When a business gets successful

The team at b5 Business Blogs have been running a competition over the last few weeks on business advice for a fictional one woman business selling children’s aprons and chef’s hats. It’s now my turn to host this week’s response to the challenge. Previous posts can be found:

• On Startup Spark: how to best use a $500 budget for marketing
• At Home Biz Notes what to do with a potential public safety issue
• At Pimp Your Work, what to do when the press want to do an interview.

Now onto this weeks challenge, what happens when the work grows.

The orders are pouring in for Kay’s children’s aprons and chef’s hats. In fact, she’s not sure that she can keep up with processing orders over the phone, packing the orders and making the actual product. She is worried that some part of her business will suffer. She is considering hiring an additional person to help her get through the holiday season but she’s not sure that she can afford someone full time – and she doesn’t know what that means in terms of taxes, benefits and more. She’s also considered part time or outsourcing some of the work but she doesn’t have a clue as to which option is best or what task or tasks would make most sense to offload. She never had an actual business plan – her plan had been to address each issue as it arose. Kay is facing the dilemma that most all small businesses face at one time or another: is it time to grow? Can she afford it? Can she afford not to?

Offer Kay advice on two key points:
1, What’s her best option for getting through the holiday season?
2, What should she consider for a more long term strategy after the holiday season?

If you’ve ever worked in a small startup business, you’ve probably experienced something similar to what Kay’s going through – especially with your first venture. However, before you think of hiring a single person, you need to have a solid plan. Based on the given example, Kay needs to think of several aspects of her business first before she gets extra help.

First, she has to decide what can be automated. Get a voice mail system to take orders. Create an order form that can be used easily (perhaps check boxes for
options, etc). Use shipping services online (USPS and UPS, amongst others,
have the click & ship options).

Then, she has to figure out what her time is worth. Once she figures out an hourly wage for her own time, she should make a list of every task she is doing and decide which takes have high pay-offs and which are lower. Usually, taking orders and packaging are the lowest ones. Whatever tasks have lower payoffs should be outsourced to others.

Where to find outside help

Now that Kay’s processed the details carefully, she can proceed. The best option for a scenario like this is to hire a couple of independent contractors or even some interns to get her through the holidays. Independent contractors have to pay their own taxes and don’t get benefits. Not only is this more affordable than a full-time employee, but this lets her get extra help through the holiday season without committing to something permanent.

There are several options available to her when it comes to finding them:

Utilize family if they’re able. If her children are old enough, she can hire them as independent contractors to work in the family business. If she has other relatives who’d be glad to help, she can hire them too. They can listen to messages, and fill out the check-box order form, or pack orders.

Draw from people she knows. Does she have any crafty or sewing friends who would work on an independent contractor basis for a couple of weeks? (They may evolve into long term independent contractors.) Unless Kay can find someone who can make the product according to her standards with short training, she may have to delegate the other tasks and do the sewing/production herself.

Kay can also consider free online classifieds such as craigslist to find help locally, but this process will take a bit longer. Unlike hiring people you already know, you need to check references, develop trust, and assess each applicant’s ability. Since her current problem is time sensitive, she might not be able to deal with all of that (plus the legalities) during the holiday rush. When she has more time in the future, this might be something she should consider.

Contact your local college or other institution for interns. There may be business or fashion students there who would benefit from the experience of being involved in a hands-on business.

As for other options, Kay could even outsource manufacturing of the product to other groups. This is usually done overseas, but she may also want to consider something else: outsourcing the sewing and packaging to a ’sheltered’ workshop. This gives jobs to skilled people with developmental disabilities. (It’s also something that she can promote and capitalize on in the future).

Hiring for the long term

As for a more long term solution, she should take a breath after the holidays, reorganize, research and develop a business plan. This includes forward planning about where she wants her business to head, and what her own strengths and priorities are. Here are some questions she should ask herself:

How does she see her future role in the company? Does she want to be a CEO, or is she more of a creator and artist? These are two very different roles that will require different approaches to how she’ll write her business plan. If she wants to do only the artistic tasks such as making the products, she should hire and train people to answer phones, pack orders, and do the other tasks that have little to do with the role she wants.

Does she want to expand or stay small? Does she want the responsibility of a larger company that may “own” her or does she want to stay small? Her experience during the holiday rush can give her an idea of how she’ll answer this question. In addition, this will let her know whether she should just hire contractors seasonally or get full time workers.

Will she eventually sell the company? She needs to figure this out first and write down her exit plans, which should be included in the last part of her business plan. Will she sell the company as a whole or consider a partnership? Will she keep it and pass it on to her children?

Hiring is best after you’ve written a solid business plan. When you get a solid grip on your goals for the business, you can tell what type of people you need to hire, what you can afford to pay them, and how long you need them to work for you.

If she wants to avoid the stress from the holiday rush in the future, she can consider special offers (e.g. partner with another business for a value added offer or give free postage and gift wrapping). She can introduce this special offer for pre orders received by a certain date so it’s not all last minute, and she can plan her staffing, ordering, and other processes during the busy holiday season.

Hope you enjoy this and get a chance to read the whole series.