Why the first hire is the hardest


Before we dive in:

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Why the first hire is the hardest:

Trusting somebody with your business, your livelihood, your customers, and your reputation is scary.

What if they mess up? How can I afford them? When is the right time? What do I pay them?

These kinds of questions will keep you running in place…forever.

One of the biggest myths of running your own business is that you have to do every job yourself for as long as you can take it.

It’s a ridiculous badge of honor among entrepreneurs, but at a certain point, it becomes too much. And more importantly, poor customer service and missed calls affect your bottom line.

Good enough ends up not being good enough.

There are three types of hires:

The administrators who do repeatable tasks on a computer.

They answer phones and send invoices. They do bookkeeping and keep things organized. They do take-offs or create proposals.

The technicians who provide your service to your customers.

They do the day-to-day work. Many times they are manual laborers in home service businesses, or they work remotely in a lot of agencies or companies.

The managers who are the glue that holds it together.

They make decisions on the direction of the company. They explore new initiatives and drive growth. They lead people. They set employee schedules.

They interview, hire and fire, and make key decisions operationally. They are the highest paid and hardest to replace.

It almost always makes sense for the first hire to be either an admin or a technician while you, the owner, free up time to do more high level work.

An example:

My friend runs a consulting business and she was working 50+ hours a week, struggling to keep up with invoicing, customer service, payment collections, and other simple tasks while also providing her core services, sales consulting.

She couldn't handle more business because she was spending 30 hours a week billing time to her clients and the other 20 on administrative work.

Her first hire was an admin assistant from the Philippines for $800 per month to help with client scheduling, emails, travel booking, billing and more.

She bills her clients over $300 per hour for her sales consulting.

An expense of $800 per month allowed her to bill an extra five or 10 hours per week with ease and actually work less.

A story about my first hire:

My very first entrepreneurial endeavor began when I was 13 years old and I hired my first employee when I was 14.

My father helped me secure a lawn mowing job in Tell City Indiana for his boss who owned a lot of retail and apartments in the town.

He sat me down at the kitchen table and set up a lease program on the family truck and zero-turn lawn mower, so I could use both.

I wasn’t old enough to drive so the original plan was to pay my mom $10 per trip to town and she would drop me off and run errands.

The job was difficult in the Indiana summers and I cried on the first day in 98 degree heat.

I had several years experience mowing the family lawn so my father simply dropped me off to do the job.

I mowed over about 100 pieces of trash and turned them into 10,000 pieces of trash by chopping them all into little pieces.

When my father came back to check on me a half an hour later, I was mowing along and creating this disaster in real time.

He pulled me aside and gave me constructive feedback and made me begin picking up the trash. It took three hours. I cried and told him that I wanted to quit. I was 14!

But he put his arm around me and gave me a cold Gatorade. He very wisely told me I couldn’t quit until my first paycheck came.

We got home after a long day and I faxed an invoice for $120. I was hooked from then on and haven’t had a real job since.

My mother got tired of our arrangement so I was forced to hire a high school kid with a driver’s license and mowing experience.

I went to the high school hallway at Perry Central Jr. Sr. High School and slipped a handwritten, copied flier inside each of the 200 lockers for Juniors and Seniors.

The flier said “Lawn Mowing Job. $12.50 an hour” and my phone number.

I found a great employee quickly and he turned my 3.5 hour job into a 2.5 hour job.

With travel I could do the job door to door in three hours. I billed $120 for the work and began to make real money, north of $20 an hour after all of my expenses at age 14.

I added more jobs and worked more hours as I got older but never grew beyond one employee.

I went to college at 18 years old with $40,000 in my bank account and owned my own paid off vehicle.

A note:

Hiring employees is expensive. As a rule of thumb, you want to be able to bill a customer 2-3X what you are paying an employee to deliver the work.

That means $50-75 per hour to make a healthy margin if you are paying an employee $20-25 an hour. It may feel like a lot, but between employment taxes, benefits, overhead, and lost time due to training, vacation, idle time and travel, 3X is often the multiple to maintain healthy margins.

The goal:

The goal of your first hire (or really any hire) should be to free up your time.

This could be through hiring an administrator, a technician or a manager. You have to find someone who can compliment your skillset and focus on key areas that will free you up to work on higher leverage tasks.

This could be by doing back office work, data collection, invoicing, and payment collection, payroll, marketing work, posting on social media, cold calling, and appointment setting, web design, ads, etc, you name it.

This person should free you up to do the most important thing if you want to grow. And that's SALES.

As the owner, you should be spending as much of your time as possible doing these 3 key things:

  1. Sales (i.e selling new customers, employees, vendors, etc on working with you)

2. Recruiting (i.e finding the next hire to expand your capabilities so you can delegate and achieve more)

3. Training and Management (i.e training these hires and leading them in the right direction so they can do the job without you over time)

If this isn't where you are spending the vast majority of your time, it's time to make your first or next hire so that you can.

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Quick note: I'm hosting a free 1 hour workshop with Zac Prince, the CEO of RE Cost Seg on November 12th at 10am EST. RSVP here.

If you register to the event, we'll send you a copy of the recording 1-2 weeks after, even if you can't join us live.

We'll discuss cost segregation, bonus depreciation, Form 3115, and more. I hope to see you there.

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A few tweets from this week:

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I'm an investor in an insurance company called Titan Risk. They are helping me with cyber insurance, errors and omissions and, most importantly, directors and officers liability.

The insurance guru at Titan, Jon, has helped over 1,500 clients get policies throughout his career. He’s offering 5 free consulting calls to share where you might be exposed and educate you.

Respond to this email if you’d like an introduction.

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Nick Huber

I own a real estate firm with over 1.9 million square feet of self storage and 45 employees. I also own 6 other companies with over 400 employees. I send deal breakdowns with P&Ls. Newsletter topic: Real Estate, Management, Entrepreneurship

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