Another big problem I’ve seen financial advisors make relates to employing staff members. I’ve been banging this drum for as long as I can remember, but many haven’t heard it or haven’t gotten it. Business owners tend to make three deadly mistakes that can be fatal to their business.
Deadly Mistakes 1
First, they hire low-quality people. They hire the man or woman who will work for cheap or promote someone who’s been the most ‘loyal’ for many years. It’s these owners who experience low results. They hire only from within the company and don’t consider outside applicants and the skill sets they could bring to the business. They suffer from what I like to call: “You can’t teach a pig to sing; it wastes your time and irritates the pig.”
One of my chief trainers at said it recently in a different way: “You can’t have mules selling to thoroughbreds.” It’s an interesting thought. What does that mean though? Your staff have to be a ‘product of the product’. You have to set an example of how to be in front of potential and existing customers and your staff need to follow your example.
Deadly Mistakes 2
Second, business owners have too much headcount. In other words, they have several part-timers trying to do the work which should be handled by one quality full-time person. This is all well and good, but they’re trying to pay for cheap labor, but the job role won’t be performed very well. For a business to perform well, it needs two high-quality full-time people; one of these may be the owner. A business also needs a full-time director (typically the owner, in my opinion) and a full-time manager who can help oversee the other members of staff. Therefore, three part-time employees (20 to 30 hours a week) does not equal one full-time person who’s focused on results and building his or her income as well as a career.
Deadly Mistakes 3
Third, when business owners find a quality person, they tend to underpay him or her. If someone will work for minimum wage or the lowest end of pay for your industry in your area, then it should be a good indication it’s the wrong person. I typically start full-timers at with a base salary decently above the entry level minimum or a percentage of the gross, or whichever is greater. Frankly, if they only earn the base salary more than one or two months in a row, then I’m looking for their replacements. You want people capable of leaning into the percentage of the gross to increase their personal income—people willing to be focused and work hard to accomplish it.
Deadly Mistakes 4 (A bonus)
Another deadly mistake of business owners is a failure to recognize the hourly value of their own time.
I was talking with a coaching client a couple of years ago. His business was on the lowest rung of what I typically accepted ($12,000 a month gross). He made two statements back-to-back which immediately struck me as silly:
He was frustrated at not being able to break the $12,000-per-month barrier at his establishment, a plateau on which he said they had been stuck before working with me and he urgently wanted to achieve larger numbers.
He also said he was very pleased he had many clients paying $80 per hour for one of his services. This, in turn, made me think, so I paused for a minute before commenting and asked if he had a calculator. After he handed it over to me, I shook my head and asked him to divide $12,000 a month by 4.2 (weeks in a month).
Next I asked him to divide that number by 40. Upon asking him the total, he said it was a little less than $80. I pointed out obviously he had valued his time at $80 an hour which was approximately the level the business was performing.
Then I asked, “Where would you like to be within the next 90 days?” His response to me was $30,000 a month. Working backward, I explained everything he touched had to be worth $180 an hour if his business was to earn $30,000 a month during a 40-hour workweek. To move to $50,000 a month meant each hour must be worth $300. This was a huge amount of money to set at an hourly rate.
Another business owner, doing a little more than $10,000 a month on average, explained he had taken a $35,000-a-year ‘day job’ to supplement his income. Well, that translates to $17 per hour. There are many things you can do to make $80, $100, $120, or even $300 or more per hour—if you are working on your business effectively with maximum energy.