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The $100 MBA Show
MBA2696 Q&A Wednesday: How Do I Find the Best People to Hire On a Budget?
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Hiring great talent is tough. Hiring great talent on a tight budget? Even tougher. If you’ve been trying to build a strong team without overspending, you’re not the only one asking how to make it work.
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Get yours today@dell.com holiday terms and conditions apply. See dell.com for details. Welcome to Q and A Wednesday here on the $100 MBA show where I answer your question about business growth and everything in between. Today's question comes from Rob and Rob asks, how do I find the best people to hire on a budget? Hiring is one of the trickiest parts of of building a business, in my opinion, because who you hire is basically what your business becomes because the people that hire the best people, the best talented, skilled, hungry people, are the ones that build the best business. And with budget pressures, it makes it even harder. But after 20 years of hiring team members all over the world, I've learned one big truth. A truth that you can't avoid and and that's you get what you pay for. Welcome Back to the $100 MBA Show. I'm your host Omar Zenholm, where I deliver practical business lessons three times a week, Monday, Wednesday and Friday to help you start, grow and scale your business real quick. If these episodes help you in any way, hit the Follow button on this podcast app. It helps us to keep bringing you practical business insights three times a week for free. Thanks. So let's break down how to make smart hires even when money's tight. I know this sounds like you know you get what you pay for means that I have to pay more to get great talent. Not necessarily. You need to kind of change the way you see hiring and see it as a job to be done. How can I get this job done efficiently and cost effectively as possible. But make sure that I'm doing as much as possible with the money I have. I'll explain in today's lesson. Most entrepreneurs, they try to hack hiring. They're looking for a deal. They're looking for the diamond in a rough. I know this for a fact because I used to be one of those people. I thought that I could, you know, find somebody that's really hungry and ambitious and smart, and they're just up and coming and, you know, I'll just be able to afford them and then they can grow with me. Very hard to find, in my opinion, impossible to find. The person who will work for peanuts and then somehow deliver like a rock star. Only exists in your head, only exists in your dreams. But in reality, that is just not the case. The case is that everybody that you see out there has value. And the more valuable they are, the more expensive they will be to hire. If you underpay, you usually get underperformance, or they're just low in talent or skill. We have to establish this truth. There is such a thing called talent and skill. There's such a thing that people have experience. There's such a thing that people just are objectively better at something than somebody else. And you have to pay for that delivery of that kind of work. If people are great at something, you're going to have to pay a little bit more than somebody who's mediocre. I find that when you try to hire looking for a deal, try to find somebody that's less expensive. You end up with a lot of things you don't want to deal with, like missed deadlines and low initiative or high turnover, where they just leave you when you need the most. This leads to costing you more than you think, right? Actually ends up costing you more than just hiring the more expensive person, the more skilled and qualified person in the first place. Instead, I want you to have a better mindset when it comes to hiring. And that mindset is have or create a budget to get the job done. When you have a problem in your business that needs solving, like sales or marketing or customer support, that's a problem that needs solving. How can you use your budget to get that problem solved? Then find the best way to allocate that budget for that result. I'm going to break down and give you some examples exactly what that means. But. But think about solving the problem, getting a certain job done in your business, rather than I need to find one or two or three people to do this job. Let's say you got $4,000 a month in your budget to spend on customer support. You're getting a lot of emails, a lot of customer support queries, and you need somebody else or a team to handle this. Now you've got a few choices. I'm going to give you some random choices here. These are viable choices, but they're not your only choices. The first one is maybe you hire out of the Philippines. Philippines is a great place to hire because you get exceptional workers, people that are good at what they do at a pretty reasonable price. You could hire four full time support reps for $1,000 a month each. That's one option. Get four people working for you for $1,000 a month and that would exhaust your $4,000 total budget. Or option number two is that you can hire out of South America or South Africa where you can get two solid customer support reps for $2,000 a month each. Or you can hire out of the US, the UK, Canada or Australia. And maybe you can hire one part timer for 30 hours a week for the same budget for $4,000. Which one is best? Well, this is how you can know which is best. Use this rule. You don't hire based on how many people you can afford. You hire based on who will get the job done best. Sometimes hiring one higher skilled, more experienced person beats four lower skilled people. Other times, you really do need that coverage. If you want to offer 24. 7 support and have people take shifts at different times at different parts of the world. So a team in a lower cost country might make sense. This episode of The Hundred Dollar MBA show is brought to you by Booking.com look, if you're running a vacation rental or even just getting started with one, you need to be where the travelers are. 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With dozens of different apps that don't even talk to each other, You've got one for sales, you got another for inventory, something else for accounting. And before you know it, you're drowning in software instead of growing your business. That's where Odoo comes in. It's the only business software you'll ever need. Everything integrated CRM, accounting, e commerce, inventory, hr, all in one place. No app overload, no juggling logins. Just one clean, seamless system that makes work easier. And the best part? Odoo replaces a stack of expensive tools with for a fraction of the cost. It's customizable, it's easy to use, and it grows right along with your business so you can focus on what actually matters running it. Thousands of businesses have made the switch, so why not you try Odoo for free@odoo.com that's o d o o dot com. Let me give you some counterintuitive examples and here's where it really gets interesting. Example number one is customer support coverage. If your customers are global, let's say around the world, hiring two reps in America might give you a time zone coverage. And if they're fluent in English and Spanish, you cover two languages that actually outperforms four cheaper hires in one region. Let's go with another example. High skilled jobs like engineers, like salespeople, like management. Okay, one top tier hire can produce 10x the output. I'm telling you, I've experienced this over and over and over in my career as an entrepreneur where I've had one person on my team that produces 10x the return on investment than another employee. And sometimes they're in the same field. They could be two different engineers. One engineer is just producing so much better work and high quality and volume. So paying that person 1.5 or 2x the going salary can actually save you money because you're buying an incredible tool for leverage in your business. I'm not calling them a tool. I was calling them a huge asset to the business that a player might close More deals than 5 average sales reps combined. You know, this engineer can be producing more features and more bug fixes than anybody else on the team. That manager could be relieving you of, you know, 70% of all your headaches right now. And it's saving you so much time for you to focus on scaling your business. There's so much value in paying above market rate for highly talented people. In my opinion, this is one of the biggest hacks that you can deploy in your business right now is hire an A player. Somebody that is way above average and therefore deserves way above average salary. But you're going to get so much in return. It's one of the easiest ways to just like turbo boost your business, right? To turbo boost it into another galaxy. Let me give you an example or just expand on what I've been talking about when it comes to productivity versus headcount. I once hired a team of bargain developers overseas and it sounds great because you have all these hands on deck to, you know, ship features and fix bugs and help, you know, the company develop better code and all that kind of stuff, right? And it's low cost, but the coordination, the missed deadlines, the rework we had to do after all the damage that was done almost killed us right later. I hired one senior engineer at double the cost of one of those engineers. And guess what? That one hire shipped more, shipped more code faster and was better than the entire team. Okay, than having a whole team of developers, that one person was producing better results than just having a bunch of people that were mediocre or, or below average. So the counterintuitive truth is sometimes fewer better people are more cost effective than spreading your budget thin. And guess what? When you have less people, you have less people to manage. Every time you bring somebody on your team, there's onboarding, there's training, there's management. You want to make sure that they're feeling rewarded. You want to make sure they're, they're motivated. You want to make sure that they're have time to talk to you if they have questions or any training or whatever it might be, okay. You also have to pay for all these tools for them. You know, when you start building a business, you start using software and different kinds of tools for them to do their job. And every time you hire a new person, that's another expense on your books for all these tools. And sometimes that adds up. So actually it's more efficient to have high quality people, less people in your team, and there's less to manage, less to worry about, less to spend on. Many of my friends run businesses that make 5 to 10 million dollars in revenue each year at like 60 to 7% margins. And their team is small. You know, 510 people. And therefore so much profit goes back into the pockets of the founders. So this is like in my opinion, success, right? Where you're doing a lot with so little, with not that big of a team, but the team is well oiled, highly motivated, talented, and guess what, a players love being around a players. So you, if you have a team of a players and you only hire high quality people when you need them, then it actually becomes a great environment for them and they feel motivated, they feel like they're amongst their peers, they feel like they're working in a high level company. But when you try to dilute your team with not so talented people, it's not such a motivating place for people that are very skilled and high achieving. So keep that in mind. Keep in mind the culture that you're building in your company. So how do you apply all this when you're on a tight budget? We got to answer this question. Okay, step one, define the outcome clearly. What exactly does success look like after this is done, after this role is fulfilled? What are you looking for? Are you looking for faster response time when it comes to customer support or is the quality of the response more important and you're willing to sacrifice first response time meaning like I want high quality but the response will be within 24 hours rather than five minutes. Are you looking for more sales closed? Is that what you're hiring the sales position for? Is it purely for that or you want to qualify leads and get some sales? You want somebody who's a little bit dynamic. Are you looking for a better design product like UX and ui? Or is it about somebody that can do design okay, but also can do the coding? Or is design the top reason why you are suffering right now, where you are not doing very well in your business and you need to get the best of the best and focus all your budget on that. So that's step one, get super clear. Step two, allocate your budget to results, not headcount. Don't ask how many people can I afford? And ask which plan will deliver the best results within this budget. I have this budget. What's the best way I can get the best results? Sometimes that's a part time hire. Maybe that's a consultant, maybe that's a freelancer, Maybe that's somebody who's working project based like on upwork. Think of the result. How can you get to the best result possible with your budget? Maybe with your budget. If it's like $4,000 a month, let's say instead of getting Whatever you're trying to get done in one month, you get it done in three months. But the quality is super high because you spread over three months. So now your budget's not really $4,000, but more like $12,000. Tip number three, pay above market in lower cost regions. If you hire out of the Philippines or South America or wherever, don't just pay average pay above market. You'll attract the best talent in that region and they'll stick with you longer because they're going to think twice before leaving you knowing that I can't get the same salary and if I start all over. So you're investing in loyalty. When I hire I think, okay, how can I pay this person so that they stick with me for at least next three to five years? Because I want to get a return on the investment I'm making with this person not only in terms of the money, but the time I spend on training and cultivating their talents and making sure they're working at their best. And finally, tip number four, invest in a players for critical roles. I'm talking about leadership, I'm talking about engineering, I'm talking about product, I'm talking about sales. Any that deals with how you make money, okay, you want to splurge if you can. One great person can change your company. I would also add marketing to that because marketing in a lot of ways in the digital world is how you bring in high qualified leads and customers that then can be easy to sell to. So Rob, who asked today's question, the answer is this. Stop hunting for a deal. When you are hiring for people, you get what you pay for. Use your budget to get the job done, not to maximize headcount. Even if you need to do it over a longer period of time or it's going to allow you to just get started. Sometimes you have a budget, okay, just get started with a part time hire so that you can get a return on that investment and take that return in money that you make from the business because you invested in your business, it's a better business now. And then go and take that money and hire somebody that can give you more time or you know, hire somebody that's higher qualified. This is why I always say when you're making your first few hires in your business, one, try to get a hire that's going to free up your time so that you can make more money for the company. But two, try to hire positions that will get you return on investment, meaning that directly impact the dollars you make in your business. Now Sometimes when you're trying to solve the problem that you're trying to solve in your business, with hiring, it means hiring more people, but sometimes it means fewer but better people, but people that are just on top of it. And in the long run, the right hire will always be cheaper, in my opinion. Oh, boy. The right hire will always be cheaper than the wrong hire because wrong hires will cost you not only time and money. Of all the time they were with you in the company, you got to fix all the problems that they created while they were there. And trust me, I've made some really bad hires I'm not ashamed of to admit it because I've learned from it. That cost me a lot of money. I had a bad hire that cost me over a quarter million dollars. So I don't want you to make that mistake. Hire the best possible talent with your budget. Thanks for the great question, Rob. Before I go, I want to leave you with this. There is a rule I learned the hard way in hiring, and that is trust but verify. Always, always, always. When you make a hire, put them on a test project, on a probation period, on a trial run where you just tell them, hey, we're going to work with each other for the first two months, three months, and at the end of the three months, we can shake hands and say goodbye to each other if it's not a good fit for either of us. But this is your chance to see how they actually work with real problems, with real customers, with real challenges in your business, with your teammates, so that you make sure they're a cultural fit as well. And that way you don't invest too much money into the wrong hire. Sometimes we make the wrong mistakes. Some people really interview really well and their evaluations are great. But what you really want to do is make sure with a trial run in the real world, in your business to see if they can actually do the job that they say they can. That way, you know, really quickly, even within the first month sometimes you'd be like, hey, one month is gone. I already know that you're not great for the team or not great for this position. We're gonna have to say goodbye. So that three month period gives you some wiggle room to figure out. It's kind of like a extended interview. So this way you're not putting up so much money to find out if you have the right person. If you found today's episode helpful and you want more practical business lessons to help you start, grow and scale your business, the best thing you could do is subscribe to this podcast, hit subscribe, or follow on your favorite podcast app, the one that you're using right now, whether it's Apple or Spotify or wherever you listen to podcasts. By hitting subscribe, you get our next episode automatically, and it's the best way to support the show. It's absolutely free, and it's a way for you to commit to growing your business. And now that you've subscribed, I'll check you in the next episode.
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