I guarantee that there comes a time when growing businesses outgrow the original span of control of the entrepreneur. It is a critical period, and is a test of the entrepreneur’s desire and ability to delegate.

And I found from experience – after investing in many other entrepreneurial businesses over the years – that this stage typically occurs first at about twenty employees or $3 million in net revenues (or gross profit) for most any kind of company. In future weeks, we will dissect this $3 million-dollar phenomenon separately.

But for now, let me digress to the story of my first hiring decision for my first company, years ago. Way back then, I was managing a small and growing phonograph record manufacturing business (yes, back in original hay day of vinyl records) using independent contractors for both content and production. I built this business through my high school and college years. Soon after graduating from college, I was making a good living and enjoying growth and freedom managing the enterprise.

It occurred to me that I had come to a fork in my career. I could continue with the status quo, making a good living, or I could reinvest much of my profit into my first hire, an assistant that would free me from the day-to-day management tasks, allowing me to recruit more business (content) and build a real enterprise. This was a tough decision at that time. Comfort, or risk-it-all?

On a Friday evening, I got into my car and drove from my office in the Los Angeles area all the way from Los Angeles to Ensenada, Mexico, checking into a remote beach hotel. Early the next morning I found a large rock at the shoreline, climbed it, and sat there for hours contemplating my future. Hire for growth, or grow slowly and comfortably? Well, the decision was what you expected.

I did hire my first employee, leveraging her organizational skills to grow quickly enough to continue hiring as growth accelerated. The company reached over fifty employees at the point where I sold my interest and moved into the computer programming business at what turned out to be just the right time. But I’ll not forget the overwhelming weight of that early decision, compared to the many much more expensive decisions made in subsequent years. I was for the first-time dependent upon the work of others. And I had made a successful hiring decision, lucky for me.

As years passed, more hiring insights became clear as I made mistakes and had successes, and watched other entrepreneurs struggle with similar choices and opportunities. Let me share some of those insights during the coming weeks as we focus upon “depending upon others.” Stay tuned, please.

SOURCEBerkonomics
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Dave Berkus
Dave Berkus is a noted speaker, author and early stage private equity investor. He is acknowledged as one of the most active angel investors in the country, having made and actively participated in over 87 technology investments during the past decade. He currently manages two angel VC funds (Berkus Technology Ventures, LLC and Kodiak Ventures, L.P.) Dave is past Chairman of the Tech Coast Angels, one of the largest angel networks in the United States. Dave is author of “Basic Berkonomics,” “Berkonomics,” “Advanced Berkonomics,” “Extending the Runway,” and the Small Business Success Collection. Find out more at Berkus.com or contact Dave at dberkus@berkus.com

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