When your business reaches capacity, do you hire or stay small?
Many small business owners reach a critical point in their journey where they have more work than they can handle alone. Perhaps they started a business in their field of expertise and, as word spread and the client base grew, so did the demands on their time.
Deciding what to do at this point can put business owners under a lot of pressure. And as research shows, more pressure is the last thing any small business owner needs! In fact, a recent study found 1 in every 3 small business owners surveyed had been diagnosed with stress, anxiety or depression in the 12 months prior. It also found that as a business increased its number of employees, the stress of the business owner also increased.
To consider the challenges that time-poor business owners face, I sat down with Emma Prime (an experienced psychologist) and Anca Costin (a barrister specialising in employment and commercial law).
We chatted about time management, stress, and how to solve the elusive growth question…
What is my vision? (Kim)
To any business owner on the cusp of growth, my first questions would be:
- What purpose does your business serve in your life?
- What is your ultimate vision for the business?
You can absolutely design a business to achieve your aspirations, which may or may not involve taking it to the next level. If you decide to grow though, be mindful of the many factors that have already made your business successful.
If you decide not to grow, you need to decide how you will manage demand. This is difficult, especially when the advice most new business owners get is: “Never say no!”. While this may work in the short term, it’s a recipe for eventual burnout and unhappiness.
Instead, establish a realistic onboarding process for new clients that takes into account your current workload. This is often better than closing your books, where you run the risk of shutting down your pipeline of referrals.
Decide how much you want to take on, and then be firm about the earliest time you can work with new clients. If they can wait, book them in! If not, ask them to think of you in the future.
You might also develop a quality network so you can refer clients when you reach capacity. This could include a referral fee, or simply be a supportive network that makes life easier for you.
Food for thought: When you’re constantly struggling to manage capacity, you need to take time out to assess your business. If your dream is to grow it, develop a growth strategy. But if you want to stay small while having more time for life, create robust business processes and don’t deviate from them except by conscious review. These processes could relate to how you work, when you work, how you onboard new clients, and how you decline opportunities when you’re at capacity.
How do I handle stress? (Emma)
There is a perception that working for yourself is the ultimate dream job. But it also comes with huge responsibilities and the risk of long hours and blurred boundaries between work and personal life.
You may find yourself constantly on the phone, working at all hours of the day and night, cancelling social plans, becoming increasingly isolated, and stressing about everything from time management to financials.
This kind of persistent stress and low self-care can lead to anxiety, depression, or a combination. Early warning signs include:
- disturbed sleep
- getting easily annoyed or frustrated
- increased alcoholism
- difficulty making decisions
- being unusually emotional or angry
- making simple mistakes
To start to manage stress, you need to understand it. It’s OK to have some stress, but continually ignoring it can cause a downward spiral.
Running a business requires discipline, so let this extend to your leisure time. Proactively schedule time off and then follow through. Be aware of your strengths, and schedule work accordingly (i.e.: if you know you’re sluggish in the morning, set more difficult tasks for the afternoon).
Food for thought: Be able to recognise when you’re stressed and have stress management strategies on the ready. These might include stepping away for a bit, taking a day off, exercising, engaging in enjoyable activities, meditation, and so on. Make social contact a priority – be it a weekly lunch, networking group, shared office space, or even video conferencing. If you’re struggling, don’t be afraid to seek help. Some great support sources for small business owners include: NewAccess from Beyond Blue, Heads Up, and Ahead for Business.
Should I hire people to help? (Anca)
Employment law in Australia is quite complex, which can be off-putting if you’re thinking about growing your business.
For example, people often get confused about whether they should hire someone as a “contractor”, “casual” or “permanent employee”. We’ve seen many recent court cases where businesses have engaged someone as a contractor, yet they were deemed to be employees. This then opens the gates for retrospective leave entitlements, superannuation, payroll tax, and so on. The penalties for failing to correctly classify a worker can be hefty – with interest on unpaid monies potentially adding to the total cost payable by the employer.
At a basic level, a person is not a contractor if they are required to behave like an employee – such as working to your roster and playing by your rules. Similarly, a person is not a casual if you require them to work on a consistent basis and they generally follow the same pattern of work.
Food for thought: Before engaging anyone, map out exactly what you need a new hire to do (and how they will do it) and then seek advice from your accountant or lawyer on how best to move forward. A small advisory cost now could save you a fortune in the long run. If you decide not to grow your business, invest in building a great network. Having people to refer work to when you reach capacity, or need support in tough times, is worth its weight in gold.