The Ebb and Flow of Managing Your Resources

In a perfect world, businesses grow in a smooth, upward trajectory that is both predictable and deliberate. There are no slow times...no staff upheavals...no sleepless nights...

Clearly, I'm living in the wrong place.

In my world, business grows the same way that Elaine Benes (from Seinfeld) dances: everything looks perfectly normal, but then the music starts and suddenly we're witnessing a herky-jerky motion with very little rhyme and sometimes no reason. Sooner or later, someone's going to lose an eye.

Over my career, there have been some hard-won lessons, though thankfully very little bloodshed. Like all business owners, we've had challenges in determining what staff we need, when we need them, and when we need to let them go. And, yes, there have been a few all-nighters that have made me appreciate vacation time much more than I used to.

So, what is the trick to managing business resources for the best possible return to make sure that I'm saving where I can, spending when I need to, and growing my business in the most un-Elaine way possible?

When it comes to managing your human and financial resources, there are four things to keep in mind:

1) Know when to hold 'em and know when to fold 'em.
This lesson has been probably the hardest one to learn because the target is always moving. And unfortunately, it's not something that people outside your company can really help with.

  • To know when to add staff, stay in touch with your team of supervisors to know what their workload is now and (here's the tricky part) what their workload will be in 90-120 days. No matter how deep the labor pool is, you can assume it'll take you at least three months to find, hire, and train a new person before they can contribute meaningfully to your bottom line. (In some industries, the gear-up time can be as long as 6-12 months, so you may have to project even further out.)
  • To determine when to add financial resources, look farther toward the horizon. Think about your payables and receivables, and anticipate worst-case scenarios for at least six to nine months. Assuming everything goes wrong, do you have enough to stay afloat and keep everyone on payroll? If not, start thinking about your options... does it make sense to get a loan?... should you look for a partner?... can you venture into a new market or deepen your draw from existing clients?... can you reduce your overhead? The key is to plan ahead so you don't get left behind.

2) Not all that glitters is gold.
Maybe I'm the only one who's ever been taken in by a winning personality or a deal too good to be believed, but every time it happens, it's still disappointing.

  • Separating the wheat from the chaff during an interview process can mean leaving your personal preferences outside the room. Forget about how polite they are or how firm their handshake is. That stuff's important, but also listen to how they talk about former employers, clients and colleagues. Do they blame others for making their last job horrific? Do they engage in gossip? Do they tell you more than they should? What you see is what you get, so rely on your intuition and think about what you need to grow your business.
  • Because you've invested so much to get this far, no doubt you'll do anything you can to support the vision. Your business is a risk (as is everything worthwhile), but remember that any financial risks you take should be calculated risks. Don't get in debt over your head. And don't be afraid to make the hard choices for the health of your business. Above all, remember that there's no such thing as something for nothing. Really. Not ever.

3) Don't let your eyes be bigger than your stomach.
Rome wasn't built in a day, so don't expect to build your business in a day. Stay focused on your end goal, and be willing to bob and weave a bit to suit the realities of your world.

  • Taking on too many employees is as bad as taking on too few. When you anticipate needing more bodies, think of alternatives that can help at least temporarily. Freelancers may be an option. Or maybe job-sharing with part-timers who work some overlapping time. Interns can also help out with certain needs, but keep in mind that they may require more supervision than you're expecting. And if it's feasible for your industry, paying overtime to a few folks on a short-term basis may be the most cost-effective way to manage a production need.
  • Being too far in debt is often the death knell for any company. Owing more money than you can reasonably pay back makes you top-heavy and wobbly. With so much gambled on uncertainty, your business may be unable to respond quickly and fluidly. Imagine turning an RV around a corner versus turning a Lamborghini around the same corner. High centers of gravity always make the biggest crashes. Don't be one of them.

4) Trust is the most important part of any relationship.
Your parents were right about this one. And while others may not treat your business with the 24/7 attention you do, that doesn't mean their ideas and suggestions should be ignored. Because they don't focus on the trees, they can help you see more of the forest.

  • Everyone's been burned by a bad hire, and that can have serious repercussions for future hires. But just because you made one hiring mistake doesn't mean that you're not good at it. It just means you made a mistake. When it happens (and if it hasn't yet, it will), find the lesson, learn from it, and move on.
  • If there's one thing in your business you don't want to skimp on, it's finding a financial team that has your back. Trust your gut on this one...you want a top-notch team of accountants, bankers and attorneys who will be around for the long haul to watch out for you as you grow your business. Interview several professional teams, seek out recommendations from trusted business colleagues and make a decision. Hiring outside professionals will be more expensive than having your Aunt Mildred do your bookkeeping and your cousin Susan at ABC Bank managing your line of credit, but in the end, it'll be worth it. (Trust me.)

What are some of your experiences as you manage business resources while trying to remain un-Elaine-like? Email me at adamatgladworks.com to share your stories.