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Taking the easy way out may haunt youBy Monroe Porter
Being a business owner is a challenge. If it wasn’t, everyone would do it. Stress and time constraints can often lead us to take the easy way out. Down the road, that quick fix can leave you at the mercy of others. Here are some of the more common easy “solutions” that can come back to haunt you.
Hiring multiple family membersIt is very difficult to find good employees so it can be tempting to hire multiple family members. This can be a particular problem with today’s ethnic population because many know each other and come from the same communities.
Some problems are obvious such as when 1 person quits, the whole family leaves. But other issues are not as obvious. All family members are not created equal and there is a tendency for families to protect one another. They also may ride together to work and firing the driver can leave you shorthanded. They also probably talk to one another and share pay information. Too many family members make it very difficult to have a professional HR approach to employment.
Here are some things you can do to help control the problem: Make sure family members go through the same hiring and review process as everyone else. When possible try not to have family members work together.
Working together can be a particular problem with brothers and fathers/children. In these situations, a long existing relationship supersedes work relationships. In many of these relationships the dominant family member tends to control things, and don’t assume that just because they are family that they get along.
Pairing father/children can be particularly unfair. When the father retires or dies, it can leave the son or daughter lost and not as skilled as you might think. If one family member does all the thinking, the other is just a helper.
Relying on the magic foreman or subcontractorCompanies can grow addicted to a super foreman or a super subcontractor. This can be a particular problem in a smaller company. Strong foreman and subs can be prima donnas, and if they leave you can find yourself in a bind. They can also grow old or simply get hurt.
Foremen in this category tend to have strong personalities and many of them are not particularly good at training people. Thinking small and putting all your eggs into one basket is short sighted. Even the best of teams have a backup quarterback.
Having too much volume with 1 customerHaving over 20% of your volume year after year with 1 customer, construction manager or property manager can be dangerous. If you are doing 50% or more with 1 customer, you have a job not a business.
Even if that customer pays a premium, one day it will all end. They will hire new personnel who want to make changes or the company will be sold, and suddenly you have no work.
This can be a hard problem to solve because the customer is great, there is little marketing expense and it is just too easy. Denial that the problem exists can be very strong.
I know of road building related businesses that expanded when the new interstate highway passed through and wondered why they had too much overhead when the road construction moved down the road.
This 1-customer problem can be hard to fix. If you are making big bucks from a single customer, make sure you sock some of that money away. Be financially prepared for it to end. Next, keep up your marketing and sales effort with other customers. Do not allow other work to become a non-priority.
Allowing aging office staff to fall behind technologyMany contractors have hard working valuable office personnel who were vital to their success. Unfortunately, technology skills tend to be generational. I had to laugh when a contractor client told me about his lack of success in getting his family member 60-year-old bookkeeper to embrace high tech solutions for their growing business.
Mature office personnel and bookkeepers are hired to manage details and keep things in order. Some of these folks do not like to change and your business can fall behind technology wise. Forcing the issue is unpleasant and it is easy to just let it all slide.
How do you fix it? This is a case for hiring a consultant or someone tech savvy to help with the project. You would be amazed what a 3rd year accounting college student can get done. Technology can be easy to use but a pain to set up.
Failing to put non-competes in placeNon-compete agreements can be hard to enforce and some people don’t want to sign them. Just the same, I recommend you require non-competes for your key people. The best time to put them in place is when hiring, as people are looking for and need a job.
You must always have a local labor attorney advise you in this regard as state laws vary. My perception (and I am not a lawyer, so that is why you need to call one), is that it is easier to prevent people from using your customer list and contacts than it is to prevent them from getting a competing job. Remember the real deterrent is the cost of the employee defending themselves from your ligation. Again, seek local legal advice.
In closing, sometimes the easy way out can create problems down the road. In our PROSULT™ Networking groups, peers tend to help other peers from making these types of mistakes. A good offense can beat a bad defense. Hopefully, the above wisdom can help you avoid future pain in your business.
Monroe Porter is president of PROOF Management Consultants, a company specializing in seminars, and business consulting for contractors. He is also founder of PROSULT™ Networking Groups developed to help noncompeting contractors. Call (804) 267-1688, email Monroe@Proofman.com or visit Proofman.com.