Networking in Berkshire - Business Event Details

Are you a Business owner or just Self-Employed?

Many people who believe they own a business are in reality self-employed. Now, if you’re self-employed by choice it’s fine by me. However, make sure you fully realise the risks and negatives:

  • It’s hard to take holidays and days off
  • Your business has no value - no one will buy your ‘job’
  • You need to make sure you’re fully insured against being too ill to work
  • Be sure you have an exit strategy and strong pension/investments
  • Keep cash in reserve - you need to be able to weather a storm
  • Beware - if you aren’t working, you aren’t getting paid!



If you have all the above covered and choose to stay self-employed that’s great! It’s good to be doing exactly what you want to with a secure future.

But if you’re working alone and don’t have all the above covered, you might want to build a business. Our definition if a Business is a profitable commercial enterprise that can work without you. If you’ve set up a limited company and call yourself a Business Owner, just consider whether you really own a business or you’re actually self-employed with a business name.

The vast majority of ‘businesses’ consist of one person and don’t meet our definition, don’t have all the above points covered, and the owner runs in circles trying to do everything. Many tell me confidently that they don’t ever want employees. The reason they don’t want employees is because either they can’t afford them yet, or they don’t want the responsibility. Isn’t that interesting?

If you employed someone and, as a result, the business made less additional profit than was being spent on the employee... it would be a bad choice of employee! Let me be clear - the reason you employ staff is so that the business makes more money. Say you spend £25,000 per year on a new employee, you’re going to want to see the business generating £50,000 or more additional profit per year as a result. This might seem obvious, but I continually speak to people who haven’t got their head around this and think that an employee is a cost they can’t afford.

In terms of employees being an extra responsibility or hassle, I understand, but it’s often a feeling or a fear that comes out of a bad experience or misunderstanding. Someone recently commented “I’m not sure I could generate enough extra business to cover the cost of one employee, let alone a team!”. My question in response was “would they be working for you, or would you be working for them?”. I admit there are plenty of bad employees around who will sit and do nothing unless you’re hassling them. But if that describes someone who works for you - why did you employ them and why do you continue to? Deal with it, you get what you tolerate.

When you think of employing someone, consider whether there is potentially enough business out there that your company can gain to more than cover their cost? Next, consider who’s going to get that extra business. Do you need to prioritise employing a salesperson or marketing person to get more business before or at the same time as an employee that will generate more work or handle more admin? Then, when you’re interviewing and certainly when you recruit someone, make certain that among other goals they know exactly what they need to be generating to keep their job and maybe to achieve a pay rise or promotion.

If you have work that isn't yet or never will require a full-time employee, consider the alternatives. You could employ someone part-time, or you could use a Virtual Assistant (VA). Using a good VA can be an excellent solution because you can contract as little as an hour at a time as needed, and get the specific skills you need at the time. What takes you three hours might take a good VA only an hour, so the saving potential is excellent.

The necessary skills to manage employees are relatively easily learnt - there are hundreds or probably thousands of books on the subject and endless training courses. But first you need to start with a clear understanding and belief that you employ people to generate more profit for the company and that you don’t do the work for them. If someone has to work late... it’s the staff. If someone needs to get more money in to pay the bills... the staff need to do it. Your job is to set the direction, employ the team, make sure they know what they have to achieve, then make sure they’re constantly motivated and achieving the goals.

Views: 42

Comment by Debbie Edwards on October 29, 2012 at 13:57

Rob this is a really interesting article. Another alternative is for a small business to outsource their non fee-earning tasks to somebody like myself. As a rule, think about what you charge per hour and if you can outsource for less than half that, it makes sense to do so. Most small businesses could benefit hugely from this approach; why spend a day trying to perfect that Powerpoint presentation when a Virtual Assistant could do a better job in half the time? While I crack on with the presentation, your day is suddenly freed up to call those sales leads, attend a networking event and ultimately generate more revenue for your business.

Comment by Rob Pickering on October 29, 2012 at 17:28

Hi Debbie,


Thanks for your comment, absolutely correct! In fact you're so right that I need to edit my blog to include your point, either in terms of using a VA or using part-time staff as a stepping stone or ongoing alternative to employing full-time staff.


A whole industry has grown up in a relatively short number of years for Virtual Assistants and I think it's great news, but far too few people understand the benefits.


I often advise people in exactly the way you describe - are they doing work that they could pay someone else to do at a lower hourly rate than they themselves charge? But that doesn't always tell the whole story. Often I see business owners spending hours doing something themselves and doing it badly in three times as long as it would take someone else! Bookkeeping is one example, where someone will spend three hours inputting data - getting some of it wrong, hating every minute - only to find that a trained bookkeeper would have only taken an hour! But there are plenty of other examples too. Maybe I should do a blog devoted to this alone?


Thanks again for highlighting a key omission. Though your comment might confuse readers after I edit the blog to improve it now:-)


Rob

Comment by Debbie Edwards on October 30, 2012 at 16:38

Thanks for acknowledging my comment Rob, couldn't have put it better myself ;-)

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