I’ve never considered myself a good manager.
But, to build great, cash-producing companies, you need good people on your team.
Getting good people to do good work consistently is the key to finally working on your business, not in it.
Most entrepreneurs try to do everything on their own, burn out, and then rush to hire to offload tasks.
New employees aren’t given clear directions, start underperforming, and our hidden belief is confirmed: “See, I knew I’m the only person that can do everything!”
….and then they’re back where they started, doing everything on their own and the business never grows.
Well, this article includes the solution that’s worked for me.
I’ve been able to help build two 8-figure companies with over $200M in total sales. We’ve made a massive impact in the world and have many employees who have stuck with us for years and years.
This is my best possible advice on how to build a great team to help grow your business.
Whether you’re hiring your first employee or are frustrated that you still feel like everything relies on you even though you have employees already, this information is for you (I’ve been there).
If you want the freedom that comes from having a thriving company that produces consistent results without your day-to-day management, you need to learn how to build and manage a group of people.
#1 – Spend Time and Money in the Short-Term to Gain Way More in the Long-Term (The Catch-22 of Hiring)
To make more money in business, we need good people. But, to get good people, we need more money.
This is the catch-22 of hiring. Out of necessity, I discovered the solution (but you may not like it)…
I quit my first job out of college as an investment banking analyst after just seven months.
I left a $60,000 per year salary with no clue what I was going to do. I just wanted to start some kind of business.
A few months later, I started my own ecommerce business.
At first, I could only afford to pay myself about $3,000 a month.
But I was doing everything including all customer service, website development, product research, order processing, chargeback handling, shipment tracking for customers, and more.
I knew if I wanted to grow my business, I needed to hire someone.
So I posted a job on Craigslist.
A few days later, in walks Kyle.
He’d left Arizona in his truck to fulfill his dream of living in Austin, TX. Then he needed a job.
Kyle worked for me for a couple years before venturing out on his own. Today, he owns a successful SEO firm with a business partner.
I couldn’t have kept growing my business without Kyle. He freed me up to do more marketing to bring in more money.
But, I had to pay him basically my full salary for three months while I hustled to bring in more money.
That’s the inevitable challenge with hiring. It’s the only way to make more money, but we have to live with less money in the short term.
#2 – Hire What You’re Best At
Conventional advice for small business owners is to hire away the “menial” tasks like customer service as quickly as possible.
I think this is somewhat true.
What I didn’t realize until many years later is the best way to free up a massive amount of your time as a business owner is to hire what you’re best at, not worst at.
Like a lot of people in the internet marketing space, I held onto the coveted copywriting job in my main business for almost seven years.
I was proud that the words I wrote for marketing campaigns produced over $100 million dollars in sales. I could claim I was one of the most successful direct marketing copywriters online.
Writing copy was taking up 80% of my time for parts of the year.
As soon as I finally had the guts to hire someone else to do this job, my life changed overnight (well, sort of overnight…it took a year or two to get the right person operating at a high level – we’ll touch on that later).
No matter what you do in your business, no matter how good you think you are at it, someone else can do it better.
Yes, better. Not just “as good”, but better.
We can build businesses where other people do meaningful, challenging work, rather than only simple, mind-numbing tasks.
So, sure, if customer service and admin-type work is taking you 8 hours a day currently, you may need to hire someone to take over that first.
But, look closely at what else is taking up most of your time.
No matter what it is, there’s someone who can do it for you.
You may have to pay a good chunk of money – or give up equity. But, I think it’s well worth it.
Our time is the only truly scarce resource as a business owner.
Let’s not waste it.
Now, where are we going to find these people?
#3 – Two Proven Approaches to Hire World-Class Employees
The only person other than my original business partner and co-founder that I’ve given stock ownership to in Amazing.com Inc., is Mike McClary.
He started off as a student of ours. Prior to purchasing our main business program, Amazing Selling Machine, he had a successful corporate finance career.
Mike worked his corporate job during the day, then built a business at night following our training. Within a year, he replaced his income from his job and quit the corporate life for good.
Then he started teaching some of his own new marketing tricks for ecommerce to our students.
This evolved into him being the primary instructor for the same program he joined as a student just a few years before.
Later, he became a full-time executive at Amazing.
Today, I don’t consider Mike an “employee”, though that’s what he is, much like me as CEO (I am technically an employee of Amazing too).
He’s such a valuable partner in the growth of Amazing, we converted some of his cash compensation into real stock ownership after a few years of working together.
Why does this matter?
Because this is the first method to hiring world-class people.
They start off as contractors, you work with them for a while, then you offer them full-time positions. (Most won’t require equity though.)
I didn’t even know this was a popular option until I read about others doing it. We just discovered this approach accidentally as it is what worked best for us.
The other approach is to hire ambitious, smart, inexperienced people and train them.
That’s not what we’ve done. But it is a successful approach I know works well for many other companies, including most of the largest companies in the world who hire smart people straight out of college.
Once you get people on-board, how do you get the most out of them?
#4 – Make Meetings as Productive as Possible
I hate most meetings.
They are often a huge waste of time.
People talk and talk with no clear objective.
But, they work when done right.
What is a meeting? It’s an organized way for two or more people to communicate.
The purpose of having other people work for you is so they do productive work that you don’t have to.
If you can spend one hour with someone and she does 50 hours of productive work for you, the trade off is well worth it.
That’s the value of a meeting – leverage.
However, a lot of people will meet to avoid doing hard, focused, solitary work.
A semi-casual conversation framed as a “meeting” is often easier than producing and creating.
But you don’t pay people to socialize, you pay them to produce.
This is why, if I have to attend a meeting, I almost always set the agenda (or, at least, make sure there is one).
The most important type of meeting is the one I didn’t catch on to until almost a decade after building businesses: the one-on-one.
It’s not as scary as it sounds.
This isn’t a performance review. And, it takes almost no preparation on your part.
You don’t need to do these with everyone.
If you’re just hiring your first few employees, do it with each of them. If you already own a business with employees, maybe just do the one-on-ones with the most critical people, especially ones doing roles you once thought “only you” could do.
Schedule 60-90 minutes with the employee. Ask them to prepare an agenda in advance. Tell them you want them to list out all the things that would be most helpful for you to discuss including any questions, concerns, or uncertainties they have.
Make sure they send this to you at least 24 hours in advance of the meeting.
During the meeting, the employee should be doing most of the talking.
This is a great opportunity, however, for you to nudge them in the directions you want them to go.
This is how you influence your team without micromanaging them.
At the end of the meeting, schedule the next one 1-4 weeks out, depending on the needs (or newness) of the employee.
It takes some time. But, this approach is far more efficient than doing nothing and being constantly frustrated when people aren’t doing what you want them to do.
The only two meetings I have regularly scheduled for Amazing other than these one-on-one’s are the following:
- A weekly executive team meeting and
- A monthly financial review meeting.
That’s it. Everything else is on an as-needed basis.
#5 – Never Delegate these Two Responsibilities
I advocate getting your team to do everything possible. The more they do, the less you have to do.
The less you have to do, the more you can devote to growing your business (or doing anything else you want to do).
There are two exceptions to this rule.
First, you control spending money.
At one point, we hired a full executive team and 50+ other employees in one year.
As you can imagine, this led to complete chaos.
Money spending spiraled out of control.
For example, we ended up committing ourselves to a million dollar marketing campaign.
Once the person in charge of marketing was let go, I tried to get out of it completely.
My only options were to roll the dice and try the campaign at the full million dollar budget or get out of it with a $400,000 immediate loss on commitments we couldn’t cancel.
I opted to roll the dice.
The result: $250,000 in sales on $1,000,000 in ad spend.
I should have just paid the $400,000.
This, and a thousand other smaller examples, have led me to believe one of your key roles as the business owner is to control the pocket book.
Don’t let anyone spend money in your company without your approval. This is one area in which I fully advocate micro-management.
At the end of the day, if someone leaves your company, you’ll be stuck with the expenses he committed your company to.
So you control the money.
The second exception to my delegate everything rule is hiring.
During the same chaotic period we committed to the million dollar marketing campaign, our finance team ballooned beyond reason.
We went from a single CFO to a finance team with eight six-figure employees getting regular raises and bonuses.
Today, I have no idea how I let this happen.
What I do know is you need to control who gets added to your team.
Once again, if the person who hired someone leaves, you’re stuck with the new hire.
Additionally, employees are one of the primary sources of lawsuits for companies. If you let someone hire the wrong person, it’s a huge risk to your company.
So you control hiring.
It doesn’t mean you have to do all the work involved with hiring (I don’t).
But I recommend you have the final say in anyone added to your company.
Once you add people to your company’s team, money matters a lot to how well those people perform…
#6 – Align Financial Incentives to Reduce Your Need to “Manage” (Yes, People Do Really Care About Money)
If you read pop-business advice online (likely written by people who are paid writers, not business owners), you’ll think all people care about is how much you listen to them, not how much money they make.
The “coolest” (or, at least they were until recently) companies to work for like Google and Facebook had all the perks you could imagine: cafeterias, billion dollar offices, free transportation, masseuses, nap pods, psychologists, daycare centers, managers who wrote books on how to manage, and more.
All this free stuff means people would work for them for nearly free, right?
The median salary in 2018 at Facebook was $240,430.
Cool perks and nice management included, people still want money.
We’ve always paid fairly well. It’s part of my management style. Or, more likely, I compensate for my lack of desire to “manage” by hiring good people, paying them well, and mostly leaving them alone to do their work.
So we’ve paid above-market rates since the beginning for customer service and other roles.
However, I never really felt comfortable trying to motivate employees to go above and beyond…
“Hey, you should work hard because….you’ll keep your job? (Even though you won’t get paid anymore for doing it.)”
The harder I work, the more money I make. So I’m incredibly motivated.
Are other people so different?
I don’t think so.
We’re all motivated by incentives, that’s why coupons and promotions work in marketing.
If someone can make more money (or save more money), they’ll likely do more work than they would if the same incentive were not available.
It wasn’t until I put in-place a sort of profit-sharing plan that I finally felt like I wasn’t trying to push a giant boulder (all the employees) up a hill on my own.
Instead, everyone got on the same page.
Our bonus structure is as follows:
I set a minimum net profit target for the year.
If we don’t hit it, nobody gets a bonus.
If we hit it or go above it, a certain percentage of that net profit is available as a bonus pool for everyone.
Then, depending on the employee’s role and experience, he or she has a bonus structure that’s about half based on the company performance and half based on individual performance.
Here’s an example:
Let’s say your company’s net profit target is $500,000.
If your annual net profit is less than $500,000 there is no bonus.
But, let’s say net profit for the year ends up at $600,000.
Great, you exceeded your target!
You decide to allocate 10% of that bonus pool to employees. So, $60,000 is available.
With your 5-person team, your main customer service person gets, say, a bonus equal to 20% of his $50,000 salary, or $10,000. 50% of that is based on the company performance, so $5,000 is locked in.
The other 50% is up to your discretion based on how he performed. You give him 80% based on performance, so he gets another $4,000 for a total annual bonus of $9,000.
Now your customer service person isn’t complaining every time a customer writes in because they’re confused about a new marketing promotion you’re running to increase sales.
Instead, because of the aligned incentives, he’s on your side – you work together to improve marketing communications and increase sales.
The first step to building a team is to accept you’re giving up some cash and time in the short-term to gain way more in the long-term.
As soon as possible build a team that not only takes care of the basic, day-to-day tasks of your business, but also the big, important responsibilities you might have thought (before reading this article) only you could do.
The most successful approach to hiring for me has been to bring on contractors part-time, work with them for a while, and offer the great ones full-time positions. I’m confident this strategy will work for you too.
Meetings are a necessary evil – they’re an efficient form of communication if you relentlessly manage them. The most important, in my opinion, are your one-on-one’s with your highest level employees.
Never delegate spending money and hiring.
Align the compensation of your employees so they’re incentivized to produce the company performance you want because people do really care about money.
Thank you for reading my thoughts on building a team. This has been a hard and worthwhile journey fo rme. It’s a critical skill for entrepreneurs.
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To Your Success,