Was listening to Dave Ramsey’s podcast as I was moving around Singapore for customer site visits. A guy (who ran a one man consulting firm) called in to comment that he wanted to grow his business but didn’t want to walk the traditonal path of hiring a employee but instead was looking at bring on a partner. Dave gave some great advice that seemed quite logical and useful to me at the time. However, I had forgotten to make a note of the exact details and wound up fast-forwarding a few days of material before remembering it was from 1st August.
The reason why I wanted to listen again to the details was because I too didn’t want to hire just another employee as I find myself needing to grow the business. Dave’s rationale is that he hires team members while still holding 100% ownership. While not the tradtional X% shared ownership like partners, I think this is a better model for me to adopt.
The reasoning goes (figures are for example only)
If I’m making $60K, hiring an employee would most likely have to be supported by this revenue and creates a cash flow issue. The better case would be to look for someone who is willing to fight and strive to earn his own keep while at the same time looking to grow the business as much as possible since its to his benefit.
A likely scenario would be to base his output based on past experience. E.g. His target would be $40k and most importantly, he would receive a high percentage of this (e.g.80% with 20% back to the company). This way, there is an incentive for the team member to work harder and of course earn even more versus a fixed salary income that grows slowly. However, Dave also mentioned that this arrangement is best set in a fixed period of say about 3 months to a year to ensure flexibility in adjusting the allocation since the aim is really more to ensure fairness.
With this in mind, it looks set for another person to join the team. Details soon 🙂
One thought on “Growing a small business with baby steps”
Yup, getting the right person on board is always critical. Good luck!