Hire Humans

Open your mind and open the door to a lot of great potential candidates

You hear it everywhere – everyone says it – “Always hire stars”.

This wonderful piece of advice is offered by just about everyone, and it is totally wrong.

I see companies all the time advertising for people all across the country and even internationally for quite mundane roles.

Let’s go through the basic reasons.    

1. Get a grip – there are only so many truly talented people out there, the rest are ordinary humans.
2. What makes your company attractive to a highly talented individual? Salary, opportunity, equity? If they are truly any good then why aren’t they working in a highly paid job.
3. Are you or your business “stars”?  (sorry, but I genuinely doubt it).
4. A business doesn’t run on its stars – it runs on normal people with normal intelligence and skills performing their normal job – following normal procedures. If you require superhumans to make your business work then your business model is broken.

I’m a big advocate of hiring good people locally and promoting good people from within (if you have them.) It’s amazing what giving a bit of authority and encouragement to a person will do.

If the position description would require a star to perform it, then try looking at the core duties and breaking it into 2 or 3 separate roles that would only require a normal person.

Don’t believe the hype, believe in people instead.

Business plans are bollocks

This is you - for starting a business. Ignorance is bliss I say.

Depending on what kind of business school hype you are smoking, you will think that all businesses are the same.

Scope out the needs, design a solution, raise funds, develop solution, sell solution and then get rich.

Yep – and I have unicorns in my garden, and I talk to the pixies and leprachauns every night in my dreams and everyone in the whole wide world is my friend.

Are you picking up on any sarcasm yet?

It doesn’t matter whether you work in software, product design or major projects the reality is that business plans and project plans are incremental and repetitive.

The real process is along the lines of the following

• Identify a market need.
• Scope out the need.
• Design a solution.
• Raise less funds than you wanted – if any at all in which case exit loop and do anything legal that makes money.
• Make a solution
• Try to sell the solution – discovering that your idea of what the market wanted was too simplistic and didn’t take their real needs into account.
• Drink yourself into oblivion for a couple of weeks.
• Come back to the office determined to do something about it.
• Work as a team to make your product better match client’s needs.
• Run out of money.
• Pay staff using your credit card while begging for funds from everyone you think might have money (this is the point that you will consider selling your soul).
• Run over your credit card limit and start borrowing from family and friends, basically doing everything you can short of embezzlement.
• Finally get funds through investors or pre-sales. At this time you will have four separate and entirely made up versions of your business plan which you hand out to investors depending on their attitudes. You may also be indulging in selling vapourware (OMG).
• Get revised product to market – discover hidden glitches, and fix at a great cost which is written off as capital.
• Finally get traction and make more sales.
• Have dinner at home with your partner and children for the first time in 2 years.
• Enter growth stage and have a whole new set of pains as you take on employees and are forced to make up systems as you go.

 From all this, the point is that you don’t know everything when you start out, the market is a brutal mistress and you will have to reinvent and start again on many aspects of what you are doing. And this is all normal.

Enjoy.

Help only those who will be helped

Are you imprisoned by your own desire to help others?

You only have a limited amount of time and energy with which to get your business up and running.

For some reason when you are trying to control your own destiny by setting up a company a lot of people look to you for help. This is mostly positive as through this you learn as much as you help others, and it often helps you out too.

However, there are limits.

Some people ask for help, but never put it into action. You can often tell these because they ask the same questions about the same problems again and again.

Some recognise they need to ask for help, but need help with everything, not just a few things. They appreciate the help you can give, but they have a long personal journey to go on if they really want to learn.

Sometimes your suppliers need help in order to meet deadlines for you to do your job. Often times this is simply because they don’t have enough experience to find solutions – they just see problems.

Sometimes your customers need help because they don’t even understand their own problems or what solutions there are. Educating them is important, but again sometimes people won’t be helped.

Helping others is good, but watch yourself. If it ends up taking too much time from your main business or you find it draining take a break.

Spend your money on the product and the customer’s experience

Hey, it works and the customers are never going to see it

Do you like fast cars, a glamorous lifestyle and the adoration of the masses? If so, business is going to be hard for you.

As a business owner you quickly learn that the scarcest resource is cash, and without it life is very hard.

You will rapidly learn to use your meagre savings on only those things that make a difference.

For example, it is not uncommon to see retail shops that are modern and appealing in the shopfloor and look like an industrial nightmare out the back, with second hand shelving and furniture.

Offices in the best buildings, overinvestment in fitouts, buying buildings and assets when you could rent or hire, encouraging a high flying lifestyle – all these things are warning signs for yourself and your potential investors.

To put it as simply as possible, you need to make your product look professional and up to date, plus you need to make it as easy as possible for customers to find your product and buy it. This is where you should spend your money.

Smart investors also think about this too. Venture capitalists traditionally insist that all funds are spent on the business and that there is no repayment of existing debts or rewards for the founders. They are providing capital to grow the business and want you to see the rewards when you succeed.

Ration your money and use it where it makes a difference.

The importance of letting others fail

This is you - even if you don't admit it.

Setting up a business is a constant learning process. Your ideas are constantly tested against the reality of the market and real customers. Every day contains a small failure that allows you to learn and improve. Then, just as you think you have things figured out there is a change in the economy or your competitors change the game – so previously successful strategies no longer work.

Given the constant level of change you and your people face it is impossible to avoid any kind of failure.

I can hear you thinking that this is completely obvious and are asking why am I even bothering to talk about this. The reason is simple – many company founders are control freaks, and this means you may well be too.

You mightn’t start out as a control freak, but given the incredible amount of work to be done and the limited time and budget you have to do it you learn the hard way the most efficient way to use your time and the cheapest way to achieve your objectives.

When you take on employees by default you will set high expectations of efficiency and value every minute of their time. Your first few employees may deal with this, but you are setting up a toxic culture that will prevent your company growing and trading successfully.

When everyone is trying to be perfect the risk is that they start watching each other to make sure that nothing goes wrong. I’m sure you’ve experienced this kind of situation before – I sure have, and working on high pressure projects I am guilty of maintaining this exactly kind of culture to achieve project outcomes.

For a long term operation you need normal people who aren’t so stressed out that they can’t perform. It has been proved by researchers such as Dan Ariely that if people are too afraid of the consequences of failure their performance degrades dramatically.

So, expect failure, embrace it, and set up your systems and culture so that failure can be remedied in a common sense manner rather than expecting perfection.

Let them fail and let them learn.

Stick to your knitting

Just because it is possible it doesn't mean you should do it.

There are always distractions.

• One of your main competitors just started offering prizes to customers.
• You read in Wired magazine about a new technology that could make all the difference to automating your business.
• You think that if only you could organise all the files better then everything would work better.
• You just saw a brilliant new business opportunity that you want to pursue.
• Business is slow, you get bored and start looking for new things to do.
• The latest trends in management say that you should eat an orange every morning and talk to small furry animals to boost your own morale.

Okay, so I am deliberately exaggerating on that last one to make the point here.

Stick to your knitting means to always ask the following question – What is that I should do today to help bring in my next sale, or deliver on what I should to my customers.

It’s both that simple and that hard.

Ask for what you are worth

You may not be able to choose the pricing point for your product

When we start out in business most of us underprice ourselves and overprice our products.

If you sell your own time by the hour or the day the common mistake is to assume that you will work all year round when what you need to do is to assume that you will only work half to two thirds of the time (excluding public holidays, sick leave and holiday leave). This is especially a problem in the services industry.

Yes, low pricing helps win work, but almost guarantees that you will be treated as a disposable employee.

If you can find out roughly what the market price is, then you will have a good guide on pricing your services.

For products we tend to look at the costs of supply, add a share of overheads and then a margin. Sounds simple but unless you are selling into an overpriced market you are likely to hit problems.

Take furniture or household goods as an example. Major manufacturers set up large factories in low labour cost countries to assemble parts supplied by high volume third party suppliers, likewise located in low labour countries.

If you look at software then your biggest competitors can price lower than you can. The equation here is simple – development costs divided by total potential customers. Selling a product into a limited local market means a limited number of potential customers, so even if you work smart and keep development costs down you may not be able to beat the price of a global competitor.

All this seems kind of obvious until you do it yourself, especially in industries where comparable prices are hard to come by.

Too many businesses are set up with dreams of easy profits rolling in the door from day one. Reality is more prosaic than dreams, so if you are in danger of locking yourself into a low profit industry it is better to work that out before you spend all your savings on establishment costs.

You only need to be smarter than the next person

"More than one person can eat - maybe I can sell  some."

You don’t need to be smarter than everyone else, just the next person.

When you are selling something you are showing that you have looked at the issues facing the buyer and you have dealt with them. If you can demonstrate this to the buyer then they will be more likely to buy your product than your competitor’s.

When you are in a competitive selection process for services, you need to be the right company for the job. You don’t need to be the best person in the world. Often times you only need to show more knowledge and expertise in the specific area that the client is interested in than your competitors.

For services based companies your clients may know exactly how to do the service you provide, they just don’t have the people or the time to do it yourself. Showing that you are the best company is less important than showing you know how to do the work, you have people available and that you understand the client’s issues.

I say all this because many people oversell themselves. They try to prove that they are the best at everything they do, their people are the best, their company is the best, etc. They would be better placed placing their emphasis on why they are the right company for the job. This is a subtle but important difference.

Leave something on the table

One of the worst complaints that can be made about a company is “they’re greedy.”

Yes, you are allowed to make a profit – most people understand and accept that.

Yes, you are allowed to charge for scarcity or urgency – again this is understood.

However, if you consistently charge more than is normal in the market then customers will notice – and they do gossip.

Also, being unreasonably opportunistic in pricing – i.e. seeing that they have no choice but to use you this time, will lead to long term relationship damage.

People will go out of their way to avoid using a company they think is greedy. They may even pay the same fee, but for better service or a better relationship.

Most transactions in business are a part of a bigger relationship. If you have a one off transaction then you have no motivation to give a better price other than to make a firm sale. If you are looking for repeat business or are interested in your reputation then you need to make the other person feel that a deal is not totally one-sided.

Leave something on the table to have better long term relationships.

You need to be more outrageous

There's nothing wrong with a bit of showmanship

Marketing and promoting your company is absolutely vital. If nobody knows you exist then how are they going to buy your product?

Whatever you are doing now is probably not enough to get attention.

• I bet your business card is the usual name rank and serial number. Do you use it to provide contact details or is it designed as the mini-marketing tool that it really is?
• Do you put your opinions about what is not working in your  industry on the record?
• Do you tell a client when their scope (invitation to offer, etc.) misses the mark?
• Do you provide a client with what they need as well as what they say they want?
• Do you fight for recognition when the procurement section of a potential client decides not to use your company?
• Do you offer your opinions to the press?
• Does your website and branding reflect what the company needs as opposed to what you prefer? The odds are that you are more conservative than your brand should be.
• Do you talk to anyone you meet about your business? Sure it might be socially embarrassing on occasion but if you aren’t prepared to risk embarrassment then how will you ever promote yourself.
• And most importantly – do you attract attention to the business?

Welcome to the 99%

You are the rule - not the exception. Welcome to the 99%.

Have you had no luck raising venture capital?

Do Angel investors go all quiet and then change the topic to the weather when you approach them?

Does your partner laugh at you when you share your ideas?

Have you discovered that people don’t understand your business model and that rather than having to be shy about sharing your idea with people, you now force it down their throat?

Do you now realise that while most people talk about starting a business almost none do?

Have you found out how much you need to do in order to get things done?

Are you finding ways to get product to customers sooner rather than later?

Have you had all your friends tell you what a dumb idea your business is and that you are not suited to running a company?

Congratulations – welcome to the 99% club.  That is, you are part of the 99% of business that set up and grow a business the normal way – make product, flog product, spend spare cash on improving product and growing, trying not to have a nervous breakdown on the way.

What you need to understand is that most of the popular press about business is about the 1%, and while we all want to get fabulously rich from a great idea those companies are the exception, not the rule.

The good news is that business has been round in one form or another since the beginning of human history. You are not alone. There are plenty of role models around you. Inspiration is everywhere. Success is possible. Getting rich is possible.

Most of all realise that you are heading down a well-trodden path, so call out for help and plenty of people will come to your aid. After all, you are part of the majority.

Mentor your competitors

Competition makes you stronger

This is controversial to say, but I take great delight in helping out people starting up companies that may be future competitors. What I often find is that they become allies.

We can put in joint bids to take on larger jobs.

You may even combine companies later.

You learn from each other too – everyone has a different way of looking at the world and work.

You are all learning about regulations, IT systems, tax laws, hiring people, firing people, marketing, sales, policy development, and so on. You can share some of your experiences – and maybe save some expenses.

Of course talking about pricing is forbidden.

You can talk about what client’s need and how they view the service providers they deal with.

If your competition is interstate or overseas then you should be fine in terms of losing your own customers.

Even better, you can make good friends for life.

Embrace your competitors.