This brings us to my chicken or egg dilemma:

– I want to grow my business and get more clients but I feel like I need a bigger team to do so.

– I can’t find the courage to hire more and grow the team without enough business to support them.

The above was in a business forum where someone posted the question of when to hire the next employee for their branding agency?

This chicken and egg dilemma is a common early stage business challenge.

When I hired my first developer, I was maxed out on what I could do and still felt like I didn’t have enough money to pay someone else.

When I hired my first project manager (PM), I also felt stuck in a chicken or egg scenario where we didn’t have the revenue to support a PM, but I would forever be stuck in operations if I didn’t hire someone.

When I hired developers, our revenue went up significantly and offset the cost of bringing them onboard. I didn’t believe we had the demand to support new developers, but I was turning away some work and the increased capacity enabled me to step partly away from coding. Our throughput increased, I sold more deals sooner, and addressed some missed opportunities.

Our revenue also improved with the PM and I was able to step away from operations and focus more on marketing and the business. But revenue didn’t improve to the same level as hiring developers. Two or three years later, I fired our PM and took on the role myself. In the intervening time, I had made changes to make the role more efficient and our profit leapt up (today, we have a PM again- which I’m grateful for, because project management is not the best use of my time.)

When you’re in this situation, what you don’t realize is that employees both cost and produce. You engage in iceberg thinking where you focus on what is clear, the cost, and don’t measure in what isn’t clear, the gain. E.g. employee A costs $50,000, and you don’t have $50,000. But they produce $100,000, so by hiring them you’re up $50,000 and not down $50,000.

Even less clear is the other situation you don’t factor in: opportunity cost. If you’re tied up in delivering work, you’re not moving the business forward. Early on, you’re not marketing or selling as much as you could. Later, you’re not building those capacities into your business system. How those will impact the business isn’t clear, but your time spent delivering value, rather than creating it, is coherent and measurable.

That’s the nuts and bolts side of this problem. The other side is managing risk.

For this chicken and egg scenario, you have no idea what your pipeline for customers will look like. That’s why you hold back: what if the customers dry up?

There are tactical solutions to addressing this risk using resources like part-time employees, contract labor, and partner businesses.

But the foundational problem really is your risk tolerance weighed against your courage.

For me, in both hiring the first developer and the first PM, I had come to a point where I had had enough. I was willing to risk burning everything to the ground rather than keep going as I had been. I no longer had anything to lose.

I don’t recommend getting to that point.

Instead, hedge your risk and take your shot. The worst case scenario is you have to swallow some pride and fire someone. That sucks, but as a business owner you will do both many times in your career. It won’t kill you or the people you stop working with.

And it’s better than what accompanies the chicken and egg problem: stasis.

“Success is not final, failure is not fatal; it is the courage to continue that counts.” – Winston Churchill

Featured image is of Churchill in command of the 6th Battalion, the Royal Scots Fusiliers, 1916. He had just been forced out of an admirality leadership position in the navy after two failed battles (Antwerp and Gallipoli) were blamed on him. Used as a part of public domain.