Q. I have been having a difficult time hiring good people. They look good on paper and they interview well, but their performance doesn’t meet expectations. Can and should I use assessments to help me hire?
Hiring the right people is challenging for many small businesses. No one will get it right every time, but we have helped many companies improve their hiring results.
Read more ...
The short answer to “can I use assessments” is, yes. You can use assessments to help you determine who to hire. As usual with employment practices, there are a few caveats we need to mention. First, if you are going to use assessments make sure they are scientifically “reliable” and “validated.” This is necessary to ensure that the assessment meet the requirements set forth by the Department of Labor as well as the EEOC, ADA, etc. If you are not sure about a particular assessment, ask the person supplying the product or seek out a knowledgeable employment attorney or human resources practitioner. Second, you should never choose or eliminate a candidate based solely on the results of an assessment. Rather, the assessment should provide one piece of the puzzle.
Q.Some friends have told me that I should have a business plan for the small business I am planning to launch in the fear future. What do you think?
A.You will most assuredly need a plan for your business. You may, or may not, need a formal business plan. Every business must answer three questions. They are:
What is the formula for a successful business? You know the ones we mean, the ones that thrive. These are the businesses that throw off a lot of cash and provide a great lifestyle for the owner and his/her family. Then there is the other kind of business. Those that struggle and never seem to reach their potential. Doug and Polly’s award winning and best-selling book, Let Go to Grow: Why Some Business Thrive and Others Fail to Reach Their Potential uses real life examples gleaned from their more than 100 interviews with small business owners and entrepreneurs.
LET GO TO GROW
1. Why should a prospective customer buy your product or service rather than a competitor’s?
2. Is there a segment of the market that values what differentiates your offering and is it large enough to support your business?
3. How will you reach this segment with your marketing message?
Every business, no matter how large or small must answer these three questions, either implicitly or explicitly. However, once you resolve these very basic issues, whether you need a formal business plan is a function of cash flow. If your business will have significant negative cash flow before it starts to throw off cash, or if you need your business to throw off cash from day one (say to pay the bills), a formal business plan may be in order.
Read more ...
Q. I have a small business. It is growing nicely and is profitable, but I haven’t paid myself anything yet. I have been living off of savings. When should I start paying myself a salary? How should I set my salary? A.
When we began working with Joe’s lawn care business, we asked to see the financial statements. He proudly showed us that the company had made a profit of $10,000 to $15,000 in each of its first three years of operation. There was only one problem. Joe hadn’t paid himself a nickel in any of those years. Had he compensated himself at market rates for the 60-hour weeks he was working, the business would have lost money in each of those years.
One of the most frequent mistakes small business owners make is not paying themselves and thinking that their business is profitable. Entrepreneurs should compensate themselves at market rates as soon as the business can afford to do so. Read more ...
Q. I have worked for several years as an automobile repair technician. I know this field well and I enjoy my work. I’m thinking about opening my own business. Do you have any words of caution? A.
We often advise people not to open a bakery because you love baking cakes. If you love baking, get a job as a baker. The minute you open a bakery, you’ll discover that there is a lot more to running such a business than baking cakes. You’ll have to wait on customers, keep the books, order inventory and sweep the floors. Open a bakery because you want to run a business and you happen to have a great cake recipe. We offer the same advice about opening an automobile repair shop.
There are many functions associated with running a business. Before you quit your day job, make sure that you know how each of these functions is going to be handled. In most cases, the founder will need to be good at doing the primary work of the business. It sounds as though you fit this mold. It is important to remember that this most often includes sales and marketing. You’ll need to figure out how you will drive business to your shop. Further, you will need a plan for how to accomplish the ancillary functions (e.g., accounting, information technology, etc.). Read more ...