The first 5 hires EVERY entrepreneur should make…or go broke…
Summary
- As you grow your company, your initial hires should be extensions of yourself, helping with repeated tasks that consume time but aren't necessarily high value.
- Start with hiring for roles that provide the least costly skills in the marketplace, allowing you to focus on higher-value activities.
- Your first hire will typically handle administrative tasks that support business operations but aren't directly contributing to growth.
- The second hire often focuses on customer success or support, managing necessary but non-strategic interactions like handling returns or billing queries.
- Consider bringing on a salesperson next, especially if sales isn't your strongest skill, to free up your time for higher-value work.
- Your fourth hire might assist with marketing or promotion, like setting up appointments or creating content, depending on whether sales or marketing is more critical to freeing your time.
- Early on, use fractional services for roles such as bookkeeping to handle basic accounting and help manage expenses without requiring a full-time hire.
- Focus on buying back your time through hiring, but ensure you use that time effectively for high leverage activities to prevent profit margin erosion.
- Ideally, your first hires can grow within the company and manage their own teams, although the transition from individual contributor to manager can be challenging.
- Be mindful of the various types of debt you accrue when starting a business, e.g., technological, management, and financial debts. These debts must be repaid later, often with interest.
- Recognize which debts to incur and when. Entrepreneurs with access to capital may choose financial debt to avoid other types of debt and accelerate growth.
- Lastly, think of hiring as a two-fold process where you reverse-engineer based on dollar value and cost to the marketplace and simultaneously balance the types of debt being incurred.
Video
How To Take Action
I would suggest starting with identifying tasks that consume your time but aren't high value. To use your time for bigger things, these are the tasks you should get someone else to do first. Hire someone to help with these tasks, like paperwork or scheduling.
Next, look for a person who can manage customer support. They’ll handle things like returns or billing questions. This hire helps make your customers happy without you having to do all the small things.
If selling isn't your strongest skill, think about getting a salesperson. They can take care of making deals, and you can work on other parts that grow the business.
Consider whether you need someone for marketing next, someone to make sure people know about your products or services. This could be through social media, making videos, or something else.
Also, you won't need a full-time bookkeeper right away. Go with a part-time one to handle money stuff like tracking expenses, so you understand where your business stands financially without paying for someone full-time.
Remember, each person you hire should help free up your time. But make sure you use that time to focus on growing the business. If not, you might start losing money.
When growing, it's good if your early hires can learn and lead their own teams later. It might be hard for them to switch from doing tasks to managing, but it's a big step in building a strong company.
Lastly, be smart about the type of debt you choose to take on. It's okay to owe some money if it means you can grow faster and avoid other problems. Just make sure it's the right kind of debt for your situation.
When hiring, think about how much money you make doing a task and how much it would cost to hire someone else to do it. Start with what costs less to replace. So, the steps are like this:
- Hire for customer support.
- Bring on administrative help.
- Get a salesperson if needed.
- Add marketing assistance.
- Use a part-time bookkeeper.
Focus on growing and being wise about the debt you take on. That's the plan!
Quotes by Alex Hormozi
"The process of entrepreneurship is always just buying back your time so that you can level up the amount of time you're spending on high leverage activities"
– Alex Hormozi
"You want to think about especially for the first five that they are really just helping you do more and so think of them as extensions of yourself"
– Alex Hormozi
"The more valuable the skill, the more it will cost"
– Alex Hormozi
"If sales is not necessarily your strong suit, then you might take this earlier"
– Alex Hormozi
"Be mindful of the type of debt that you are incurring and make sure it is the type of debt that you would prefer to incur if you have the choice"
– Alex Hormozi
Full Transcript
through the first five hires that you need to bring on in your company as you are growing and as a fundamental framework to think through this you want to think about especially for the first five that they are really just helping you do more and so think of them as extensions of yourself over time we're going to transition from that philosophy to really building a team in departments but each of the five will more or less correspond to being an extension of you and doing the repeated tasks that are time consuming but do not necessarily add as much value as some of the more strategic pieces of each of the roles all right and so if you don't know i am my name is akshmosie on acquisition.com this portfolio company is about 85 million a year i make these videos because a lot of people broke and i do not want you to be one of them so let's rock and roll so the first of these things in terms of the order and sequence that you're going to be hiring them in is going to be in the reverse order of the value that's being delivered and or what you can get in the marketplace in terms of dollars per hour and so the more valuable the skill the more it will cost and so you want to replace the skills that cost the least amount of money for you right should make sense and so typically one of the first two hires and this can happen in any order is going to be one person who's going to be more of an administrative help to you because as you start a business especially in the beginning there's lots of administrative work that needs to be done it must be done but it's not necessarily the high value work that's going to move the business forward but it must be done and so number one will typically be someone in that type of role the second hire will typically be somebody in the customer success or customer support role all right and you're still likely going to be heavily involved in the success or delivery of the product or service that you have but this person is going to help take away some of the repeated tasks that you are doing that are not necessarily value additive but must be done alright so this is like handling returns talking to customers about repeated tasks uh you know switching out billing stuff and again you'll see that there's some crossover between this administrative role and the help with delivery because in the beginning that's where a lot of your time is going to start occurring note that you're still probably marketing you're still probably selling because that's what you need to do at this point in the game the third piece will likely be the first sales person all right and that's because and again this will depend based on how good you are at sales right so like if sales is not necessarily your strong suit then you might take this earlier if it is a strong suit of yours you're gonna take it a little bit later because your dollars per hour in that role continues to grow and so i don't want you to take these as hard and fast rules these are just general rules of thumb that the corresponding framework that you need to be thinking this through is how much value am i making per dollar and then how much would it cost me to replace that dollar per hour so it's like if i do not generate a lot of dollars power and it doesn't cost a lot of money then that will be the first thing now if i'm generating a lot of money and i can replace it for a medium amount of money then it's like well i'm it's the net difference right and that's what we're looking at in terms of how we're replacing each of these roles and so right off the bat you're gonna have some sort of administrative help then you're gonna have some sort of customer support help then you're gonna probably hire some sort of sales role from there now kind of depends a little bit on the role you'll probably have someone who starts assisting you with the promotion or marketing of your business so this is oftentimes somebody who's doing setting or doing prospecting for you or if you uh generate customers based off content this is probably somebody who's being a videographer of some sort or helping you create the content in some way some of the more laborious parts that are not as value additive that would be kind of that fourth looking higher and again that can flip with the sales role so like if for example you're a killer salesman then you might have somebody who's prospecting and doing some of the intro calls for you so that the majority of your time is spent just closing which is the higher value task so hopefully this common theme is working out and making sense to you because it's like the number one question i get or one of among the top questions i get is like what order should i hire people in when i'm starting my business the next one is and again all of these roles can be some of these things can be fractional right in the beginning so you'll probably have some sort of fractional bookkeeper which is really filling the gap for the finance hole so they're just doing basic level of accounting for you to get so you just know how much money you're making at that time they can help you take control of your expenses etc over time that rule will probably come in house but much a little bit later so like before you're at 100 000 a month you probably don't have a ton uh that's going on so just having a fractured bookkeeper is sufficient same thing with you know somebody who's helping you with your taxes somebody who's helping you with legal stuff like you'll have a lawyer but it's not going to be in-house and so as you're moving up this value ladder in terms of the the value per hour and the cost per hour that you can get this the process of entrepreneurship if you think from a big picture perspective it's always just buying back your time so that you can level up the amount of time you're spending on high leverage activities now here's a key point i see this happen all the time i'll see entrepreneurs replace all of their time and then they don't do anything with that added time to add more value and so in that case your profit margins will go down because you are not continuing to add and do the things that generate the income now as you progress each of these roles become more solidified and these people ideally in a perfect world actually can ascend up and then have teams underneath of them the person who's helping you originally now has a team of people helping them the administrative person originally you might have to send them into a director of operations who's really pushing each of the tasks and projects forward they end up being a mini project manager for you if done properly right the sales person might become a sales director or sales manager who's actually leading and training a series of of sales people now i will tell you that a lot of times people have the difficulty of going from an individual contributor at a high level to a manager it's one of the hardest transitions in business and it's commonly messed up by most people all right and so one of the things that comes with experience in entrepreneurship is you recognize the people who have the talent to do the thing that is required later so you can hire those people earlier on now you can't take you know a cool a billion dollar company and put them in as your operator one because they probably could probably afford it too they're probably not that interested in the opportunity yet unless you have funding or some sort of a vehicle that you can acquire that talent earlier and so as a final concept that i want to introduce to you is that whenever you are starting a business you are incurring debt and this is something that i'm now very very convinced of and so you're incurring lots of types of debt you are incurring life debt you are incurring management debt you are incurring financial debt you're encouraging technological debt right so that a technological debt which by the way is probably if you had another next full-time hire it's usually a tech person who's helping you manage the crm build out sites and kind of make all the things that you want to have happen or know should be happening in the background actually happen in the real world they're helping manage passwords onboard new new people in terms of getting them logins all that kind of jazz and so in terms of the debt that you're incurring if you don't have a good crm that's in place you will incur that debt and then you'll have to pay it back with interest later when the company's bigger if you don't have a good bookkeeper in place you'll have your finances will be a mess and as you scale you'll have to fix and pay back that debt later if you have not the best people or the values are not there then you're encouraging management debt which means you'll have cultural debt which means you'll have to pay that back later and so the idea in terms of moving quickly in the game of entrepreneurship is recognizing which debt i want to incur in what order and so i used to poo poo the idea of investors and venture capital and things like that who gave people money to start because i was like that's not real entrepreneurship and i think as i've you know weathered or aged in the game i don't see it that way anymore i just see it as just fundamentally an advantage is that they're choosing financial debt to incur fewer other debts incur fewer operational debt incur less talent debt management debt crm debt like you might have to have a bigger crm that's better for you so that you can scale with having to switch platforms which is common but it would cost more money up front so if you're bootstrapped you might not be willing or able to do that but if you have funding or you have money that you're willing to invest in the business upfront then sometimes you can do that and so one of the things that is difficult with people who grow bigger companies faster is that they skip through the earlier stages because they know how to do it and so it's the reason that each of the companies that we've had subsequently have grown bigger faster stronger than the companies that preceded them because we are willing to incur less of the other types of debt rather than financial debt because we have the finances and so we can skip steps in the growth process that would normally off-rail a quarter's worth of growth by implementing a new crm or offload a quarter or set me back another quarter because i have to fix my financials or set me back another year because i have a whole bunch of management team in place where inexperienced and i need to get more been there done that's on the team and fewer i'll learn as i go and so as we're thinking through this and you're hiring your team the two major frameworks that i'd like you to take away with this is number one you're hiring in reverse order a value that you are providing and cost to the marketplace that you can use to replace it and so typically you will one gets customer support two some sort of administrative role three some sort of sales or setter role four some sort of marketing assist five some sort of fractional bookkeeper and or a sixth which would be your it person or tech person that is usually the beginning of the core team and then a christmas tree is down so each of them right now have five people hanging off of them let me see as this doesn't freeze there we go you'll have five people hanging off of each of these not necessarily 5it people but hopefully you can understand it especially on the marketing the sales and on the delivery those are the teams that tend to grow as the companies grow and the you know it and and finance departments and hr departments which end up getting built over time there's a ratio that is a higher ratio as in you need fewer of them per amount of customers or employees that you have in the company and so as you scale that is framework number one and then framework number two is be mindful of the type of debt that you are incurring and make sure it is the type of debt that you would prefer to incur if you have the choice and so if you are new to the channel welcome to mozy nation and enjoy the next video bye
