Adam McFarland

I had a great lunch yesterday with a friend and former classmate who now has a PhD in Entrepreneurship.  He’s teaching a class called Entrepreneurship and Small Business at prestigious Skidmore college in the fall and asked me if I’d like to come in and speak to the class.  Of course, it’s a total honor and I said yes.

At one point in the discussion I started talking about our hiring situation.  He mentioned he’d keep an eye out for exceptional talent, which I said would be awesome. That got me to really thinking: I haven’t been in the corporate world since 2005 and I haven’t been in acadamia since 2004.  My opinions of each are still - to a large extent - stuck back in those years.  I haven’t seen a corporate environment from the inside since then.  I haven’t been part of an interviewing/hiring process since then…both from the side of a new hire coming in and from the side of recruiting new talent for the company.  I haven’t been in a classroom environment since then.  I really have no clue what today’s student faces.  Hell, when I left RPI they were just getting campus-wide wi-fi.  In my days, we had to plug into ethernet jacks at our desk and teachers could regulate us by just telling us to unplug our ethernet cables!  How much different is today’s student?  How much different is today’s corporate environment?

I don’t really know if there is much of a solution to this.  I’m active in the small business and young professionals communities, both online and off.  I stay up to date with all of the news that I need to live my life and run my business.  But when it comes time to hire, being years removed from the corporate and academic environments could hurt us.  We need to have a full understanding of the company we’re competing against for potential hires.  We also need to have a full understanding of the academic experience that the students are encountering.

I’m hoping this speaking engagement will be the start of an effort by myself to have a little more contact with academia and the life of a student in this generation.  I hope that the books and blogs I read, and the people I associate with, keep me up to date on the corporate world.  However, you can’t truly understand what it’s like to be a student unless you are a student.  You can’t truly understand what it’s like to be in the corporate environment unless you’re in it.  So maybe I’m just experiencing something that every business owner goes through?

If this first story sounds familiar, it is - I touched upon it in my Productive Output post.  A few weeks ago the owner of a local large online retailer (approx 10x bigger than us) visited the warehouse.  George worked for him prior to starting DI, and he based much of early DI off of this particular website.  After seeing our shipping process on the back-end of our shopping cart, the owner turned George and his co-owner and said “I could fire two employees if I had that technology”.  I unfortunately was not there to hear this, but upon getting the story from my partners it made me feel about as good as a developer slash business owner can feel.

Thus far, features like the shopping cart are how we’ve gotten our competitive advantage, how we’ve gotten as far as we have as guys just out of college with no outside funding.  Anytime something takes up a lot of time we’ve either automated it or eliminated it.  However, we’re rapidly approaching the time when four people just can’t handle it all.   Today Mike, George, and I spent from 9 AM - 3PM packing our orders from the weekend.  That’s 18 man hours doing warehouse work!  Don’t get me wrong, we shipped close to 60 orders - many of which were very large - but no owner in their right mind thinks that 3/4 of their resources should be poured into $10/hr work while the high level stuff (mostly marketing) gets ignored and pushed back.

So why not just hire right now?  A couple of things add to the difficulties:

• 18 man hours is not the norm.  The norm is probably 4/day, but it’s not uncommon to have a few slow days a week that only take 2 man hours.  Mondays are always larger because you have an extra 2 days of orders being shipped.   In short, the pure warehouse work is sporadic.
• We don’t really have a lot of other work for “warehouse workers”.  Shelves need to be stocked for maybe 30 minutes to an hour a day.  Inventory needs to be updated (15 minutes a day maybe).  That’s about it unless we want to cross train them in other areas, which I personally do not think is a good business move.
• We recently instituted a new check/balance system where one person pulls orders and another packs.  Both check the invoice against the products before passing it on (either to the packer or to the outgoing packages area).  This prevents errors due to pulling the wrong item, and highly reduces errors from missing an item all together.   We’re pretty serious about it:  if you take the product off the shelves, you are absolutely not allowed to pack and ship it.  If this is the case, do we hire 2 employees?  Or do we still have an owner paired with the full-timer?
• Our salaries aren’t as high as we want them to be right now.  We are all getting by, but still underpaying ourselves.  Everyone is living tight and that is stressful.  An employee will increase revenue long-term, but we’d like to get one more raise in there for us before hiring someone.

My gut tells me that in a few months we won’t have a choice:  we’ll need to hire.  IF our threshold is where I think it is (fingers crossed), we’ll already have our raises and it’ll be a question of:  do we hire one full timer or two part timers?  I’m leaning towards two part time college age students with flexible schedules.  This eliminates the need for us to provide benefits, meets our check/balance requirement (if one isn’t working that day, one of us will chip in), and enables us to have them only come in 3-6 hrs a day.  I realize that there are downsides to these types of employees, but I think the pros outweigh the cons.  Who knows, maybe we’ll have 3 or 4 at some pt to ensure that we get 2/day.

The good news in all of this is we’re growing.  Nonetheless, every “hump” is stressful.  The “getting into a warehouse without going under” hump is passed and this is the next logical part of our growth.  The warehouse stuff was only February, so things are happening fast, even though a lot of days it feels like growth is happening at the speed of molasses.

On a somewhat related topic:  we’re considering getting an intern or hiring a virtual assistant (usually based in India) to do a lot of the more monotonous marketing and customer service tasks.  One example would be to create a list of sites for us to contact to participate in our wholesale or affiliate programs.  There are many many more, but those illustrate the point that there are long tedious tasks that us, as owners, shouldn’t be spending our time on.

On a completely unrelated topic:  this heatwave is ridiculous.   I was sweating balls all day long doing manual labor in the warehouse.  Average high temps this year:  ~70 degrees.  Beautiful weather right?  This week:  close to freaking 100 degrees with humidity that makes it feel like you’re in a steam bath all day long.  Our boxes - despite being “dry” - felt mushy when we were trying to pack orders.  The packing slips and invoices were curled up like you took them in the bathroom with you while showering.  Last time I checked I lived in Upstate NY…not the swamps of Florida.

While it’s on my mind, I want to reflect on how I think client work can be done correctly.  By ‘correctly’ I mean being happy with the work you’re doing, not being over-worked, making plenty of profit, and satisfying your clients.  It can be done - I know people who do it - but it certainly wasn’t for myself or Pure Adapt.
Based on my experiences, these are the rules you should strictly adhere to if you want to do client work right:

• Charge what you’re worth.  What are you worth?  Do some math:  if you want to make $100k you need to make around $2k/week, which means you need to make around$50/hr for 40 hours/week.  That $50/hr has to cover every second you’re working - including answering phones and emails, time spent researching and preparing quotes, time required to market your business, and that 5-10 hours/week when random unexpected stuff gets in the way of getting work done.  The best way to do this is to charge by the hour and inflate the price a bit (say $100/hour in our example).  Unfortunately most people - us included - charge by the project and don’t account for the extra 50% of time we spend doing support for the project, which of course drives down our hourly rate and makes the work not worthwhile.  I’d lean towards charging hourly if I did it again, but if not it becomes even more important to….
• Have clearly outlined terms.  Our lawyer drew up arbitration and indemnification clauses for us, which covered our ass legally.  But that’s not what I’m talking about here.  I’m referring to:  exactly what the client will get, exactly how many revisions they get, and exactly how frequently they can contact you.  Yup - I’d do the unheard of and place limits on how often they could contact me.  This saves me time, and forces them to coherently convey their thoughts. Ten rambling emails a day turn into one well-thought email.    This goes hand in hand with….
• Have set hours.  I have gotten phone calls on Christmas, Easter, on Sunday mornings at 6 AM, at midnight on a Saturday night….and those are just ones that come to mind.  If you let them, clients will call you 24 x 7 x 365.  Don’t let them.  In your terms, make sure you say “I answer emails and phone calls M-F 10 AM - 4 PM and Saturday from 9 AM - 11 AM”.  Or whatever hours work for you, but you get the idea.  We never committed to doing this, and it hurt us.  Some people will abuse your terms, so you have to be willing to….
• Fire bad clients.  When you make the decision to do so, don’t let them talk you out of it.  If they have caused you so much stress that you would rather NOT make their money just so you don’t have to deal with them, then you absolutely need to let them go.   As you get better at quoting out clients, you’ll learn to….
• Turn down clients.  If they don’t meet your standards, or if something doesn’t feel right, don’t go ahead with the job.  Just tell them you don’t think you’re a good fit for each other.  In my experiences, this makes them want to work with you more and they ‘beg’ for you to work with them.  Don’t give in.  If you’re turning down imperfect clients, you better…..
• Have a way of generating a ton of leads.  When we applied ourselves, we were actually pretty good at this.  Things that worked for us:
  • Have a website with a lot of information about all of your services.  The more content, the better you’ll get indexed and the better you’ll convert readers into clients.
  • Start a blog, preferably about your industry.  This very blog has accounted for probably 40% of the clients I had.  If people get to know you personally before they contact you, there’s no ’sale’ - they just contact you with a desire to work with you.
  • Buy local business leads.  We paid ~$200 for 13 weeks of leads.  They email a CSV file of every new business registered in your area.  We then sent each lead a post card…and then a follow-up post card.  These are people that NEED websites, so it’s a no-brainer.  Including postage we spent about $1 per lead.  For less than $1k/year you’ll easily make your money back.  The best part is that it’s easily scalable to the ENTIRE country by just buying more leads!
  • Work Craigslist.  At a minimum, post in your area.  We tried paying a posting service to post throughout the country for us.  They did an OK job and brought in some OK leads, but we didn’t commit to it long enough to do it correctly.  One thing is for sure:  lots of people every day who need sites are looking on CL.
  • Incentivize current clients to give you referrals.  You can’t MAKE them give you referrals, and if you’re doing a good job they’ll probably do it anyway, but a little push can make a huge difference.  Send them newsletters frequently updating them on your business, and every single time make them an offer if they refer you a new client:  a year of free hosting, 2 free hours of consulting, $300 off of a redesign, etc.
  • Participate in your local Chamber of Commerce.  Go where the successful business are, and all successful businesses are members of their local CoC.

  This is all a lot of work, so make sure you….

• Hire contractors.  Your local college is FILLED with computer science students who need part-time jobs and don’t want to work at the local TGI Friday’s.  Albany is filled with colleges, and I’m sure your city or metro area is as well.  Using Craigslist you can usually find a handful of sub-contractors to try out.  Even if they spend the majority of their time generating leads or doing basic maintenance work, the $15/hr you pay them allows you to spend your time on the $100/hr work we mentioned earlier.  And finally, to do all of this right you should….
• Avoid being a hybrid company like Pure Adapt.  I’m not saying don’t work on some side projects, but if you decide to try to make a run at making serious money off of one of your sites then you might as well ditch clients.  You’ll NEVER want to work on your clients projects ever again.  Your projects are always better, more important, and of course more fun.   You’ll begin to resent your clients, and everything will fall apart.

As is the case with any service company, we have to wait on files and information from our clients regularly before we can complete their project. This morning, in two such cases, both clients of ours blamed their partner for the delays. Something along the lines of “they didn’t get me the file”, “they screwed up and gave you the wrong information”, or “that decision they made makes no sense”. One even bashed their partner three times in a four sentence email! It might not seem like a big deal, but those businesses are in trouble big time. I would never, ever, ever throw my partners under the bus like that.

Any time WE screw up I tell the client or customer that it was OUR fault and WE apologize and WE will fix it. We are a team, we all make mistakes, and if someone screws up repeatedly we’ll deal with it internally, but I know I’ll never disclose that to a client. I know I would be pissed if one of my partners was ripping me to a client. As far as I’m concerned, if something slips past our internal checks and balances it’s the fault of our entire team and not the individual.

Bashing your partners tells me that you resent each other and you don’t want to be associated with each other’s mistakes. It also shows a sign of immaturity that you’re unable to solve problems face to face and instead vent to other people to make you feel better. That’s the anti-team, and those partnerships will likely fall apart.

The best answer I can come up with to that question is: it depends.  I know a lot of people who swear by never hiring people they know.  Those are the same people who also say they’ll never date a colleague, or never mix any form of business and pleasure.  Those things all sound noble, but they’re just blanket statements that don’t hold up in the real world.

How many companies do you hear about that are founded by two brothers, or two sisters, or father + son, or lifelong friends (like in Pure Adapt’s case)?  A lot.  Know why?  Because those are the people you trust.  There the ones you know you can count on because you’ve been through difficult times with them before and you know how they react.  There’s also the other side of it: that you have a more complex relationship than just business partners, and when things go awry you’ll have another layer of the relationship to deal with.  So a lot of people just avoid working with friends and family solely for that reason.

If you take that approach, you make running a business a lot harder on yourself (not to mention the ironic fact that you’ll probably meet a large portion of your friends at your job…so the more friends you make, the less potential job candidates you’ll have…which is ridiculous).  The value of your network is probably the best hiring asset you have.  I know I have a mental list of about 15 people I know that I’d LOVE the chance to hire.  Some are friends, some are relatives, some are former co-workers, some are former teachers, and some are classmates from college.  I have a relationship beyond a typical professional relationship with each of them, but given the resources I’d hire them in a second because I know exactly what they bring to the table.

First and foremost, they’re all good, honest, trustworthy people.  They’re also all very intrinsically motivated people who take pride in doing a good job - no matter what they’re working on.  And of course they are all extremely good at what they do.  I know all of this because  I’ve been through the trenches with them before and I know how they work under pressure.  Think I could learn all of that from a few interviews with someone I found on Monster.com?  I’d be insane not to hire those people, and if I ever get the chance I sure as hell will hire them in a second.  See, I also know that each one of them is a professional in every sense of the word and I know they can handle the complexities of the relationship.

The key in my mind is being able to separate your business relationship and your personal relationship.  We do an amazing job of that at Pure Adapt - when we’re watching a football game together that’s what we’re focusing on, regardless of how the work week went.  That’s how I know it can be done.  I guess the bottom line is this:  if you know someone who is perfect for the job, and you are fairly certain they’ll be able to separate the two relationships, you’d be stupid not to hire them.