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How And When To Add Staff

May 1, 2007
by Alfred Branch, Jr.

In the competitive world of web based wholesaling, one thing is a constant: owners and employees are stretched to the limit. The 24/7 nature of the web makes it inevitable that websites stay staffed as much as possible to take orders, answer inquiries or upload new products.

The rub, however, is that most web wholesalers are small enterprises, comprised of an owner who wears several hats and another employee or two, often family members, who work equally as hard. Hours are long, and in those first years, revenues are usually small and overhead is tight. As the business grows, thoughts often run toward adding a new employee. This story looks at how web wholesalers should go about hiring additional staff.

Know Your Needs
The first thing a wholesaler must determine when considering more staff is exactly what are the company's needs. Too many businesses get into trouble by not adequately examining their requirements before adding personnel, which can lead to cost overruns, inefficiency and wasted time.

Businesses should begin the process by listing the specific responsibilities for a new employee, according to Smart Money magazine. A good rule of thumb is whether these duties will fill up more than half of an average 40 hour workweek. If not, do not look to take on new staff; consider part time, temporary or contractual help, which can ultimately keep overhead low.

Also of critical importance, know the budget for the position. It is one thing to need additional staff, but it is something else to have the money to fund it. Project out several years what the employee will cost in salary and benefits, and then determine how much additional business the company will need to generate to pay those costs, and whether the firm can sustain the increase in spending. Companies often make the mistake of under valuing the cost of a new hire, or over inflating projected revenue to pay for the person; both of which can lead to the necessity of eliminating the position prematurely.

Employees of small wholesale companies are often required to perform numerous different tasks, whether making sales calls, stocking inventory, developing marketing and advertising initiatives or answering phones and fulfilling orders. Such diversity can make it difficult to pin down all of the specific responsibilities an employee may have, but cataloging as many of the specifics as possible will help keep everyone on the same page throughout an employee's tenure. If possible, even break down the job by percentages, meaning assign tasks as a percentage of that employee's time, such as 25 percent sales calls, 25 percent order fulfillment, and so on.

At Accessories Palace, a Lake Worth, FL based supplier of general merchandise for dollar stores, whether to add staff is a question currently in the mind of president Craig Weil, a 20 plus year veteran of the wholesale industry. The company has six full time employees who are spread out among three locations.

"We are expanding," Weil said. The company carries more than 2,000 different products, and at the moment, the business takes up a total of 10,000 square feet of warehouse space. Sales are continuing to climb, and the accessories reseller is planning to move its palace into a single 17,000 square foot facility in a nearby condominium warehouse park. Weil says the move will take place before the end of the year, at which time the new employee will likely begin working.

Factoring into his decision on whether to add staff is: Will an extra person increase efficiency enough to help pay for himself? "This is not an easy business, because so much of it relies on human contact," Weil said. "Fulfilling orders, handling inventory, answering questions. It all has to run smoothly."

Family First
Most small wholesalers are family affairs, with husbands and wives, sons, brothers, sisters, daughters or extended family members pitching in under a myriad of circumstances. This can be an easy source for employees because they are close by and are often familiar with the business. That closeness, however, can lead to explosive situations where relationships become fractured quickly.

Define the role thoroughly. While that is true for all hires, it can take on added importance when considering bringing family members into the fold. Without clearly delineated responsibilities, family members can sometimes be more inclined to try to take matters into their own hands because of the familiar nature of the relationship. As such, consider setting boundaries, such as leaving shoptalk to business hours only to help avoid the risk of burn out.

Consider requiring the relative to work in the industry outside of the family business, especially if the member is an heir to the company. This can help alleviate some resentment among other family members or staffers that think that junior does not know what he is doing, because he has little experience, but was then thrust too quickly into an important position.

Along those same lines, do not allow the business to be a charity provider for wayward relatives, meaning do not hand out sympathy jobs to any family members. These situations almost never work out quietly.

Greg Sterling of the small business resource website, Allbusiness.com, also suggests the following when adding a family member to a company:

  • Do not overpay relatives compared to any regular employees who may be doing a similar job. Doing so could lead to jealousy or resentment within the workforce that could hamper productivity.
  • Consider only placing relatives in positions for which they are qualified.
  • Keep the workplace rules uniform for all employees, whether they are a relative or not.
  • If the business is large enough to have managers, do not force relatives on them without at least giving the manager the right to deal with that family member the same way they would deal with a regular employee. Also, allow regular employees to suggest their own family members for some positions.
What to Look For
Clearly defining the duties of a potential new hire will help tremendously in what to look for and where. Generally, employers want personnel who have experience in the industry and a familiarity with some of the specifics of the company.

A good place to start is by networking within business associations in the region to find out what kind of employees other companies are searching for and where they find them. Small web wholesalers often cannot afford to pay for multiple listings on several job boards or websites, so networking and word of mouth are invaluable tools. Trade shows are another good source for leads on hiring, because these events bring together hundreds of different businesses, and striking up a conversation with an owner can lead to quick results.

Internet based wholesalers should mine the local colleges, universities or business schools for recruits. Such workers might prove to be less expensive than more seasoned candidates, and many students and graduates are more web savvy than their counterparts from 20 years ago. Small web wholesale businesses offer employees the opportunity to perform many different tasks, which can be attractive to new hires, because they will learn a lot of different responsibilities.

Also consider pouncing on an older industry veteran who may be looking for a new challenge, or for more (or in some cases, less) responsibility. Not all industry veterans are going to automatically be more expensive than a younger candidate, because 1) They will likely need less training and may be more efficient. 2) They may be able to perform the required tasks as a part timer instead of full time. 3) They will likely know more tricks of the trade and may be able to offer advice on how to accomplish certain things, and 4) They will probably have more industry contacts readily available. As Weil put it, the wholesale business, even when automated over the Internet, is still based on human interaction, and that older veteran may prove to be more valuable more quickly.

Because the business is small, employers and workers will be performing responsibilities closely together, often physically within the same room. As such, companies should make sure that a potential employee's temperament matches that of the other employees in the firm, as best as possible. This is highly subjective and far from being an exact science, so much of this will go on good faith that a new employee will fit into the business' culture.

Contact Information:

Accessories Palace Inc.
1953 10th Avenue North
Lake Worth, FL 33461
Tel.: 561-582-1812
Fax: 561-582-1435
Website: www.accessoriespalace.com

AllBusiness.com
650 Townsend Street, Suite 675
San Francisco, CA 94103
Tel.: 415-694-5000
Fax: 415-694-5001

Topic: Business Strategies

Related Articles: staff 

Article ID: 166

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