I am a key production person, as well as the mechanic when things break down. I work with an outsourced HR group to do payroll, health insurance and paid time off, but it still requires my input. The salesperson and I meet every week, and I contribute to sales as well as open doors. I know the wisdom is that I should work ON the business, not IN it. Finance-wise, I can’t afford to hire someone to handle the depth of what I do, and I couldn’t hire enough people to do the variety of what I do.
If I increase sales to be able to afford, say, a general manager, I’ll also need more production workers, more drivers, etc. etc. to handle the extra work. How does a small business owner make this transition, realistically?
Answer: In any environment, especially today, it’s crucial that your business be able to run without you. In a small business, it is hard to take care of everything with your existing staff without sacrificing something, just as you describe. Yet business owners do it every day.
Yes, it requires planning, and, yes, it requires trust in your people.
Start by bringing in the best industry experts with a proven record of helping owners grow and succeed.
In my decades advising label and flexible packaging businesses, the first thing we have to do is take an honest look at your financials and ratios. Our first phase with your financials will help you decide how and when you can hire a manager. The second phase with your financials will be to prepare for the business sale down the road. It’s vital to have monthly and year-end financials prepared accurately and promptly so you an make the best decisions.
Whatever the size of your business, there are optimal operating ranges that will improve your bottom line. I know it doesn’t seem that way, but small businesses are almost always overstaffed. Look at job descriptions, wages, hours, overtime, contract labor, employment taxes, benefits and incentive packages, and sales-per-employee. Be sure all expenses are being booked properly by your bookkeeper. Amend your chart of accounts if necessary to track and gain insight. Use your financials and your budget to make better predictions and help you get the most out of every dollar.
These saving will help you partially fund a new position, but you will have to achieve sales efficiency as well. You and your sales person will have to push out of your comfort zone and go after jobs that have a higher profit margin without incurring proportionally more costs. Having a profitable operation will help when it comes time to sell. Visit my website TheDealFlowGuy.com and compete my no-fee VBS valuation tool to receive a customized report on the financial and operational areas you can improve in your business.
Finally, set a timeline for hiring a manager. Choose a trustworthy talent recruiter or professional placement service that specializes in our industry. With the help of your advisor and a professional employment recruiter, look at how general managers are compensated in our industry so you can craft a realistic package. Position your business as an attractive place to work, and then live up to that image so you can attract and hire the best.
I’m glad you are thinking ahead and preparing to take the necessary steps. Even if you have a long runway to selling your business, you will find yourself getting more enjoyment out of both your work and free time, knowing your business is in good hands.
About the author: Rock LaManna is The Deal Flow Guy. He helps qualified buyers and investors find businesses that are ready for sale or transition. On the sell side, he helps owners improve their businesses, increase value, and position more strategically in anticipation of sale, exit or succession. Visit TheDealFlowGuy.com to obtain a customized no-fee business valuation along with information on how to get your business in front of today’s buyers and investors.