Tag: Growth

Fueling Small Business Growth with Aligned Compensation

The natural dilemma of every small business is investing in growth ahead of realizing profitable and positive cash flow results.  It’s a constant push/pull realizing you need more resources – product, plant capacity, people, etc. – to deliver growth you have confidence will materialize, but don’t have the capital to invest.

Maybe there is a creative solution on the people side of the ledger.  These are tough times and the market is ripe with great people looking for work and a chance to prove out their worth.  Small businesses need great people resources and “can’t afford” the investment.

Consider an incentive laden “hiring” approach that is directly tied to “money coming in” for the firm:

  • Offer low to no wages.  Definition of relationship as contractor or employee with benefits depends on the ability and willingness to pay wages
  • Provide benefits as incentive to “hire” commensurate with lower wage scale
  • New business has associated Gross Margin attributes after Cost of Goods Sold (COGS).  Include in COGS a fee for marketing, sales, development talent for these people who can directly drive these new customers or new revenue growth.
  • The approach requires analysis to ensure that this new growth adds incremental margin that does not disrupt any current SG&A requirements or cash flow
  • Overpay market for the risk taken on by these individuals and you may find them hungry to deliver for future employment rewards and direct alignment of compensation with success for your business

This solution certainly is not for everyone, on the employer or individual side.  However, there are times when it’s an alignment of needs where this approach can be mutually beneficial.

A Call to Action for HR Leaders, Hire!

It may be counter-intuitive in tough and challenging times, but businesses need to be proactive in creating meaningful new jobs.  Growth will not come from an attitude of cutting costs or neglect of our labor forces’ needs.

With pressures on all leaders to produce profits and conserve cash, those responsible for management of your greatest asset, people, must be vocal in proactively demonstrating the value and impact that comes from new resources and investing in development.  Every new hire can bring fresh eyes, new capability, and, especially, renewed positive energy to an organization.

It is the responsibility of all those tasked with “human resources” to not only manage their functional requirements, but to provide insights that fuel business results and growth.  Don’t wait for the need to downsize.  Proactively replace those that no longer contribute, encourage positive attitude in the organization and promote new opportunities for growth with new hires.

Adapt to competition and new opportunity by demonstrating how adding new capability through fresh resources can deliver positive growth results.  Seek new energy – our friends at the magis group have an interesting opinion on this too.

Crazy, Isn’t It?

Over 25 years ago, I started my working career in a DEC warehouse in Nashua, NH. The minicomputer was all the rage but there were whispers in the marketplace about the development of a “personal computer”. DEC’s business was doing great but the company’s founder, Ken Olsen, didn’t believe in the future of a PC. A guy who built a fortune on miniaturizing the mainframe couldn’t see the miniaturization of the mini as it was evolving right in front of his eyes. Eventually, he was forced into a half-baked approach to a personal computer but it was too late.

A little bit like Mr. Olsen, today’s businesses face evidence of transformational change in their opportunities for growth. It’s the Web.  It’s obvious, right. I get it. I have a website. I am doing business on the web. I see it every day, right in front of my eyes. Like Mr. Olsen with the PC, though, there is often denial and then adoption of a web approach that is often half-baked, half-hearted, half-assed. No longer can a company consider the execution of their business without a thoughtful, rigorous and disciplined plan for maximizing return from the Web. But that plan cannot stand-alone separately from a businesses’ traditional approach to running their business.  Every go to market effort, every option for fulfillment, every opportunity to deliver service has to be considered in terms of maximized ROI by execution on-line, off-line or both. Businesses must embrace a “wholistic” plan. With the maturation of the Web, it’s essential for every business to step back and define an integrated strategy of traditional and virtual. Don’t pull a Ken Olsen. He thought the PC was a trivial development. Unbelievably, many say the same about the Web. Crazy, isn’t it?