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How do I achieve smart growth with hiring employees without going bankrupt?

I have a sole proprietorship that offers web professional services to small businesses with small budgets to spend on web development. I want to get it to the point where the business "runs itself" and is a more passive source of income than something I'm directly involved in every day. To do that with my target market, I need to take on a large amount of projects yet handle them efficiently.

I want to stay out of debt and grow project capacity in a balanced way. How do I go about hiring more employees when it's sometimes a challenge to get struggling clients to pay, let alone justify paying myself?

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2

In that case, do not hire employees.. rather sub-let the assignment on franchise basis or profit sharing. You will have a team of entrepreneurs who would like to work more to get more.

I love the franchise idea under a unified brand and brand standards. I'll look into this more.

2

Hi Rob,

Figuring out when to hire the first employee is always one of the toughest decisions for a small business to make. Since you don’t seem too sure of your cashflow, I’d agree with Sharmila and Mark and suggest holding off on hiring someone full time until you are more confident that the money will be there to pay your employee and yourself. Professional web services is an area where I would suspect you can find a good number of capable freelancers willing to work for you until your company is in a good position financially to hire.

To paraphrase Michael Gerber in the “E-myth Revisited”, I see that you want to get to the point where you are working “on” your business instead of “in” your business. I have two suggestions for you to tackle prior to hiring that first employee. First, if you are planning to take on a large number of projects in your target market, you first need to figure out a way to maximize the chances that your company will be paid (in a timely basis) for the work it performs. Everyone who claims to want your services is not necessarily a good client. Figuring out a way to weed out those “struggling” prospective clients before they actually become a client unable to pay you needs to be a high priority. I know this is easier said than done, especially if the target market you have chosen consists of a considerable number of these financially challenged companies.

Secondly, once you know how much an employee will cost you (hourly rate plus all other mandated federal and state employee taxes/fees) , run a month by month company cashflow projection for the next 12 months assuming that person is on the payroll. This should allow you to answer the question “how much more revenue do I need to bring in to afford this person?” . Then, put a plan in place to get there. You will then be able to more forward confidently with your hiring plans once you reach that predetermined revenue target.

Thanks. I like the idea of running a month by month company cash flow projection. I've been using Zoho Invoice for that. I'm not out of "startup debt" just yet for that to yield any predictions.

Almost all of my clients are in the same beginning phase of product development, so cash isn't coming in regularly just yet. Most customers also seem to want to pay monthly, and/or only when everything's done and handed off. I typically require an up-front deposit as earnest money toward the project and as cash flow to get the resources needed for the project. Getting paid is a concern because these are small businesses with limited cash flow of their own.

I'm considering ways of becoming more regimented and procedural about payment in the future. To get this off the ground I've had to do a few "handshake" deals because that's how these particular clients like to operate. So far I've only been burned once, but I know I need to be more firm about having signed agreements going forward.

1

Hire contractors.

Based on what you are doing you may be able to start out with some contractors or even part time employees from a local college or university.

I would look into the internship programs at these schools. You can also go the more traditional route and hire part timers from the general population.

As you grow you can move some of those people to full time and then keep adding in a similar fashion.

Yes, I like the idea of hiring folks who are just getting started in Web development. It's how I got my start 19 years ago. I'll call around to schools and community colleges to see who I can find.

1

I would consider hiring people on an independent contractor basis until you are so busy, you can comfortably pay someone as a full time employee. Try colleges that are graduating kids, in your field.

1

Rob

With your almost 20 years of experience, i believe you can run a training program for those interested to acquire technical skills of your field.

Charging a reasonable training fee helps your cashflows. And you can filter students who are interested to take up internship in your organisation to polish their knowledge. It may free up your time to fulfill your other commitments.

All the best.
Hazel

I've thought of training community members as a way to get leads on web development work. It's how I got started (teaching Continuing Education courses at my university as a college student). Hadn't considered doing that with the goal of finding new hires. However, I think I'd be looking for people who are self-starting enough to have already achieved a certain level of aptitude on their own and are looking to make it into a career. Taking people from zero to an unknown quantity of skill probably would represent a higher risk that they couldn't perform under pressure on a tricky project.

1

Look for partners. They could be your competitors too. But together you can handle large projects. Another idea is to look for independent contractors who want to build their portfolio.

0

In 21st Century web development services are need of all small businesses. No one can deny the impact of social media. Having a website of a business adds reliability and business scope.
Attaching people with your organization by bartering your services with theirs could keep them growing with you beside you will build an other reference of your work.
Develop track of face book pages of small businesses who do not have websites. You can target them and offer them a package. Develop few smart online templates for different industries and use them with different free relevant pictures and develop a demo by extracting info from their face book page and then develop a one page sample demo and show them to the prospect client. When it comes to charges monthly small charges as low as 50$ should be charged or give them a better package to pay by installments.

0

If you really want to save money, hire freelance people from other country (and YES, I mean Latam, India, China). I you want to have employees anyways, make them work remotely from home with a good and organized system. Learn some useful tools to work remotely. If you work in this digital industry, you'll know what I'm talking about (Gmail, Hangouts, Grasshopper, a good CRM and above all, use a colaboration tool called Trello). No business will never run itself of you don't have the full staff that it needs: sales, production, general manager, financial, make sure you separate this roles and don't try to be a one man band or you wont' be able to grow. And just don't take clients that are not willing to pay your fees, remember that the time you spend on a small client is THE SAME that you can be spending on a big one. And never ever work in exchange of other people's services, it simple won't work.

0

You can go for hiring bright college students as interns. This is not a full time employment. You are safe in a long run at the same time the bright students you are hiring will give their best shot to learn and prove their skills.

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