|The Small Business Library|
February 1, 2001
Hiring, Inspiring and Firing
Of course, you can hire staff. But if hiring employees is not something you want to consider at this stage, then there are several options open to you. First, let me advise you that the more employeeless you are the better it is. With staffing your business comes many new issues, risks and potential headaches. For one, there's a payroll to meet and maintain -- you need to make sure your revenues are considerable enough to make it week in, week out.
On the Internet, where revenues can be quite a roller coaster ride for some, consistently meeting payrolls can become hazardous to a small business' health. For another, there are income taxes to pay, government contributions to make and many laws to follow.
Bottom-line, hiring and firing staff are not as easy as they may appear, and often they can become quite precarious for most. So the following is not a set of strategies related to human resources and their management. But it will provide you with several avenues you can take to help grow your business in the most efficient manner possible -- without the risks, costs and extra work involved in staffing your business directly.
Virtual Assistants (VAs) are becoming quite popular for many reasons. Number one, you can hire them to work for you remotely: There's no office space to rent, no payroll to meet and no people working "in the way." While their fees vary somewhat, often they are invoiced on a monthly basis -- so a payroll is unnecessary.
Number two, with the help of the Internet emails and calls can be forwarded to your VA for further handling, and there are many chat programs in order to remain in constant contact with your VA (like, for example, mIRC at http://www.mirc.com/, ICQ at http://www.icq.com/, AOL's AIM at http://www.aol.com/aim/, MSN's Messenger at http://messenger.msn.com/ as well as many other teleconferencing tools such as Microsoft's NetMeeting).
However, the largest perfunctory work an Internet marketer faces is, more often than not, responding to email and queries from potential clients. If you're anything like me, you receive thousands of emails and calls each week. But other tasks with which VAs can help you is: The processing of orders, returns and refunds; order fulfillment and invoicing; and even maintaining and updating your website. Virtual assistants can do some or all of these for you, remotely.
While it may be perfunctory, customer service is indeed the most important aspect of your business that should never be neglected. One such VA that handles this quite well is Lisa Edwardsen at http://www.qualitycustomerservice.com/. She's done work for me in the past and I highly recommend her. Lisa is not only a VA but also an extraordinary sales professional. Her job is to make you look good while handling your admin.
Other VAs include:
If you wish to hire people directly but without putting them on a payroll, you also have the ability to hire service providers who live or work in your area. Much like a VA, a self-employed assistant acts like a consultant to your firm (an independent contractor). They invoice you and you pay them upon the receipt of such (the frequency of which is agreed in advance, and a contract is signed outlining the required performance, results and obligations of both parties).
However, if you hire support personnel in this manner, the one thing of which to be careful is to ensure that this person has other contracts or clients, or works only part-time with your business while working elsewhere. The reason is that your government may have specific guidelines that restrict this kind of behavior. Depending on laws in your area, you must give that person the ability to work for other firms.
You may ask yourself, "Why must I follow these restrictions?" If your government ever discovers that your self-employed service provider has created an exclusive relationship with you, they may consider your relationship as that of an employer-employee, and if so you will be required to pay all income taxes, contributions and such (even penalties).
Therefore, it would be wise to have them sign non-compete and non-disclosure agreements (usually included as clauses within a regular work agreement or as standalone documents). This prevents them from working with direct competitors during their relationship with you (more important, to prevent them from soliciting co-workers and your clients), and to disclose confidential, proprietary information about your firm.
As for compensation, more than likely the method will be a fee for service. However, if you wish to inspire your "staff" by giving them an opportunity to share in the rewards of their work, you may want to consider offering them a revenue-based or profit-based share, a commission on sales, a finder's fee on referrals or a performance-based bonus (maybe on volume).
For example, if your assistant handles calls but at the same time helps you to sell products or services, or to consummate sales initiated from your website, you could offer them a percentage of sales they helped to achieve.
In my business, I have a support person who also performs telemarketing for me. She is paid on a base (yet relatively small) salary, but with an added percentage-based commission plus a flat-fee (a bonus, really) based on a sliding scale according to that month's total sales volume.
If you decide to take such an approach, another great tip is to have your assistant fill out a weekly goal sheet. A goal sheet is a great way to inspire your staff. In essence, they are telling you what *they* will achieve -- giving you their own personal benchmarks (beyond what is required of them) against which you can evaluate their performance from time to time. They can even tell you how much money they want to earn (in terms of commissions or bonuses, for example).
By using the law of averages (depending on your conversion ratio, your ratio of calls to sales and your average revenue per sale), you can extrapolate the money they wish to earn into actionable steps they need to achieve in order to reach their goals.
For example, in my business I use the rule of 10-3-1. That is, 10 calls (attempts to book a presentation) usually equal to 3 sales presentations, which lead to 1 sale. Then I work with my assistant's goals in reverse. For the sake of illustration, let's just say that my average sale is $500. Let's also say that my assistant earns a 5% commission of each sale she produces. It means that for every $500 sale she makes, she earns $25. If her goal for a given week is to make $500, and if the rule is 10-3-1, then it means the following:
Therefore, in order to achieve her goal of $500 for that week she'll need to make 200 calls (which, based on the law of averages, will potentially lead to booking 60 presentations). To divide it even further, let's say she works 3 days a week. So 200 calls divided by 3 days equals to about 65 calls each day. If she consistently makes 65 calls per day, then there's a great possibility she will achieve her goal of $500.
Of course, she may or may not reach this goal precisely all the time. But in the end, the law of averages dictates. However, if she produces a less than adequate result for a certain period of time, even if she makes 65 calls per day, then using the 10-3-1 rule together we will take a look at where there needs improvement -- it may be her closing skills, her prospect qualification skills, her follow-up skills, etc.
On the other hand, if your business has to deal with refunds and returns, you can offer your assistant a small bonus -- be it a small fee or a percentage -- for every refund that he or she successfully overturns for you. Also, you can offer a results-based incentive where your assistant is paid for the number of calls or emails to which they respond, instead of (or in addition to) the number of hours they work for you.
If so, use the reverse of their goal sheet and turn it into an activity log of sorts, for that week too, where they record what they've done on a daily basis. You can divide it into columns (or use a word processor or spreadsheet software), where they write down the name of the person contacted, the date, the result of the contact and a future follow-up date.
Often, paying for results instead of hours (or workload) minimizes your risk while at the same time provides a great incentive for them to produce the effort. They should still be paid on an hourly basis. But if you can give them somewhat of an opportunity to share in the fruits of their labor, you'll be surprised at how much more motivated they will be.
Employment and Payroll Agencies
A great way to avoid some of the risks mentioned above -- such as those associated with employees and their relationships with you -- is to hire a "temp" (temporary administrative support provided by a personnel agency). The advantage is that, like a VA, you pay the agency a fee, and they handle the payroll, deductions and human resource management for you.
Since the temp has to answer to the agency (and not you), you have control over the services the agency, in addition to the services the temp, provide. For example, if the temp is not producing the results you expect, one quick call to the agency can solve much of the headaches for you. However, the downside is that the lack of permanency (such as temps changing from time to time) can become cumbersome in the training aspect.
If you look in your yellow pages or on the Internet, you will find a great number of such agencies in your area, including:
These are not recommendations -- the aim here is to provide you with some knowledge of what's available and where to look. So always make sure to check for references. It is good to ask the person referenced directly but a neat tip is to also ask the person answering your call (which often is a receptionist or secretary), or another person within the department specified, for an unsolicited, impromptu reference. They will more than likely give you less biased feedback.
As for payroll agencies, some provide this service remotely. One that I recommend is http://www.netcheckspayroll.com/. You simply email, fax or call the employee's total hours worked (or their salary amounts). You will then receive each employee's check stub with a complete earnings statement by return fax, email or postal mail. They include gross, net and year-to-date earnings, and required deductions. Then an invoice is sent to you to cover that week's payroll.
Finally, if your support staff doesn't work out for whatever reason, it is critically important to spot it quickly and to deal with it immediately. Thus, keeping a log of activities (or having them supply you with one as mentioned above) is a great way to keep tabs on their performance. But be careful! There is an investment of time, money and energy you will need to spend on training. This can often cloud your judgement.
Remember the old adage, "Hire slow, fire fast." It may sound simplistic and possibly even easy to ignore, especially if you're in need of support help fast. But follow this very simple rule each and every time and you will lessen the risk (as well as the headaches and potentially unnecessary cash hemorrhage) often associated with poor staffing.