A Guide to Human Resourcing for the Startup and SME
During an interview, one of the questions posed to the candidate was to explain- in his own words the relevance of his course of study in a Manufacturing company. In other words, how relevant is his schooling to our operations.
The candidate- a graduate of Business Administration- in explaining said: a Business Administration graduate can work in any business, as they are trained to manage businesses.
While the rest of us had the ‘why’ question on our lips, one of the panelists drew his attention to the fact that he had previously said Accounting was his least favorite course as ‘he doesn’t find it interesting’. Accounting is however key in managing a business, so how do you manage a business if you cannot understand Finance.
His response was he will hire a ‘strong’ accountant to handle the finance bit.
This got the panelists laughing and we joked that his management style will be to hire people to do the work, while he will be Chairman!
We moved on from that interview but then it got me thinking: there are two ways of analyzing the young man’s ideology. Firstly; there’s the school of thought that believes to effectively manage a business you have to be able to understand finance and most of every other aspects of the business. This is both very true and very right. You need to be able to understand the numbers and what they mean for your business. This is truer if you are running a start-up or small business; because in the early days you might not have the necessary funds to hire the needed Finance professional- or to outsource. You may need to wing it for a while and if you are unable to build a simple cash-flow system or understand how best to utilise your funds, your business may be in trouble.
On the flip side; there’s nothing that says you as a business leader or a founder needs to be able to do everything: finance inclusive. The rule of thumb for resources is to: buy (hire), borrow (outsource- in-plant or consultant), or collaborate. For a going concern with funds, all of these options are available, but for a young business there are slight modifications which can still work for you. The following are some of the options available to start-up.
- Of course there’s always the option to hire. At the early stages you may not be able to afford an experienced hire which equals expensive. You can however hire someone relatively affordable but good (you however either need to know what good looks like to deduce someone is good or you work with a recruitment consultant to source for the best candidates within your budget).
- A second alternative is to outsource – there are many affordable but standard financial institutions who can handle even the basics of your operations leaving you free to do the creative- which is most likely your forte.
- Collaboration is similar to outsourcing- this is collaboration between 2 firms where both might exchange services. Pretty much like trade by barter- a cleaning services firm can exchange its services with an accounting firm for a duration. A caveat on this is- as with all contracts, both parties must be clear as to expectations and where possible (but strongly recommended); have an independent law firm draw up the contract such that it’s fair and binding.
Another way you can collaborate is to partner with a co-founder who has the desired skills and is willing to perhaps provide services in exchange for some stake in the business. Same caveat as the above applies- everything needs to be neat and tidy contractually such that neither party is left holding an empty basket in future.
- A fourth option is to train; working with the available resource and providing training to bring the resource up-to-speed. This builds some form of loyalty; your people grow and develop with you. A downside to this is; unless the people are aggressive about their own personal development, they may not develop beyond the training which you provide; which might not be good for your business.
While all of these are available options, it doesn’t negate the fact that as a business leader- be it a start-up or a Plc.; you cannot get away from understanding some Finance, Law, HR, Operations, Business Development, etc. Creativity alone isn’t enough. Neither is it enough to throw passion into the mix. You cannot be creative out of a labor law issue if you do not understand the tenets of labor laws or have an adviser who does.
There are a few incubator labs and boot camps for start-ups associated with certain reputable organisations from which you can learn some of the rudiments of running a business. You can also take advantage of a mentor-advisory scheme when growing your business, be mentored by someone who has walked the path you are on now and can guide you through. Another option is to maintain contacts with peers who are on the same path as you are; you all can help each other navigate the obstacle course which is entrepreneurship. There are many options available to you, explore them and toe the path which works best for you. What’s important is to ensure you aren’t going about it blindly.