How many times have you been a victim of an organizations cutting people in order to “ensure future success”? Downsizing your team for the sake of expense control and cash protection? The debate over people or cash being your greatest asset has raged on since the beginning of the industrial age.
Prior to the industrial age most all commerce was done via specialty craftsmen and their apprentices, so clearly the quality of the individual delivered huge swings in which businesses were successful and which weren’t. Thanks to the industrial revolution many jobs became commoditized but clearly people are a key differentiator in many business ventures. Check out the blog by Robin Lissak, Principal, Human Capital, Deloitte Consulting LLP titled “Are People Really Your Most Important Asset?” for the pros and cons of both sides.
Go It Alone?
As discussed in last week’s blog, I don’t think I’ve ever seen any successful venture done solo. You will need a team of people surrounding you to keep you on point, objective, supportive, facilitating, etc. Identifying and engaging these individuals before you start will be a critical success factor.
The identification starts with a few objective questions directed at your self and your business venture:
- What are your personal strengths?
- What are your personal weaknesses?
- What is required to cost-effectively get your good or service to market physically?
- What does your prospective customers expect in the way of interaction before during and after the sale?
W2 or 1099?
Once you’ve identified the skill sets needed and who or where they are, the next question is whether you should hire them as full time employees (FTE) or contractors. Both approaches have value:
- Full Time Employees (W2): initial expense can be higher due to related benefits such as insurance and vacations as well as having to deal with payroll taxes but this is how you ensure the loyalty of key individuals and/or protect against competitive poaching. But longer term the expnse is mitigated by the “ownership” factor and pride for being part of a winning team which is also something that can’t be ignored and can drive greater and more predictable productivity.
- Contractors (1099): Sometimes specialized talent can be brought in on an “as needed” basis and that’s where contractors step in. You can expand and reduce as cash is available but lose the predictability and consistency a FTE brings to the table.
Bottom-line is that you will need to surround yourself with an extended team to ensure success, so identify the needed skill sets carefully, chose the people judicially and incent them appropriately.
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