The Transcript

How to Hire the Right Contractor or Employee for Your Online Business

Voiceover: Rainmaker FM. You’re listening to The Digital Entrepreneur, the show for folks who want to discover smarter ways to create and sell profitable digital goods and services. This podcast is a production of Digital Commerce Institute, the place to be for digital entrepreneurs. For more information go to Rainmaker.FM/DigitalCommerce, that’s Rainmaker.FM/DigitalCommerce.

Sean Jackson: Welcome to The Digital Entrepreneur, everyone. I am Sean Jackson, and I am joined, as always, by the delightful Jessica Frick. Jessica, how the Frick are you today?

Jessica Frick: Delightful, Sean. How the Jackson are you?

Sean Jackson: Good. I’m going to have to start looking through my thesaurus and find more synonyms that I can start using to reference you.

Jessica Frick: I was going to say, I’ve been called worse.

Sean Jackson: I know, and mostly by me.

Jessica Frick: Not in the podcast, Sean. Not in the podcast.

Sean Jackson: No. We left everyone hanging last week with our question of the week, which is about when should you bring in outside help, or when should you bring in a contractor or an employee into your organization. Jess, you took the position of bringing them in early in the process, right?

Jessica Frick: Absolutely, otherwise you’re going to go crazy, and we want to avoid that.

Sean Jackson: Give the argument for bringing someone in from the outside early.

Jessica Frick: First off, I’ll say I understand where you’re coming from. You want to wait until you absolutely need them because you don’t want to spend money on things — that’s presuming that’s where you’re going to go with that. I think that it’s worth the money — when you know you’re going to need them eventually anyway — to have somebody come in and own the job. I used to work with a client who would say that if he was the smartest guy on his team he was doing it wrong.

Sean Jackson: Right.

Jessica Frick: He would hire these brilliant people, present company obviously included. We would come in and bring our expertise for things he would never even think of. He was able to grow his business and sell it off. I’m not sure he’s working now. I think he’s just hanging out with those piles of money. I’m not sure. I’ve got to check in with that guy.

I know that I have seen it happen before where businesses will be built and they go through so many strains and pains that your company starts losing morale, you start losing business, and you can’t attend to the business you already have. Thus, you need to get that help before you think you need it, because chances are you’re not going to know you need it until it’s too late.

Sean Jackson: Yeah, I think there’s a case to be made for that. Let me give you the argument against. I think you can’t bring anyone in until you know your business to an extent that you can direct them in the place that you want them to go. Let me explain that. I think there is an evolution to every online business or to every business in general. We all start with the one or two things that we’re doing, and then over time we have more things and more things. We start to say, “The pressure is building. I really need some help.”

But too often, if we bring them in too early, we haven’t thought through what is that help that we need. Defining what we need done and understanding the best way to get it done based on the unique culture that you have in the business. I think sometimes we jump the gun a little bit and say, “I just need to bring somebody in right now. If they’re really smart they’ll figure this whole thing out, because I don’t have any time to talk to them.” I think that’s the mistake you have when you bring them in early. But, of course, to your point, you would say bring them early benefits you how?

Jessica Frick: Because they can expand upon your capabilities and save you from losing your mind.

Sean Jackson: Yeah, that’s a foregone conclusion in some cases.

Jessica Frick: Yeah, you have to be a certain kind of crazy to do this.

Sean Jackson: Yes, I think you had to be crazy to start your own online business, are you kidding me?

Jessica Frick: I think you cannot buy amazing customer service. You just give it. And you give it early and you give it often, because once you screw that up, you can’t get that back.

Sean Jackson: Yeah, what you’re referring to is the fact that if you don’t bring in somebody early enough then you may find that you are losing people quickly because you can’t service them in the way that they were used to when you were smaller and it was just you and maybe just a few customers, a few clients, etc. Right?

Jessica Frick: Exactly.

Sean Jackson: Putting people in early allows you time to train them before things get crazy. It allows you time to sit there and really understand the task at hand and how to service that best. Before the crazy comes on you when you’ve got 20,000 things that are occupying your time and attention. That would be the argument for early. The argument for late is very simple: if you don’t know what you need people to do, then you’re going to be bashing your head against the wall because you haven’t really figured out, “What are those tasks? What are those projects?” Sometimes taking the time to understand them so you can make a strategic move, that helps with time, which means later in the process.

You know what, Jess? It really comes down to what does our audience think. What do they think? Should you bring somebody in early? Should you bring them in later? That’s what it really comes down to, what do you think about that? We have the best mechanism for you to give us that feedback by visiting our page and leaving a comment. Letting us know when you — based on your personal experience — have found it right to bring in those outside people. When we get back from the break, we have …

Jessica Frick: The lovely and talented Jess Ostroff from Don’t Panic Management.

Sean Jackson: Jess is amazing — both our Jessica as well as Jess. But Jess is amazing because she’s built a whole business both with employees and contractors and helping other business owners reach out and have the resources that they need to build their business.

So for today’s interview, we decided that … We had too many Seans on before, right, Jess? We’ve had so many Seans on the show recently that I wanted to confuse our audience even more and bring a Jess on to contrast with our lovely Jessica. Jessica, will you introduce our guest today?

Jessica Frick: I will. She’s one of my favorite people in the whole wide world. She makes me so happy whenever I see her. It’s so fitting that she is CEO and Director of Calm of her company, Don’t Panic Management, which works with small business owners, entrepreneurs, and executives to help them organize and execute their day-to-day operations, giving them the ability to focus on the things that matter most. She is a wonderful human being, a “get ‘er done” girl, and her favorite kind of cheese is aged goat gouda. I introduce you to the lovely Jess Ostroff.

Jess Ostroff: Quite the intro. Thank you, my fellow Jess. It’s so great to be here. Thank you, Sean.

Sean Jackson: Of course.

Jess Ostroff: I’m glad to meet you.

The Pros and Cons of Bringing in Help Early or Later

Sean Jackson: You know, to keep it simple, I’m going to call Jessica Frick “Jessica,” and I’m going to call you Jess. That way our audience won’t get completely confused. So Jess, let’s go through this. Because this is a very important topic, and you are in a very unique position to give the pros and cons. Let’s go through this general setup.

I have been working my online business primarily by myself for some time now. Maybe I’ve used a contractor here and there in pieces and parts, but infrequently. Given the success of my online business, things are starting to grow, I’m making some real money, and my time is really busy. When do you think, based on your experience, should a business owner start to consider putting someone more on a continual contract basis as a part of the organization or bring them in as an employee? What is the triggering event, do you think, to start to consider personnel as a big part of your online business?

Jess Ostroff: In my own experience — it is an interesting position to be in, because not only do I provide these services for other people now, but I also went through this myself as an entrepreneur. Where I got to the point where I had so many clients and so many hours of work that it was actually impeding my quality of life. For me, part of the reason why I started my own business was because I wanted to have the freedom. I wanted to have a flexible lifestyle. The second where I felt like all this money was going into the bank but I didn’t have any time to spend it, that was the time where I decided to bring on more help. I think for a lot of entrepreneurs there’s that friction point where the cost of getting help and of getting some of your time and your sanity back is worth it.

Everyone has a different setup, a different level of profit margin, so I think that cost element is the differentiating factor between whether you should hire a contractor or an employee. Overall, the time when you get overwhelmed and you get to the point where you’re not enjoying what you’re doing and you’re not able to spend any time living your life, I think is when you should start thinking about hiring someone in the first place.

Then, for most people, it’s a slow build. I think that’s why people start with a contractor or freelancer relationship. Because — especially in online businesses and service-based businesses — you can’t always guarantee that you’re going to have X amount of sales or X amount of clients to pay the bills. Starting someone small — maybe five or 10 hours a week — and having the opportunity to grow … When I start working with people, I always ask them what they are doing in the rest of their lives. A lot of them are mothers or fathers, or they’re actors or they’re chefs — they do have other hobbies. But if I wanted to bring them from, say, 10 hours to 15 hours a week, I have the flexibility of doing that.

That’s why that’s a really good option for people. On the other hand, if you’ve all the sudden gone from 10 clients to 50 clients and you really need day-to-day, full-time support, and you know that maybe it’s even administrative things like scheduling your meetings or booking your flights that you’re not getting to … We had a client recently that I’m thinking about who ended up in Vegas a week early for an event because he booked his own travel. That was the pain point for him where he was like, “I’m so busy with my clients that I can’t even book my own flights.”

It’s the pain of screwing up and doing things wrong that was the impetus for him. But there is something really nice about being able to share the burden. That’s what I use my employees for, is having someone there all the time, someone that I can call on. You have to get to a certain level to be able to justify that kind of cost.

The Best Way To Start the Process

Sean Jackson: Let’s talk about that, because I think in the natural evolution of anyone’s business there is going to be that point where you’re looking forward and saying, “I’m going to need some help.” Now, I would hope that you need help because you have so much business coming in and you have so much money that you’re really like, “I’ve got to do something now.” I think for most people it’s a gradual shift between, “I’m going to bring somebody in to start with — maybe on a contract basis, but a very regular contract basis, not ad hoc,” and then moving them to an employee. I’m going to talk about that.

I want to talk about the difference between the regular contractor — which is a service that you provide, obviously, so you have a lot of understanding of that — versus that decision when you’re going to say, “I’m going to put them in as employee.” Because there are trade-offs to both.

Let’s start with what’s in your wheelhouse. Talk about the — I want to call it “continuous contractor.” Not a permanent person, but a continuous contractor. What is the basic thing someone should be looking at when they are considering that type of service, be it a programmer, a writer, a personal assistant? It really doesn’t matter. This is someone on a regular basis. Let’s talk about the decision process on that. Specifically, what should they be looking for? How should they set that up?

Jess Ostroff: I think that when you’re going to work with someone like that on a continual contractor basis, you have to think about what type of tasks you’re going to delegate. If they are the kinds of tasks where they could be done at any hour of the day from anywhere in the world, as long as there’s a deadline and people understand what the instructions are, they’ll get them done. That’s the perfect kind of job for a freelancer or continual contractor relationship.

That’s because usually these kinds of contractors are what we call the digital nomads, or people who actually value their independence and their freedom more than they value — or at least equally as much as they value their career. They might be working from Bali one day and then they might be working from Tennessee another day. For them it’s more about a deadline. As long as they get their work done by this time, it doesn’t matter if they’re holding a nine to five schedule or not.

Sean Jackson: Let’s talk about that, because that’s important, what you just said. The deadline and task-oriented approach. Do you bring in, for instance, some sort of to-do list managing that? I think you’re right. I think you hit on something, which is bringing in that continuous contractor, it’s very much task-oriented. A clearly defined “what I need and when I need it.” Am I using some sort of tool to do that? Is it fairly ad hoc via email? What is the best way to manage that process? I think if you do that you’re going to see success, but the problem is, if you’re so busy, you may forget when they’re supposed to have things to you.

Jess Ostroff:...