A CEO breaks down why hiring costs feel scarier than they are. Split annual salaries into monthly or biweekly amounts, compare them to the revenue each hire generates, and model your budget against gross margin. Capable staff scales your operations.
Chapters
I was thinking this morning about a CEO that I've been doing a bit of coaching with recently and also thinking about a lot of the CEO alliance members over the last year or so, talking about hiring and one of the key stumbling blocks that we always seem to stumble into, and this used to stress me out all the time as well. I'd be thinking about the business and the growth and how fast we were growing and how we really needed to ramp up the hiring to stay ahead of that curve and to produce all the revenue that we were going to be generating. And I would think to myself, you know, I need to hire, you know, three more great people. I need to hire two eighty thousand dollar people and one hundred twenty thousand dollar people. And I'm like, that's like two hundred eighty thousand dollars. And I start like scrambling that around in my head and worrying about it. But if you break it down and you think about it, the reality is you're not paying that tomorrow. You're not paying the $280,000 for three people tomorrow. You're paying it over the next 12 months. And over the next 12 months you're also going to have the revenue and the gross margin to pay for that. So let's break it down a little bit. Think about, let's say $280,000 divided by 12 is approximately, oh gosh, $24,000 a month. So if $24,000 a month, that doesn't sound as big as 280,000, does it? And then it's not $24,000 tomorrow, it's $12,000 over the next two weeks and $12,000 over the next 2 weeks. So all of a sudden it's like, well, that's not that big of a deal. We have the 12,000, got the next 12,000. How can we get some revenue being generated from these people or free up some of my time to go generate the revenue to pay for that? So when you start wrapping your head around the cost of hiring these new incremental people, but also the revenue and the gross margin that these new incremental people are going to be adding to your business, it really isn't that big of a risk to actually hire those people. Also, I think a lot of the nervousness and worry that we get. I was talking to another COO that I was coaching the other day on one of our coaching calls that the, the nervousness is, how are we going to be able to sustain this and pay for this? Well, budget it out, model it out, and you'll actually start to see that by hiring these people and hiring especially ones that are going to drive gross revenue and gross margin, you're actually going to be able to pay for that over the long term. It's not like you're building a new building and adding a whole lot of overhead either. Worst case scenario, people, the worst case people can always be let go and then you're out of that overhead as well. So worth wrapping your head around because as you start adding more great people to your operations, your business will always scale.
