VIEW BY TOPIC
Ready to Grow Your Business Fast?
Here’s How I Grew Five Businesses, and Eventually Sold One to a Fortune 500 Company.
Hiring the Right Business Associates
How often have you heard the phrase “No man is an island”? The quote is from a seventeenth century sermon by author John Donne. It continues “No one is self-sufficient; everyone relies on others.” As a business owner, you need to decide what type of business associates they choose for this service—a partner, third-party vendor, contractor, or consultant?
No one can really argue with that. As humans, we rely on unknown sources like the persons who built our local grocery store and provide the food we buy there, like the founders of garages like Firestone and their mechanics who fix our car, like the owner of Wal-Mart and the makers of Gorilla Glue, Reebok, and iPhones. The list of people we must rely on is long.
Business Owners Need Even More Help With Business
This truth is decidedly applicable to business owners. We need other kinds of business associates; website designers, coaches, and bookkeepers. We need copywriters, printers, and graphic artists. This list is also long.
The question is: “What do I need to be done and who shall I select to perform that?”
How Do You Hire the Right Business Associates?
Thus, the title of this blog. A business owner needs something done that they can’t do. What business associate do they choose to provide this service – a partner, third-party vendor, contractor, or consultant?
First, let’s nail down some basics of selecting the right business associate:
- What service do I need?
- How important is the service for my company?
- Do I need this service for the short-term or long-term?
- How much will this cost?
- What budget can I spend on this?
- Do I need this person to only provide a service, or do I need them to assist in collaboration, financial investment, or decision-making?
- Must this service be done locally or can it be done anywhere in the world?
Compare your answers to these definitions of potential business associates to determine which will work best for your needs.
A Business Partner.
For some services, you might find it wise to enter into a partnership with a business associate who brings certain skills that are significant and required long-term. Think of partner Steve Wozniak who designed and brought to life the visions of Steve Jobs.
A partnership would commonly involve financial remuneration to that party by either a salary or the sharing of profits. It could necessitate that a partner make a financial investment in the business. The partnership may necessitate that you reciprocate by providing a service to your partner’s business, of equal or greater value.
A partnership typically involves collaboration, not just a one-to-one trading of skills or services. The two parties might decide to only make joint decisions on certain matters, like choice of materials, staff, or strategies. Partners might ”silo” decisions based on a variety of factors like knowledge, experience, financial holdings, or seniority.
For instance, you may choose a partner who has the needed software development skills. That party agrees to perform certain duties, receiving a monthly salary. Because of their limited investment of knowledge, direction, time, or money in the enterprise, they are only consulted and informed regarding decisions relating to purchase of software and applications.
Another example is a partner with business management education and experience who made a one-time investment of $20,000. They are accountable and consulted regarding purchases over ,000 and will be responsible for the hiring, management, and firing of IT staff. They receive 10% of the company’s quarterly profits.
The partnership can be as simple or as complicated as you both need.
$Investment: H Affordability: H Collaboration: H Decision-making: H*
A Third-Party Vendor.
Your business will have to engage providers of a product or service that you need – whether it’s training, machinery, office supplies, bookkeeping, or a website. Sometimes, a vendor is needed one time only; mostly, you’ll enter into a relationship that could last for months or years.
While this relationship will be crucial to making your business run well, you wouldn’t involve a vendor such as a website designer to participate in the decisions or operations regarding your business. They will supply certain items or services when needed at an affordable price, with an acceptable level of efficiency, quality, and support.
$Investment M-H Affordability M Collaboration L Decision-making L
A Business Management Consultant
Retain a business management consultant or coach when you need independent, professional guidance and expert opinions. They are paid for their knowledge, while contractors are skilled workers paid for defined tasks. Consultants provide direction, and advice to grow a company, but do not possess the standing or profits of a partnership. They are primarily engaged for a limited-term for a specific area of responsibility. A business coach is more holistic; they work on both business and personal aspects with their clients.
These business associates should be self-directed problem-solvers with the subject matter expertise, initiative, and people skills necessary to understand the situation and develop viable resolutions.
Consultants generally assess a condition or pain point, and suggest a solution to remediate, improve, update, or streamline it. Solutions can come in the form of strategies, processes, systems, software, or hardware.
While the hourly rate for a consultant is usually higher than that of a contractor or employee, owners need not pay for benefits like insurance, 401K, and vacation or sick leave. Consultants won’t require the training or supervision needed for other staff members.
$Investment: M-H Affordability: M Collaboration: M-H Decision-making: H
An Independent Contractor.
A contractor is an hourly worker engaged for a specific amount of time to accomplish defined tasks. They can be directly hired as a self-employed individual or through a placement agency.
Contractors will frequently require training, supervision, and daily direction.
While a contractor may have input into suggestions for improvements, they are paid solely based on their hourly work.
Often more expensive by the hour than a salaried employee, a business owner will save money by not having to pay for benefits and by not having to locate, vet, hire, and fire them.
If engaged through an agency, that firm will be responsible for paying any benefits and withholding taxes as well as entering into contracts and confidentiality agreements with the contractor.
$ Investment: L Affordability: M Collaboration: L Decision-making: L
Considerations in Selecting a Business Associate
- What might be the legal implications (benefits, taxes and withholdings, agreements, financial obligations, contracts) of my choice?
- What limitations will I need to place on any of these choices – i.e., the term of engagement, monetary minimums or maximums, breadth of duties, or restrictions of access to proprietary company information?
- Is it necessary to delineate ownership of any resulting inventions or developments (software, hardware, processes, systems, etc.)?
- How should I prepare for issues that may result with offshore business associates: language difficulties, time zone differences, quality of work, shipping limitations, culture, etc.?
- Will I need to define conditions which necessitate the ending of an engagement such as lack of viable results, breach of company rules, unauthorized facilities or systems access, hacking, or lack of funding?
Engaging a business associate to provide a product or service to your company requires consideration of the impacts in terms of financial investment, relative affordability for results received, need for collaboration, and desired involvement in decision-making.
Most importantly, be sure to consider the ramifications of these essential business associates to your success.
* L= Low, M= Medium, H= High