People Matter — Especially When You Get Set to Hire Your First Employee

By Susan Wilson Solovic

People can make or break your business.

That includes your professional advisers, suppliers, customers and clients, employees, business partners, and even your friends and family. Making wrong decisions about any of the people with whom you deal can significantly hurt your business and impede — even destroy — everything you are trying to achieve.

With regard to people, I’ve made both good calls and bad. In most cases, the bad calls were no big deal, but a few of the bad choices left me feeling angry and betrayed.

There’s an old saying: Business is business and friendship is friendship, but when it’s your business, it’s always personal. Fortunately, I’ve been able to rebound from bad calls, but not all entrepreneurs are so fortunate. Some find placing their trust in the wrong people to be too devastating, emotionally and financially, to overcome.

A story of betrayal

A number of years ago, I personally saw the tragic ending for a friend who simply couldn’t overcome business betrayal. I’ll call her Sally.

Sally had tremendous entrepreneurial drive. She built a business from nothing in 1993 to nearly $100 million in revenue by 2006. She recognized that she didn’t have the sophistication to develop the structure and process for such a large organization, so to help her manage the rapid growth, she hired a chief operating officer. Things seemed to be going well until documents from the IRS arrived indicating she owed $2 million in back taxes.

A complicated investigation ensued, and it turned out that the trust Sally had invested in her second-in-command had been misplaced. According to sources close to Sally, the COO, who had previously been convicted of IRS fraud, failed to pay the company’s federal taxes for two years. The IRS troubles caused other financial problems, too, putting the company in dire financial straits.

Ultimately, Sally left her office one Thursday evening and never returned. Her body was found on Saturday. She had taken her own life. As one of Sally’s friends noted, “Sally believed that she would lose herself if she lost her business. She had fought so hard for so many years to build that company, and she was deeply ashamed about her financial problems.”

This is an extreme story. But I feel compelled to share it because it drives home the importance of understanding that your business is only as good as the people involved with it.

Surround yourself with quality people, and be careful about where you place your trust. Every choice you make has an impact on your success. Oprah Winfrey has said that she continues to sign most of the checks in her business. Sage advice from a successful business owner.

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The fork in the road

Thomas Edison had an unusual way of hiring his engineers. He’d hold up a lightbulb and ask the candidate how much water it would hold.

Some candidates used gauges, measurements, and scientific calculations to determine the answer. Others simply filled the bulb with water and then poured the contents into a measuring cup. Which candidates got the job? The ones who used the simple approach — filling the bulb with water. Develop an “Edison Test” for your business.

Small businesses often start out as one-man or one-woman shows. As the owner, you do everything from collecting the cash to emptying the trash. As your business grows, however, it can reach a point where the volume of work for one person becomes overwhelming. In terms of the success of the business, that’s not a bad thing, but it can cause you great stress and put you at risk for burnout. With only so many hours in a day, there are limits to what one person can accomplish.

This point in your entrepreneurial journey is a pivotal moment: the proverbial fork in the road. The direction you choose is going to have a lasting impact on your business. You recognize the need for additional resources to manage the business, but the thought of increasing your overhead by taking on an employee is scary. However, if you don’t take on more resources, you’ll stagnate at your current level of business.

So how do you know when it’s the right time to hire your first employee? When the business is ready. When you are ready. And when adding employees is in strategic alignment with your vision for the business.

Excerpted from It’s Your Biz: The Complete Guide to Becoming Your Own Boss by Susan Wilson Solovic. Copyright © 2012 Susan Wilson Solovic. Published by AMACOM Books, a division of American Management Association, New York, NY. Used with permission. All rights reserved. http://www.amacombooks.org.

Susan Wilson Solovic is owner an co-founder of ItsYourBiz.com, a video news and information site for entrepreneurs. She is also a small-business contributor on ABC's Money Matters and a featured blogger at The Huffington Post. Solovic has served on the National Women's Business Council and the Women's Leadership Board at Harvard University. Contact her at info@itsyourbiz.com.

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