The Mistake that Cost Me $100,000 in Cash this January

This lesson cost me $100,000 (in CASH! From my savings account – not in theoretical “maybe” money … in actual lost dollars) over 3 weeks in January.

Team is super important. Especially if you ever want to have a business you can walk away from. We read it everywhere – do the stuff you’re good at! Get other people to do the stuff you’re NOT good at!

I’ve always been kind of anti that statement.

It’s TRUE – but with a proviso.

Don’t put people on to cover your weakness.

If you hate sales, don’t hire salespeople. If you hate financial management, don’t hire a financial manager.

If you’re going to be an effective entrepreneur, you need to understand every facet of your business. You don’t have to do it forever (hiring someone to take care of the day to day financial management of the company was my favourite thing EVER!) – but you DO have to understand it.

How many business owners have you heard about, who get screwed by their accountants and employees? Millions of dollars in missing cash and stock? And why is that?

Because the owner doesn’t know what the numbers should look like. It’s frightening how few business owners can read their P&Ls – let alone run them themselves.

I speak to so many business owners who employ sales people because they hate sales. When I dig into the numbers their team are doing, they’re often underperforming and costing the business hundreds of thousands of dollars.

But you wouldn’t know that unless you understood the sales process.

Yes. Team is important.

But there’s one thing that’s MORE important:

That they’re the RIGHT team.

One of the biggest mistakes I see people make – and the mistake that cost me $100,000 – is trying to beat round pegs into square holes.

Creating a team out of the people who are there is almost ALWAYS a mistake. It’s taken me a LOT of time and a LOT of lost money to really get this … even though I’ve read it in management books over and over again.

You want to ensure that you have the BEST team possible. And yes, I know that sometimes seems like it could TOTALLY work with the friends, clients and suppliers you see around you now.

I know how hard it is when you need a team member yesterday – and you’re doing your best to choose from the limited candidates you have in front of you.

But the answer is always – ONLY hire the right people. NO MATTER WHAT. Because beating round pets into square holes is going to cost you far more money than not hiring anyone.

I’ve seen it happen time and again.

Hiring the wrong sales team, because I needed sales people ASAP, cost me $100,000 in cash from my personal savings account in January.

Hiring the right sales person last month has made me more than $100,000 in sales in 6 weeks.

I’ve watched people put general managers in place in their businesses because they didn’t want to handle the day-to-day – only to wake up one morning to see their bank accounts drained.

I’ve watched people offer equity to business partners because they want company and don’t want to do it alone – only to have those partners do literally nothing all day and then walk away with 30% of the profits.

How to Avoid Screwing this Up

1. MYOB: Mind Your Own Business.
   Never hire someone to cover the fact that you don’t know how to do a job – from management, to financial management, to sales – you don’t have to be the greatest, but you have to understand the job you’re asking them to do … or risk getting screwed due to your own willful ignorance.

1. Before Hiring:
   Make a decision about the company culture you want. And then hire to fit culture, rather than hiring for enthusiasm or skill. This is a mistake we’ve made repeatedly when hiring sales people in our business. People will come to us with all of the enthusiasm in the world – and we’ll give them a shot. But it’s cost us time and money when it turns out that they’re not a good fit.Now, we hire based on how the person will get along with the rest of the office (this only works because we have a super-awesome team that we’re really happy with). It’s made ALL the difference in the world.

1. HS:FF: Hire Slow: Fire Fast:
   We all mess up. You ARE going to make hiring mistakes. But you need to be willing to rectify them ASAP. The best quote on this I’ve ever heard is from Dan Kennedy. He says:
   “If you wake up more than one morning in a row thinking about an employee – it’s time for them to go.”
   He’s right. Your best employees should be so good that you practically never think about them.