Do I need to hire more people?
What if I told you that the job you’ve chosen as the owner of a service firm is to balance a see-saw? A see-saw between your staff and your sales.
The way service firm businesses work is that if either end of the see-saw touches the ground your business has brewing problems. But, both ends of the see-saw change every day! Yes, sometimes they change based on actions you take (you close a deal or you hire a team member), but they also change based on things out of your control (someone quits, your client extends a contract, or starts a new project).
So the see-saw moves up and down while you rush around in an attempt to keep it balanced.
Too Much Staff, Not Enough Work
All service firms start with their see-saw tilted this way. We need work to keep folks busy so we take any work we can get. Things we’re good at, things we could be good at… anything to float the boat.
Everyone pitches in! The team helps to expand the website, they are all over social media, they produce new marketing plans and ideas… and then finally it works and clients start rolling in.
It doesn’t take long for employees to start to report to you that they are SO busy. If you watch them they are busy! But you’ll notice they are busy overdelivering on the project! They don’t want to lose this precious client, they want to make the client happy, so they go the extra mile (or ten). The over delivering is setting client expectations sky high and you aren’t getting any more money for all the extra work.
Now you are feeling the stress!
I need more business to make money, but everyone seems so busy…
Too Much Work, Not Enough Staff
At some point, the see-saw tilts the other way. Finally! “If I have a lot of work and just a few people, I can make a lot of profit!“
Sure, that is the case… but ONLY for a very short time.
People get burned out and the quality of output suffers when they are overloaded and pulled in many different directions. Staff may not tell you this is the case, especially if you haven’t built a culture where they feel safe to do so. You may have to sleuth it out. Or you may figure it out when they start to quit.
One sign this has happened is if you’re employees are stressed and afraid when you bring in a new client or start a new initiative. They don’t celebrate more business or new ideas with you – they dread it. You get blank stares or vocal reluctance to move forward. Never a good situation for you, your staff, or your customers.
You might think. “They just aren’t tough enough!” or “They’re lazy!” or “They are afraid of change. I need excited people!”
While there may be some truth to that, it is more likely your staff is silently flailing and hope you will notice one day. They want to do well and feel good about their work, but are in a situation that makes it impossible for them to achieve that. If this is a pattern you see from more than one staff member and over and over again – then we can safely assume the problem isn’t your staff. There is a disconnect between your business model and the amount of staff you have to support it.
Another sign is if you are in constant fear of losing a team member. The work will never get done without them. You know you have higher turnover risk than is necessary. (Turnover is expensive!!)
Finding the Balance
For most service firm owners, it’s a constant battle between these two states. Bring in some new work, now I need more people. Hire more people, now I need to bring in more work. Or now the work doesn’t fit the skills of the people I have.
For service firm owners both the supply side (your staff) and the demand side (the customers) are in constant flux. So even if you think you’ve got it balanced it’s sure to be out of balance next week when someone goes on vacation or goes to grad school. What happens when a project is pushed out? When a rush project comes in?
We need to have a business model that has some flexibility built in so you are not in a constant see-saw of workload vs. size of staff. If your profits depend on you constantly selling enough work to cover your salary burden, but not too much to stress everyone out, that is a daunting task that you are likely to fail at most of the time.
On Thursday we’ll talk about some ways to build in flexibility to make your business more profitable and your life less stressful by growing your business without hiring more people. But in the meantime, think about where your business is on this see-saw. How busy are your people, really? How much are you overdelivering and setting high expectations with your clients? What have you done to contribute to that situation?
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