Rich Contractor

Choose A Simple Service To Maximize Profit

My last post was about how you've got to expand your business in order to achieve wealth, but I also need to make the important point that replication in your business is made much, much easier when the service you provide can be easily performed by unskilled laborers.

Many services require special training, education, and certifications.  For example, I have a good friend who is a personal trainer in Cleveland, and he is highly skilled at what he does.  He earns a good living, but if he ever desired to expand his business by moving into a managerial role and bringing in other trainers to work for him he could find it more difficult than it would be for, say, a lawn-mowing business owner. 

Why?  Personal trainers are certified and have devoted long hours to get where they're at, which means that they are somewhat of a scarcity and expect to earn a good living.  In other words, they expect to be paid well and are difficult to replace.  One or two trainers quit and it could really effect the business in an immediate and negative way.  Lawn mowing techs, on the other hand, are pretty much a dime a dozen.  They don't need any previous training or skills and so they are in greater supply.  Therefore they can be hired for relatively low pay and if one quits they are easily and quickly replaced.  This scenario sets you, the business owner, up for higher profit margins, less chance of a breakdown in the system, and therefore a quicker rate of company expansion.

As evidence of this phenomenon just take a look at McDonald's or Subway, which have thousands upon thousands of franchises.  Do you think they achieved that kind of growth by hiring highly skilled hamburger flippers and sandwich makers who expect to make a lot of money?  Of course not.  They'll hire just about anybody with a pulse because the work is easy to learn and perform, and the pay is therefore pretty low.  That means more money in the franchise owner's pocket, and more money in the corporation's pocket.

Set Employee Expectations From Day One

In my last post I talked about treating your employees with the dignity and respect they deserve, but that's not to suggest that you should let them walk all over you.  As a small business owner, your job is to set expectations for employee behavior from their first day of employement, and then to stick to these rules and expectations for the duration. 

Indoctrinate New Hires

New employees should immediately be given a packet that details what is expected of them, specifically with regard to uniform or dress codes, treatment of customers and co-workers, and quality of work.  In addition, it should include information about what they can and should expect from you as their boss and/or owner.  Then have them sign it and make copies for both parties.  This will serve to set clear guidelines from day one and to provide a record in case you have to fire them later for failing to live up to the agreed upon expectations.  Don't be a jerk during the orientation process, but let them know that you have certain goals and rules in place and adherence to them is required.

You should then immediately assign the new employee to a trainer who can show them the ropes for a few days.  Many people feel overwhelmed during their first few days at a new job, and you owe it to them to provide enough training and support to make the transition easy.  It's also in your best interest because an ill-trained employee, especially in a home services business, can cause amazing amounts of damage to your reputation and brand. 

Rules Are Rules.  No Exceptions For Friends.

Becoming a contractor who has hired help will mean that you'll need to be vigilant in practicing workplace equality.  It's natural that over time you'll become close friends with some of your employees, especially those that have been there a long time, but it's very important that you hold them to the same standards as everyone else.  You'll be tempted to let them slack off on occasion, or maybe you'll overlook something that they're doing wrong because, hey, your buddies.  But you must know this kind of favoritism will not go unnoticed by newer employees.  They will begin to grow resentful of this perceived lack of fairness, and the result will be a loss of respect for you, which always leads to a deterioration of workplace morale and productivity.  We've all been in that workplace situation where the boss is all cozy with one or two of your peers who seem to get preferential treatment.  Remember how mad that made you?  Don't be that kind of boss!  If your friends at work have a problem with being treated the same way as your new hires, then maybe they're not such great friends (or employees) after all.  Run a tight ship, respect and care about the help, practice equality, and you will have a productive and happy workforce.

Your Employees Are Not Your Slaves

It is true that the fastest-growing and most lucrative businesses tend to be the ones that operate like a well-oiled machine, but that doesn't mean you should treat your employees like mere cogs.  They are human beings, after all, not robots.  What this means is that you need to know when to push and when to lay off; when to correct and when to keep quiet; when to ask for more and when to give back.  Your people are the lifeblood of your business, and how you treat them will have an enormous impact on their productivity (and your earnings). There's nothing wrong with having high employee expectations, as long as you recognize that they'll have expectations of you, too.

This post shouldn't be shocking.  After all, if you're reading this then you're probably a small business owner, and if you're a small business owner then at one point in time you probably quit a job partially because you weren't feeling like your efforts were appreciated.  So you should be keenly aware of your employees' need to be recognized as a valuable member of the team.  If they screw up accidentally, take them behind closed doors and talk to them about it with a respectful tone and attitude.  If they do something great for your business image, thank them!  I've noticed that lots of managers are very good at cracking the whip or chewing people out, but very few take the time to balance it with an appropriate amount of praise or gratitude when it is warranted.  Fail to recognize good workers at your own peril, because they'll be out the door faster than you can say "two week notice"!

Go that extra mile to get to know your best employees.  If they feel like you truly care about them, they will work hard for you.  Before I started my home improvement business, I worked several years for a small business owner who never even learned my first name.  How sad is that?!  Granted, he wasn't involved in direct management on a day-to-day basis, but it still irked me that I worked hard to make his wallet fat week after week, year after year, and he didn't even care to know my freaking name!  This is an extreme example, but my point is that your lack of attention to your best employees will almost certainly encourage them to start looking for a better opportunity.  Your job is to make the work environment as pleasant and rewarding as possible for your most skilled and hard-working people because they are, quite simply, a rarity.  Mediocre employees are a dime a dozen, but the truly exceptional ones are worth bending over backwards for because they will accelerate your business' growth like you wouldn't believe, and they will make your life as owner-manager a hell of a lot easier.  Trust me on this one.

One final note.  If one of these star employees decides to call it quits so that they can go start their own business and become a contractor, support their decision and wish them good luck.  Because they're so valuable to your business, you might be tempted to hold them back by warning them of the risks of business ownership or by saying that their idea will never work, but I encourage you to be gracious and genuinely happy for them.  It will be a loss for you and your company, but the bigger loss would be if that would-be entrepreneur never had the chance or the guts to strike out on his own and go for the American dream, just as you did when you started your fledgling little business.