Small business operators are multi-hat wearing folks. We put on our sales hat to deal with customers, switch to our operations manager hat to make sure sales are fulfilled correctly, and then put on our CEO hat to chart a path for the business. We’re a part-time everything. As a business grows, these different hats are transferred from our heads onto employees and contractors. However, hiring ourselves out of a role is a bit of a hat trick.
Hat trick is a term from sports that relates to the achievement of three goals in a game. Similarly with hiring, there are three factors that you have to evaluate accurately:
- The financial cost to the business of a new hire.
- The financial benefit to the business (in a time span.)
- The opportunity cost to the owner-operator.
This makes for some tricky math (pun!)
Costs are the easiest to establish. You might end up with a salary range or budget, but you have a general idea of what a new hire will take.
The benefit is more amorphous. Some roles will immediately and positively impact revenue. If your sales are backlogged and you hire someone to help in operations, revenue will increase as your tempo picks up.
Others might not impact revenue at all, but will prevent harm or create some sort of strategic advantage. If things are falling through the cracks and you bring in a manager, they may not significantly bolster revenue, but they may prevent refunds, losing burned out employees, and other costs.
Regardless of how murky a role is, you have to have some sort of estimate of impact. E.g. A good “y” should create this sort of benefit. A less effective “y” should create this sort of benefit.
Finally, you have your opportunity cost. This is where things are opaque in what the benefit will be. When you’re wearing hats, you can’t do other things. What those other things are could be discovering new value, navigating the business towards growth, or diving in the Bahamas. The value of these activities is known only after you’ve done them. But you are paying a price by wearing all those hats in the business- even if it’s invisible.
Balancing these three forces is the hiring hat trick that you have to achieve in order to grow your team and business. Being able to expose and estimate these gives you the intelligence to make a strategic choice.
Featured image is the first recorded photo of a cricket match taken on 25 July 1857 by Roger Fenton. The term, “hat trick,” derives from cricket. Used under public domain.