22 Mar 2018
When it’s time for your company to make a new hire, should you look at who already works for you and hire from within? Or is it better to open up the field a bit and hire someone from outside the company? The answer depends. Hiring from within has its benefits, but there are also drawbacks to it, especially if you’re a small company or are looking to move in a new direction.
Take a look at a few pros and cons of promoting someone from within the company, then take a look at your company’s goals for growth to determine which option is best for your business.
Pro: Promoting from Within Can Motivate Employees
One significant benefit of promoting from within your company is that having that be a potential opportunity can be a way to motivate your existing team. Employees who don’t see much (or any) opportunity for growth and development in a position or with a company are more likely to move to a new position at a different business. A high rate of turnover at your company can further demotivate employees, which can make your company’s turnover rate even higher.
But if employees get a sense that they have a chance to grow with your business, they’ll be more likely to pour more into their work. Motivated and happy employees and employees who eventually move up the career ladder to become managers or executives are good for business.
Pro: The Employee Already Understands Your Company’s Culture
Another benefit of hiring from within is that the “new person” already gets your company. You won’t have to put much time or effort into onboarding since the person you promoted already knows the people they are going to be working with and also already has a view into the inner workings of your business.
Although you will most likely need to do some training to show the promoted employee the basics of their new role, the entire training process can be considerably shortened.
Pro: Promoting From Within Generally Costs Less
Hiring new people is often a sizable expense for businesses. Along with the financial cost of advertising the open position and of potentially working with recruiters or headhunters, there is the time cost of having to sift through resumes and cover letters and bringing in promising candidates for interviews. There’s also the risk that the new manager or another new hire won’t work out or will prove not to be a good fit for the role, in which case you’d have to start over again.
Con: Your Current Employees Might not Be Right for the Role
Of course, there are instances when bringing in a new person makes the most sense for a position. Your current employees might not be ready for a promotion or might not be at a point in their careers where they are ready to be managers or to tackle additional responsibilities. For example, if your team is currently made up of recent college graduates or interns, none of them might be in a position where a promotion makes sense.
It could also be that your company is growing and changing and that it needs a person for the position who possesses a particular skill set, which no one on your current team has.
Another thing to note is that not all stellar employees will make stellar managers. If you have concerns about an employee’s potential management style, it might be best not to promote from within but to make an external hire. For the future, you might consider a management training program to help current employees learn management skills and to prepare your company for an internal promotion.
Con: You Miss out on the Chance to Gain Outside Perspective
Although promoting from within means that the new manager already has insight into how your business works, it also puts your company at risk of becoming stagnant. Negative behaviors can become set in stone since there’s no one new to notice them or offer suggestions for improvement. You also miss out on the opportunity to explore new ways of doing things or to try new tactics when you hire an insider versus making an external hire.
Whether you do promote from within or find a new person to take on a manager role, having a clear idea of how you want your business to grow can help you make the decision that’s best for your company. The team at New Direction Capital can provide guidance and advice to help your company as it moves forward. To learn more, contact us today.
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People leave jobs, even employees who seem to be great at their jobs. While you can’t expect to keep every employee forever and should recognize that turnover is part of doing business, there are cases when turnover can be a problem. If your company struggles to keep positions filled, it’s wasting a lot of time and money on the interviewing and hiring process. High turnover doesn’t just drain your company’s resources, it’s also bad for morale.
Reducing turnover rates and keeping employees in their jobs starts with finding the source of the issue. For many businesses, high turnover is often due to one or two people — the managers at the top. A Gallup poll found that nearly half of all surveyed employees had left a job at one point or another to get away from a manager. If turnover’s high, it helps to look closely at your management style and tactics and see what you can change.
You Think It’s OK to Yell at Employees
No one likes to be bullied. Yelling at employees when they don’t meet your expectations or when things in the office aren’t going entirely to plan doesn’t encourage people to work harder or work to solve the problem. It only demoralizes them, making them look towards the quickest exit.
If you do yell at your team or are known for having outbursts of anger or upset, one way to avoid that behavior is to remind yourself to take a step back. When tensions are high or things aren’t going the way you want them to, take a few deep breaths before addressing your team. When you do speak, do so in a normal tone voice.
You Don’t Acknowledge the Contributions People Make
Engaged and happy employees are employees who are motivated to do their best work. If your team is working hard, but you refuse to see it, or worse, claim all the credit for yourself, you’re going to end up with a team that’s unmotivated and ready to leave.
You don’t have to give out stickers or trophies for every little thing, but it is good to recognize the efforts your team makes. At the end of a big project, make sure to thank your team. If someone goes above and beyond, such as by staying late or really putting in the extra effort, find a way to acknowledge and award that person. It doesn’t have to be big. Something like flowers, a coffee or pizza can be enough to let your employee know you appreciate their efforts.
You Need Everything to Be Done “Just So”
You might have a particular way you like to work or a particular way you like certain tasks to be completed. But everyone has different work styles and no one wants a manager hovering over their shoulder, second-guessing or trying to correct everything they do. Micro-managing your team doesn’t just irritate employees. It can also keep them from learning and growing in their jobs.
It can be difficult to get over being a micro-manager, but change is possible. If you find yourself closely supervising employees or worrying that they won’t do the job “right,” remove yourself from the situation. Go into your own office or find a place to work that’s slightly removed from your staff. Trust that the project will be completed without you checking in every five minutes.
You Pit Employees Against Each Other
The workplace isn’t the “Hunger Games” and your employees should be working together, not working to see who can topple the other. While a little competition is good, if employees feel that they are in a dog-eat-dog work situation, they are going to want to leave as soon as possible.
Instead of having employees work against each other, find ways to bring your team together. You can try trust exercises, group lunches or breakfasts, or even retreats. Shift the focus to teamwork and away from competition.
High turnover rates and poor management styles interfere with your business’ ability to grow. Once you’ve gotten your management troubles under control, you can focus on what it takes to move your company to the next level. The team at New Direction Capital can help. To learn more about our virtual CFO services, contact us today.
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08 Mar 2018
Few people, if anyone, like to be the new kid in the office. Starting a new job is stressful for a few reasons. Not only is a new employee taking on new responsibilities and tasks. They are also going to have to find a way to fit in with their new co-workers, who may already have a defined social order.
When they say that first impressions last longest, they aren’t lying. Many employees can tell whether or not they’ll stay at a company for on a long-term basis within the first week of employment. Although sometimes, a new hire just isn’t a good fit for a company in the long run, in other cases, the managers and current staff at the company could have done much more to make the new person feel part of the team and to bring the new hire up to speed. Here’s what to do to help increase your employee retention rates and to make new hires feel welcome from the beginning.
Get Started Before Day 1
The onboarding process for new hires can and should begin before the new employee walks in through the door on their first day. Depending on how sure you are about a candidate, you can start onboarding during the interview. That can mean giving a new hire insight into your company, such as details about its culture and values. You can describe your company’s mission during the interview and discuss your goals and the goals of the candidate.
Prior to the first day at a new job, many new hires have jitters and concerns about what to wear, where they’ll go for lunch and who they’ll be interacting with on that first day. You might put together a “FAQs” guide for new employees, answering basic questions such as what the dress code is, what the lunch policy is and who the new hire will be working it, plus contact information for those people. Email or send the FAQs to the new employee before they begin.
Give New Hires a Crash Course in Culture
Depending on the culture and style of your company, there are ways to bring new people into the fold and make them feel part of the team from the start. Some companies assign new employees a “buddy” or mentor, whose job it is to answer any questions and to provide general guidance. Companies with a more casual culture might give each team member a nickname to help people feel like they belong right from the start. What you do to make new hires feel as if they belong depends on your company’s style and preference, but it should be more than simply showing someone to their desk and handing them a stack of paperwork.
Put Together a Welcome Packet
Along with introducing new hires to your company’s culture right away, it helps to put together a welcome packet for their first day. A welcome packet sends the message that you were waiting for them and were ready for their arrival. What you put in the packet depends on your business’ style. You might include a T-shirt or other piece of company-branded merchandise, a note from the owner or manager, all the paperwork the employee needs to complete for HR, a trivia sheet about the company or even flowers or something to decorate their new desk.
Have an Open Door Policy
Sometimes, new hires might struggle to get used to the job or might feel as if they’ve been left to float on their own, with little or no guidance. When employees feel like they’ve been left to figure things out on their own, they might be more likely to start looking for a new opportunity or for a company that might be a better fit.
Having an open door policy, that is, letting new hires know that you or someone else on the team is there to answer any questions they might have, can help avoid feelings of uncertainty or alienation. It’s also a good idea to check in with new employees from time to time, such as at the end of the first day, the first week or first month, to make sure that they are adjusting well and to answer any questions they might have.
A team of happy employees is key to your business’ growth. To learn more about ways to help your business grow, contact the team at New Direction Capital today.
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01 Mar 2018
While franchising a business might not be the right move for every company, for some, it’s the ideal way to grow. If you’ve decided to franchise, getting the ball rolling can be a bit more complicated than you might have thought. Several steps are involved when starting a franchise, from getting your company organized to making sure the legal paperwork is in order. The following step by step guide can help give you a big picture idea of what to expect when franchising.
Get Your Business Ready
Up until now, you might have used a mixture of intuition and guesswork to run your business. That might work when there’s just one location or one person managing the company, but intuition won’t help you when you’re handing the reins over to a franchisee. Part of preparing your business for franchising involves gathering information on your company’s performance, such as sales figures and overall profits. It also means having a clearly defined concept and a step-by-step guide to replicating that concept. You might also want to have data and research that shows that there is demand for multiple locations of your company.
Understand the Legal Requirements
If you are going to franchise, you need to prepare a Franchise Disclosure Document, which gives potential franchisees a clear look behind the scenes at your company. Along with the disclosure document, you might need to fill out other legal paperwork or complete additional registration forms before you can sell franchises. Often, the specific rules for franchising vary by state and some states are a lot more strict than others. It’s a good idea to seek the advice of an attorney at this step if you haven’t already.
You need to consider how much you’ll charge franchisees for licensing, how much you’ll charge for royalties, what limitations you’ll place on franchisees, and how you expect them to obtain materials and equipment. For example, will you produce the materials the franchisees need and sell them those materials to sell at their own locations? Will franchisees have some say or choice in the products they sell?
Another thing to consider is how franchisees can market themselves. Will you have required colors, fonts and slogans to use or will you give each franchisee some leeway in designing marketing and advertising materials?
Screen and Evaluate Potential Franchisees
Before you start selling your brand to franchisees, it’s important to have a system in place to evaluate them. Consider what sorts of requirements you’ll have in place for business owners who want to buy a franchise from you. For example, will you only sell to franchisees with a demonstrated track record of owning or managing a business? Will you let first-time business owners franchise from you? If a franchisee has a history of bankruptcy or failed businesses, will that automatically exclude them from working with your business?
Consider Hiring Someone to Manage Franchisees
It can be helpful to designate a member of your company as the point person for franchisees or to hire someone to help train franchisees and make sure everything is in order. When you become a franchisor, you often take on additional responsibilities. No longer are you just responsible for managing the day to day at your company. You’re also responsible for making sure that your franchisees’ needs are met and that they are holding up their end of the deal. Having someone on your team who is experienced with managing franchises and franchisees can reduce your burden significantly.
Market Your Franchise
Just because you’ve decided to franchise your business doesn’t mean that franchisees will be lining up to buy. You need to market your franchise, just as you would marketing your company’s main product. It’s also important to be patient at this stage. Unless you go into franchising with a handful of potential franchisees lined up, it might take months (or longer) before you make a sale.
Offer Support and Guidance to Your Franchisees
Once you’ve sold your first franchise, don’t leave your franchisees on their own. Be there for them, either by scheduling occasional meetings or check-ins or by making yourself or your point person available for questions.
Is franchising right for you? The team at New Direction Capital can review your options for growth and help you make the right choice when it comes to scaling and expanding your company. Contact us today to learn more.
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22 Feb 2018
Growing a business usually requires an investment of time, money and people. But not every company that is looking to take the next step or that is hoping to expand has all three of those things in abundance. If you are hoping to expand into a new area or market, but don’t have the capital available to cover the full cost of renting a new location or the cost of hiring a new team to staff that location, franchising your business might be the way to go.
What Does It Mean to Franchise?
When you franchise a business, you enter into a partnership with another owner. As the initial owner of the company, you become the franchisor while the person or company you partner with is the franchisee. As the franchisor, you give the franchisee licensing rights to your business’ name, logos and other intellectual property. You also provide assistance with managing the franchise location and have some say in how the franchisee runs the business.
The franchisee usually pays you, the franchisor, an upfront fee as well as a monthly or annual fee for continued access to your company’s name and support.
What Are the Benefits of Franchising a Business?
Franchising offers benefits to both the company looking to franchise and to business owners who hope to buy a franchise. One of the biggest benefits for business owners is that franchising is a lot more cost-effective than opening an additional location on their own. There is also a bit less risk involved for the franchisor. If the franchised location doesn’t work out, the franchisee is the one responsible for the location’s lease and other expenses.
A benefit of becoming a franchisee rather than starting a company from scratch is that the franchise often already has an established reputation. For example, the owner of a popular coffee shop decides to franchise. The coffee shop already has a customer base and word has gotten out that it makes one of the best cappuccinos around. The franchisee is able to capitalize on that reputation, using it to help attract customers to the new location.
One other benefit of franchising for both franchisors and franchisees is that there is often strength in numbers. A coffee shop with multiple locations is going to need more cups, coffee and other supplies than a cafe with just one location. That means that the franchisees and original owner of the coffee shop can work together to negotiate contracts with vendors, often getting a better rate.
What Are the Drawbacks of Franchising a Business?
Franchising isn’t without its disadvantages, though, and it’s not necessarily the right option for every company. For example, companies that make the best franchises are companies that are easy to duplicate. These companies usually sell a product that’s easy to reproduce over and over — such as coffee, food or durable goods. Companies that rely on the personality of their owner might not franchise as well, as it’s difficult to reproduce the spark or sizzle of an appealing owner.
Another potential drawback of franchising your business is that doing so often requires you to shift roles or to hire someone to be responsible for managing franchisees. Someone needs to be in charge of finding eligible and capable franchisees and in charge of making sure that franchisees are holding up their ends of the contract. Often, franchising a business requires writing manuals and rule books and otherwise creating criteria for franchisees to follow. Some business owners find that they have a natural knack for playing the role of franchisors while others have difficulty with it.
One last potential drawback of franchising is that it can dilute your brand. For example, if a several franchise locations open up in the same general area, the customers who were previously going to the original location might start to go to one of the others. That means that sales can drop at the first location, affecting your bottom line. Depending on the amount of demand for what your company has to offer, franchising might not be the best way to grow.
Should your franchise your business? The team at New Direction Capital can review your options for growth and help you see whether franchising or another plan is right for you. To learn more, contact us today.
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