course, for inexperienced people, constant positive feedback is very important. I hate to say it, but as I get older I am less concerned that everybody does the best job possible that contributes the most to the bottom line. I'm more concerned with balancing a good work environment with achieving my own financial success. And if the company does well in the process that is fine also. Obviously to a certain extent, the financial success of the company (i.e., one I don't own) is tied to my own, but not as much as I used to think. LFO

5/6/2003 5:52 PM

LFOscalator

It takes a while to learn how to be a good boss. I cringe thinking about the first time I supervised people. I was a complete jerk. But in a funny way you almost need to go through being a jerk boss once in your life to really understand how to get along with your subordinates. It's a required real life experience.

Hopefully I'm better today.

The funny thing I learned about being an a**hole boss is that people detect this very easily and will sandbang you deliberately. When you show them respect, they work for you a whole lot better.

And respect isn't just telling them they are doing a good job. Rather it has to do with treating them like you want to be treated. I remember reading in the book "The One Minute Manager" that it is usually wrong to constantly reward experienced people with attaboys for every little thing they do. Why? Because they already know they do a good job and feel patronized if they constantly get trivial positive feedback. Looking back at things, I have to say yeah, those trivial attaboys can be real annoying, and they breed the suspicion that there is no real payoff for doing a good job. Of course, for inexperienced people, constant positive feedback is very important.

I hate to say it, but as I get older I am less concerned that everybody does the best job possible that contributes the most to the bottom line. I'm more concerned with balancing a good work environment with achieving my own financial success. And if the company does well in the process that is fine also. Obviously to a certain extent, the financial success of the company (i.e., one I don't own) is tied to my own, but not as much as I used to think.

LFO

5/6/2003 6:52 PM
LFOscalator	These comments are based on a small software business I started and ran from my home: When is it time? When you can no longer do eveything yourself and when the new hire will immediately pay off in terms of sales and profit. My experience is that you have to have customers in hand at that point and there has to be quantifiable demand for your product. Persuading yourself? It's easiest when you use cost accounting to identify exactly what the marginal cost vs marginal revenue is for a new employee. Obviously you want MR > MC. And don't forget, you can only compute MR if you already have demand for your product. Unfortunately, figuring MC is extremely difficult to do when you have fixed costs associated with your employment business model (See RG's famous post for a list of many annoying fixed costs). For a microbusiness run out of your home, I'm one for getting rid of fixed costs as much as possible by using subcontractors. It then becomes a virtual business rather than a traditional real business. If you didn't catch the point that ZVEX made about using subcontractors, go and re-read his famous memo again. His advice is pure gold. Finding Someone? In the software business you can attract very good people by advertising in the newspaper that you will pay them very good money on a project basis. Many programmers will be turned off and won't want to work on a project basis. That's OK because I don't want them to respond to my add anyways. The people that reply are usually those who are the most entrepreneurial. I get the kind of person I want. Not sure how this applies to the effects business. The key is that you want to subcontract your work out to other microbusiness 'entrepreneurs' who are self starters that will get it done for you on a variable cost basis. Different Path? The virtual business model works best in my opinion for a small in home business. Budgeting Considerations? When MR > MC and all fixed costs have been minimized, cash flow is your only real concern. RG's approach will take an enourmous budget because of high fixed costs. ZV's approach will work almost completely off cash flow with minimal budget since mostly only inventory has to be financed. I have found that I work best in partnerships where people look at fixed costs the same way I do. It's tough having a business partner in a small business who immediately wants to run up fixed costs. LFO

5/6/2003 6:52 PM

LFOscalator

These comments are based on a small software business I started and ran from my home:

When is it time? When you can no longer do eveything yourself and when the new hire will immediately pay off in terms of sales and profit. My experience is that you have to have customers in hand at that point and there has to be quantifiable demand for your product.

Persuading yourself? It's easiest when you use cost accounting to identify exactly what the marginal cost vs marginal revenue is for a new employee. Obviously you want MR > MC. And don't forget, you can only compute MR if you already have demand for your product. Unfortunately, figuring MC is extremely difficult to do when you have fixed costs associated with your employment business model (See RG's famous post for a list of many annoying fixed costs). For a microbusiness run out of your home, I'm one for getting rid of fixed costs as much as possible by using subcontractors. It then becomes a virtual business rather than a traditional real business. If you didn't catch the point that ZVEX made about using subcontractors, go and re-read his famous memo again. His advice is pure gold.

Finding Someone? In the software business you can attract very good people by advertising in the newspaper that you will pay them very good money on a project basis. Many programmers will be turned off and won't want to work on a project basis. That's OK because I don't want them to respond to my add anyways. The people that reply are usually those who are the most entrepreneurial. I get the kind of person I want. Not sure how this applies to the effects business. The key is that you want to subcontract your work out to other microbusiness 'entrepreneurs' who are self starters that will get it done for you on a variable cost basis.

Different Path? The virtual business model works best in my opinion for a small in home business.

Budgeting Considerations? When MR > MC and all fixed costs have been minimized, cash flow is your only real concern. RG's approach will take an enourmous budget because of high fixed costs. ZV's approach will work almost completely off cash flow with minimal budget since mostly only inventory has to be financed. I have found that I work best in partnerships where people look at fixed costs the same way I do. It's tough having a business partner in a small business who immediately wants to run up fixed costs.

LFO

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