Staffing is the toughest of the challenges faced by owners of growing businesses. What will be the most cost-efficient personnel purchase? Should the investment be most heavily in the business manager, office manager, recruiter, or sales people?
Plus, the timing of staffing decisions is tricky. Hire too soon and profitability drops due to the increased overhead, or the employment rating goes up if people are laid off because sales did not support their positions. Wait for sales and you are running the risk of reduced work quality. New people need time to get up to speed. Training them is necessary, but it can be distracting to the operations.
More often the decisions of entrepreneurs to hire now or wait is a reflection of their personalities and comfort levels rather than a reflection of any industry-specific pattern. The pace at which business owners go for growth reflects their personal orientation to risk versus security; some of us love living on the edge, but others resist it.
As entrepreneurs grow their businesses, they establish patterns or styles of going for growth that fit their needs. Successful approaches for one entrepreneur may not work for another unless they operate their companies under the same growth style.
There are four classic patterns of styles entrepreneurs use to go for growth. The first has been popularized by people like Donald Trump and starts with money. These entrepreneurs will look for lines of credit, loans, joint ventures, venture capital, partners, and/or silent investors. When the money is in place, they will hire the people they need to run the business.
People who are comfortable with the deep pockets style need a great deal of confidence in their capacity to succeed. Some deep pockets entrepreneurs finance their businesses on credit cards, a mortgaged home, or the profits from a previous venture.
Deep pockets entrepreneurs are only secure when they can see the money is in place to fund their ventures. They often need outside assistance to set reasonable parameters and terms for repayment. Perhaps the most important people hired by them are their business/project managers who hold everyone accountable for appropriate return on investments in specific deals.
We have dubbed the second style sponge and buffer. Unlike the deep pockets type, the sponge and buffer business owner believes in sweat equity over money.
Business is fun to this type when it involves exploring new ideas, researching new trends, and designing new products. Their employees are buffered from their research into the unknown. While the entrepreneur is out sponging, the employees mind the store. Sponge and buffer entrepreneurs feel cost-efficient because they do not spend extra money for overtime, asking others to do research that they want to do anyway.
Probably the most important people hired by sponge and buffers are their office managers and supervisors, who keep the day-to-day operations humming while the owners are off sponging and creating. The office managers and supervisors need to have highly positive attitudes and be team-builders, so the absence of the sponge and buffer entrepreneur is not resented or disruptive. Plus, stability is needed to counteract that type’s tendency to move into several new directions.
We labeled the next style build and find because the entrepreneur who is going for growth through this pattern focuses on market research to build the right inventory at the right time and then finds the suitable customers. Build and find entrepreneurs are comfortable when they know their businesses are making good purchases, and they are not stuck with products no one wants.
Perhaps the most important employees of build and find entrepreneurs are the market researchers and purchasing agents because the secret to success here is keeping down the cost of inventory, knowing what the market wants before the competition, or knowing it better than competitors do.
The sales people of a build-and-find company often are specialists in targeting and are paid through salaries. Incentive systems in this style of company frequently start with the purchasing agent. In a service business, the equivalent of a purchasing agent is the recruiter.
The fourth style leads with sales, and is referred to as promise and hurry. The entrepreneur who is comfortable with this style values flexibility.
The entrepreneur of a sales-led company closely monitors marketing efforts, sales-closing percentages, and pricing. In addition to needing talented sales personnel, the sales-led promise and hurry entrepreneur needs quality marketing and publicity people and good shipping/receiving clerks.
Promise and hurry types could have very large lines of credit available but not be comfortable until they see a steady increase in monthly or quarterly volume.
Known as The Growth Strategist®, Aldonna R. Ambler, CMC, CSP helps rapidly growing midsized companies (typically $20 – 200 million/year) realize their goal of Achieving Accelerated Growth With Sustained Profitability® through opportunity/resource analysis, executive coaching, strategic working sessions, and her intermediary role regarding growth financing. Her clients are among the brightest, most ambitious business leaders whose names now appear on published lists of the fastest growing privately held corporations. The recipient of 23 prestigious awards for her success as an entrepreneur and industry leader, Ambler hosts a peer-to-peer-to-peer Internet radio program, aptly called The Growth Strategist®, which features lively interviews with CEOs of midmarket companies who have successfully executed the growth strategy of the week. She can be reached toll free at 1-888-Aldonna (253-6662), by e-mail at Aldonna@AMBLER.com or online at www.ambler.com.