This is a raw sample chapter for my upcoming book, Leader: The CEO Manual For Entrepreneurs.
Hire For Your Core
“What job(s) should I hire for first (next)?”
I’ll attempt to explain why that question is so difficult to answer for founders and how to solve it.
Here are several of the key issues I see with my clients:
- competing priorities
- unclear vision for the company / vague plan
- no or little money (more a perception than reality)
- hiring is emotional
- unsure of which positions will improve the company
- belief that hiring equals more work for themselves
Hiring Equals More Work
I’ll start with the easy one first. If you hire someone who will have very little impact on the business’ objectives, you will likely have more work to do.
I’ve seen this play out over and over with the advice of “hire a virtual assistant.” The idea is that if you hire a VA, that person will handle all the little things that take up your day so you can work on more important activities. This feels like more work because it is.
What happens is the founder unloads 5 to 10 hours of low-level, limited-impact, work on the VA, and then fills that time with other work. The problem comes with having management work added in.
An example from one of my clients: he hired a VA for 20 hours of work per week. He freed up a lot of time to work on his business… in theory.
What happened was he spent approximately an hour per day managing his VA. She was really good at certain tasks, but every time a new task came up, he had to go through a whole training process that included instruction, standard operating procedures and even videos that the VA could reference in the future.
When he became my client, his VA had been with him for over a year. I had him analyze his VA’s productive time. Her productive time was about 10 hours a week — maybe. He was spending an average of 1 hour to get 2 hours of relatively menial work completed.
From this experience, he had the idea that hiring more people would just be a massive headache.
Here’s what I had a different client do recently: My client was still doing customer support each week, which required 15 to 20 hours of work per week. Her idea was to hire part time just for that labor, but I encouraged her to hire full time.
Not just full time, but also someone capable of managing the customer support department. This new hire should be able to do the current customer support, create and improve support procedures, and train and manage new customer support staff.
To accomplish all of that work only takes the new customer support person 20 hours a week (and it’s all productive time). The other 20 hours a week are used to assist her in other areas of the business.
Not only does my client have more time to work on key areas of her business, but her management requirements are less. Her hire has a major impact on the business with customer support running much smoother, and she can focus on growing the company.
A new hire shouldn’t equal more work for the founder. It should equal more output, more results, for the company both from the new hire and for the founder.
Unsure Of What Position Has Impact
There are a few variables that cause a founder to not know what jobs will have impact:
● For my clients, a big variable is inexperience. They are young, have little job/industry/domain knowledge and experience so they are figuring it all out as they go.
● They don’t have a clear plan for growth. Since they are ‘winging it’ they just hire for their biggest pain at the moment and not for the biggest impact.
● Not having a clear path causes a conflict of priorities. They can’t identify what is the most important activity so they focus on immediacy — putting out fires instead of preventing fires from starting.
Little Or No Money
“How can I hire when I don’t have any money?”
This is the seemingly eternal conundrum for bootstrappers. They need more money to hire, but need to hire so they can make more money.
I believe this catch-22 is why so many entrepreneurs feel compelled to hire low-cost, low-reward employees in the early days of their business. They can’t afford someone with years of technical know-how so they hire an relatively inexperienced admin to do random tasks they don’t like doing.
One of the Internet-era’s greatest boon is also a trap for many. Businesses can now be started for nearly $0. This is amazing, but it can also trick people into thinking any business can be started and grown without any capital.
Most of the hiring issues I’ve ever seen with entrepreneurs could have been avoided had they saved up some capital before they started their business, or even raised a small amount through a loan or friends-and-family investors.
Here are a couple scenarios that are common to bootstrappers:
● Founder is working a job, has an idea for a business and gets it going while maintaining the job. As soon as the fledgling business has enough revenue to pay the founder’s bills, the founder quits the job to work full time on the business.
The smartest play, assuming a very small savings account, would be to keep working and use the startup’s revenue to hire someone who could help grow the company. When the revenue grows and could support the founder, he/she could quit working or make the next most important hire.
● The founder has some savings, maybe a year’s worth to cover personal expenses. The founder gets the business started while working full time, but even before the business has any traction, the founder quits the job to work full time. The startup makes some early sales and the founder starts spending some of it on company expenses such as software subscriptions and also to cover personal bills.
Then one day the founder realizes that he/she doesn’t like working 80 hours a week, most of the savings account has dwindled away, and now the founder doesn’t have enough capital to risk on hiring someone who can have a substantial impact on the business. So, the founder hires a virtual assistant for $3/hour out of the Philippines in hopes of working less.
Possible solutions to not having enough money to hire for your core:
● Save money. Every business needs to maintain at least 3 months worth of expenses in its bank account to weather any unforeseen problems. Also, a business should be saving for anticipated expenses (i.e. new hires). You may have to work 80+ hour weeks to save up enough to hire someone (at least 3 months worth of their expected salary).
● Get a loan or investment. You’re probably bootstrapping for a reason and may not like either of these options, but they can be faster and less stressful than taking many months to save up for a hire.
● Hire ambitious apprentices. My friends, Dan and Ian over at the podcast, TropicalMBA, popularized this strategy with their businesses.
The concept is to attract inexperienced talent that doesn’t want the typical corporate cubical, “go get coffee and make copies” starter job. They are willing to trade a market rate salary for real experience that can propel their careers. Your job is to give them that experience, and if you can provide them with a great vision for the future, they’ll stay with you long term.
Several of my clients have had great success with the apprenticeship path. One of them even had their marketing apprentice go from marketing apprentice to CEO of their company. Sure that’s likely to be extremely rare, but I mention it to show that there are very ambitious young people who want experience over starting salary.
Hiring Is Emotional
Hiring is scary.
“What if I hire the wrong person?”
“What if my plans for the person don’t work out?”
“What if I have to fire the person in 3 to 6 months… or ever?”
Hiring is a huge responsibility. Entrepreneurs truly feel the weight of employment. They must make enough money to hire. Hire the right person so as to make a profit that warrants hiring in the first place. And they have to be able to afford to keep the person as that person put his or her family’s livelihood in the entrepreneur’s hands.
Oh, and all that is typically thankless. Society just expects you to do it. Politicians and voters love to talk about how it’s the responsibility of companies to create more jobs. And companies equals you and me.
Hiring is also emotional in that entrepreneurs may hire someone they “like” instead of someone more capable of doing the job. Sure culture is important, but many people hire based on whether they feel a connection with the job applicant and less on that person’s capabilities.
Getting over the emotion of a hire is important. You must understand the math and the roles and responsibilities required to contribute to a profitable company. Many entrepreneurs don’t do the math — the path to profitability, when they hire. They frequently have only a tangential idea as to what impact the job will have on the company.
The logic kind of goes like this: “I’m really busy so I need to hire. I don’t like doing these jobs (feelings) so I’ll hire someone to do them. I’m currently (or near) profitable so by hiring someone to do the jobs I don’t like, I’ll become more profitable.”
The hiring planning should be more like this: “The company is growing and I need help with marketing. I’ve got a few activities that are working, but need to test more marketing channels. Hiring a marketing assistant, who can eventually become marketing manager, will help us drive more customer acquisition. I’ll then be able to focus more on conversions instead of spending most of my time trying to attract prospects.”
Hiring by feelings tends to fill roles that support the company’s core competencies instead of filling openings in the core first.
Jobs that have impact are always in your Core.
There are areas of your business that are critical to your success. I call them your Core Competencies.
Inexperienced entrepreneurs simply assume all activities in a business are important to their success. This is made worse when an activity seems like it should be a core competency.
I use Apple as an example. Two of Apple’s main core competencies are design and engineering. They do an amazing job of designing new products and engineering them, but they don’t manufacture them.
Manufacturing is a critical element of producing an iPhone and for Apple’s success. It looks like it should be a core competency. But working with a company that’s sole core competency is manufacturing allows Apple to excel at their core.
An example from one of my clients was when he was considering hiring a designer. He didn’t have the budget to hire a great designer for the company, but needed high-quality design for his products.
We analyzed what his company’s core competencies were. Design wasn’t important. His products needed to look good, but the design wasn’t why his customers bought. Customers bought because the products solved a major problem they had.
The plan became, outsource product design to an amazing designer, and get a templated system and style guide for making new products. Then a junior designer could be hired to adjust the template for future products.
During this process, my client discovered a core competency that he did need to hire for: launching and maintaining the marketing for new products.
He needed to build a product launch team. This team would have an immense impact on his company whereas the designer would not.
There are never-ending lists of things that must get done in a business from the time you conceived the idea of it until you’ve sold it.
Coping with these endless to-do lists is an important lesson to learn for entrepreneurs. They start their day with 53 items on their to-do list and go to bed with 153 on it.
The issue isn’t how much needs to get done (it never ends), it is what needs to be done when.
There will be 153 things to do 10 years from now in your business, different things (hopefully) to do, but still they’ll need to be done.
Prioritization isn’t about which of the 153 items get done first today, but which of the 1 to 3 most important, highest-impact activities get done today, this week, this month, this year.
If you can’t identify what those activities are, no productivity hack will ever help you grow your business. You’ll make the mistake of hiring a dozen part time people to do lots of little tasks trying to check off all the items on your to-do list.
When you know your highest impact activities, your Core Competencies, you can hire specifically to fill those roles. You won’t need a bunch of random employees or contractors.
The client from part 1 who learned that marketing was a core competency for his company focused on determining what roles within marketing had the most impact.
He identified affiliate management, copywriting, paid advertising, and project management.
He had been filling all of these roles (as most bootstrappers do). His next steps were to profitably fill those roles. First, he contracted paid advertising to a company that specialized in increasing conversions. Next was hiring a project manager to free up most of his time for higher level activities. Then the project manager contracted out copywriting and helped hire the affiliate manager.
This formed the basis of his marketing team. The part time work, copywriting and paid advertising, were important to the team, but the company couldn’t afford to bring anyone on full time so he made the judgement call that it was best to have those jobs outsourced to experts until the company could afford to bring the jobs in-house.
What to do with the other 150 items on the list?
You’ve found your 1 to 3 highest impact activities, you’ve hired appropriately for them, but what about all the other items on the list?
I developed the Leadership Task Filter to help with all those nagging tasks that just won’t go away.
Most items on your list simply don’t have to be done. Shocking, right?
They are low priority and low impact. Put them off for as long as you can.
Sometimes the need to do them goes away. Tim Ferriss wrote about letting little bad things happen.
You, as the leader of your company, have to learn to let little things pass so that important things can get done.
But even if you’re great at that skill, there will still be lots to do and you need help.
Search the web and you’ll see lots advice to hire a virtual assistant to get work done, but I’ve already warned you about that hazard.
You need a Lieutenant.
You need someone who can take your vision and strategy, rally the team, and get the work done.
Many times this person fills the role of operations. In a small company ‘operations’ is a catch-all term for getting everything done that doesn’t have someone currently doing it.
Over time the role of operations manager will coalesce. This person will help you systemize your small, but varied departments so each department is working toward your vision.
This brings us to the number one reason why entrepreneurs have difficulty knowing what job to hire for first or next…
In the beginning, the entrepreneur’s vision is to manifest an idea into reality. Once the business exists, vision gets cloudy. It gets swamped by all the immediate necessities of getting the company to exist and keeping it in existence.
The stress and workload obscure the vision, what little of it existed, but so does the validation process. Figuring out product-market fit and message-to-market match are filled with trial-and-error.
Figuring out what works and what doesn’t and then trying to make it repeatable gets confusing fast.
Soon the vision becomes, “If I can just get this one thing to work then I’ll be able to get this other thing to work. Maybe one day the whole business will work.”
In other words, entrepreneurs succumb to the cliche’ of “take it one day at a time.” They stop looking more than a day or two into the future to say where the company is going.
The team members just focus on doing their jobs and hoping that it is what the boss wants and it will help the company. But the reality is they have limited impact because they can’t tie their results to the company vision.
Aim For The Horizon
Vision isn’t set it and forget it. It isn’t a project. Vision isn’t one of the to-do list items that gets checked off the list.
I liken vision to the horizon.
You can’t ever reach the horizon. Sail across the ocean and the horizon stays the same distance from you. You sail closer to it, but it somehow stays out of reach.
We entrepreneurs have faith that our destination is right over the horizon. All we need to do is keep our ship pointed in the right direction and one day we’ll reach it.
Your vision for the company is that destination that is always on the other side of the horizon. The company will take a quick stop at some amazing places along the way, but the true destination is still over the horizon.
That metaphor will either energize you or frustrate you depending on how you’ve handled your priorities, and who you’ve hired so far.
If you’re frustrated its because you see the journey as just more work. Like I wrote above, the work never ends until you sell, retire from, or close your business. There isn’t some magical destination that will make it all better if you could slog it out until you got there.
But you don’t have to struggle. This article isn’t about eliminating the work. It’s about removing the struggle from the work your business must do.
How To Create Your Vision
I don’t have a solution for creating a great vision for everyone. I do have a process you can use.
Creating a vision for your company isn’t something you do once and it’s done. It’s the horizon. It is a continuous journey. Don’t treat your vision as a project.
Your vision must get updated regularly because markets, your customers, your employees, and even yourself, all change. Those changes, the new data, has to be included in your vision or you’ll end up way off course.
You need to set aside times to specifically work on where your company is going. You have to take yourself out of the daily grind to give yourself enough mental space to look into the future and see it clearly.
Types of Vision Sessions
- Annual leadership meeting
- Quarterly leadership meetings
- Weekly team meetings
- Solo strategy time (60 Minute Mission)
Your leadership team may still be just you, but that doesn’t mean you can skip a formal annual planning meeting. You need to set aside time to plan for the long term — 5 years (over the horizon) and 1 year.
Next, is to check in each quarter to see if you’re still on track for your long term vision and your annual objectives.
As the leader of the company, you must communicate your vision to your team on a regular basis. If you’ve got a big team, weekly in-person/live meetings might be cumbersome, but that doesn’t mean you get to skip communicating your vision each week.
For distributed teams (employees and contractor scattered around the world), I recommend entrepreneurs make a weekly Vision Video. Record 5 to 10 minutes of how the company is doing and where it’s going. This can include praise for teams or individuals who have excelled, areas the company can do better, what is important to you and the company (clear priorities), and any words of encouragement you have for the company.
Not only does this communicate vision, it also has the bonus of helping create your company culture.
How Vision Guides Hiring
Clearly knowing where your company is going helps you hire for jobs that will get you there.
You may need an administrative assistant in your company to keep all the files, records, and calendars in order, but that job won’t ever get you to your destination. It may make the journey tidier. Make life easier on the jobs that will impact the company’s success, but it won’t be the cause.
With a clear vision you’ll know what the highest priority activities are to achieve that vision.
Knowing what the priorities are will guide what jobs must be hired for and when. You won’t be confused as to what jobs will have impact and which ones won’t.
When you hire for impact, you won’t be adding more work to yourself — you’ll be adding more output, more results, for your company.
Core Competency: A fundamental skill or activity that is integral to your success. A core competency also leads to differentiation in your market.
Examples are Zappos with customer service, Walmart with distribution, and Uber with convenience.
Most companies have between 1 to 3 core competencies, without which, the company isn’t differentiated or doesn’t gain market traction.
There may be half a dozen or more other competencies within the company that support the core, but could be outsourced without a loss in differentiation or market positioning.
Many early stage entrepreneurs confuse all activities in their business as critical to success. They fundamentally treat all work as core competencies even if they don’t understand that they are treating tasks this way.
The earlier example of hiring a virtual assistant to do low-level tasks signals that the founder believes those tasks are critical to the company’s success, or at the very least, its continued operation.
It may be true that many or all of the outsourced tasks contribute to the operation of the company, but it shows a lack of understanding about which activities cause success and which merely support success.
By understanding what areas of your business are core to success, priorities can be set, and appropriate jobs can be filled within (or outside) the company.
Here is how to solve the problem of menial labor preventing the founder from working on more important activities:
- Write down all work that is preventing more impactful work.
- Batch them into logical job titles.
- Write down all the impactful work that will get done once the menial work is offloaded by the founder.
- Batch the impactful work into job titles.
- Hire for the impactful job titles. If you don’t have enough money to also hire for the menial work, then share some of the menial workload with your new hire. That person should be capable of wearing multiple hats like you.
Everything up to this point has been to illustrate the difference between activities that are a part of your core and which tasks are not. If founders can’t determine what work is impactful and what work isn’t, then they are unlikely to know what is a core competency or not.
How To Identify Your Core Competencies
Now that the confusion between hiring for menial work and impactful work has been removed, or at least lessened, we can determine what impactful work is core to your company.
Clues to look for are things like:
1) Does it increase my sales?
2) Does it create or improve my products?
3) Does it improve my customers experience?
4) Does it give me a competitive advantage?
Work that positively answers the questions above may or may not be your core. Manufacturing is mission critical to the success of Apple’s products, however, it isn’t their core.
If an impactful job, such as manufacturing, can be done much better than you by another company, then it isn’t a core competency. You should outsource it.
There are companies that only do sales and marketing while all other activities are outsourced.
There are even brands that simply license out their brand to other companies who do all the activities that create and sell the products. In a way, their only core competency is having a popular brand. If they make poor choices with their licensees then that brand would lose cache in the market and future licensing deals would evaporate.
Typical Core Competencies
Most companies need sales and marketing to be core to the company, at least in the beginning. Few outsourced sales or marketing companies will have the drive to make your product successful in your startup phase.
Product design or service fulfillment is typically a core competency. Nike designs its products and does a great job, but then hands manufacturing off to companies that have that as their sole core competency.
Distribution, or distribution management, is commonly part of the core. If the company doesn’t control the distribution, it must manage its distribution to gain an edge on the competition.
Customer service should be a core for most companies. This is an opportunity to learn about changes in market demand, improve your products and customer experience, and create brand loyalty.
Administrative is never a core competency. It is simply a cost of doing business that should be minimized. It shouldn’t be your first hire.
Putting It All Together
As the founder of your company, you are responsible for choosing what your core competencies are.
Determine what activities have impact on the success of the company.
Determine what activities support the impactful work.
Identifying impactful and supporting work prevents confusion as to what may or may not be a core competency.
Categorize the impactful work into departments such as the sales department or the product design team.
Label the departments of your company as Core or Supporting Competency.
Hire within your core first.
These people will speed up the growth of your company, meaning more revenue, more market share, and ultimately more profits.
Know this… in the early days of your business, you’ll just be guessing at what your core competencies are.
And that’s okay. It’s part of the process of creating a great company.
Over time your core competencies will stand out. As soon as they do, it’s up to you to capitalize on them. Improve them. Polish them.
Then you’re business will be world-class.