Managing a Growing Business
Posted: Thursday, September 30, 2004
by Rev. Randy Gullickson
Rev. Randall G. Gullickson, D.D.
As demand increases, a business must grow in order to be able to efficiently meet the new levels of demand. It can sometimes become necessary to hire employees literally overnight. Managing a growing business is a challenge. Expenses are inflated at different rates than revenues. For this reason, inaccurate forecasting of growth can lead to bankruptcy. In addition, hiring employees is a difficult process. There are a number of legalities associated with the hiring of employees, such as the withholding of federal income tax, FICA, and Medicare.
The acquisition of labor can greatly increase a firm’s productivity. The most successful and powerful companies in the world would be nothing without their employees. In many cases, a firm is only competitive because its employees keep it functional.
Depending on the work experience, education, and duties to perform, acquiring labor can be a significant cost. It is often necessary for small companies to acquire additional help. Often, without additional workers, it would be impossible to complete all of the necessary tasks and functions of the business. Consider the possibility of a rapid increase in demand for a product or service.
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It can literally become necessary for Internet-based companies to hire employees overnight
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It is important to consider not only the wage or independent contractor expense, but also the investment required in order to find appropriate qualified employees. Hiring costs can be substantial, yet are unavoidable. It may be necessary to take out ads in papers or employment sources including online job directories such as Monster.com. Finding a qualified employee may require an employer to sift through hundreds of résumés, and then possibly conduct dozens of interviews. Once an applicant has been selected, he or she will require adequate training and a clear outline of task responsibility.
Whether you are a sole proprietor with no employees or a corporation with 1,000, providing yourself or your employees with adequate training is imperative. An untrained employee often becomes frustrated and disgruntled. A frustrated employee is rarely efficient and often can lead to negative productivity through employee theft or sabotage. Most inventory loss is committed by employees, not from casualty loss or damage. The investment required to properly train someone is often quite substantial, but without training, that employee is a waste.
Outsourcing
It often becomes necessary to outsource labor, production, or services due to inability to meet requirements in house at an acceptable cost. Outsourcing not only saves time, but it has the potential to expand a firm’s ability to meet demand. Take for instance, the opportunity cost to engage in a contract. Without the outsourcing of labor, the opportunity cost of foregoing alternative contracts may be too high.
The outsourcing of projects carries yet another advantage. Through outsourcing, the hiring of employees can be avoided, thus saving time and funds during the employee selection and employee training stages. Furthermore, by avoiding hiring additional employees for small or finite projects, businesses can avoid the time and costs involved in setting up employee benefit
programs, tax withholding, the remittance of unemployment tax, etc.
Hiring Employees
If a business owner wishes to hire any employees, it is first necessary to acquire an Employer Identification Number from the IRS.
The employee and the employer must both fill out INS Form I-9, ‘Employment Eligibility Verification.’ Each employee is also required to file IRS Form W-4, ‘Employee’s Withholding Allowance Certificate,’ (used to figure the amount of tax the employer should withhold from the employee’s wages).
Employees with qualifying child may wish to fill out Form W-5, ‘Earned Income Credit Advance Payment Certificate.’ Employment Tax: employment taxes include Federal Income Tax, Social Security Tax, Medicare Tax, and FUTA tax. Information on how to remit these taxes is available in IRS Publication 15. Federal Income, Social Security, and Medicare Taxes: It is commonplace to withhold federal income tax from all employee wages (this does not apply to independent contractors). The amount to withhold is determined using Form W-4, ‘Employee’s Withholding Allowance Certificate.’ It is also necessary to withhold taxes for Social Security and Medicare. In order to determine the amount to withhold, see IRS Publication 15. Federal Unemployment (FUTA) Tax: This tax is paid from the employer’s funds, and is not withheld from the funds of the employees. Federal Unemployment tax is reported on IRS Form 940, ‘Employer’s Federal Unemployment Tax Return.’ At the end of each year, the employer is responsible for totaling all wages paid during the calendar year to each employee and submitting that information to both the IRS and to the
employee. The IRS Form W-2 is used, and is usually due to the employee by January 31 and to the IRS by February 28. These dates are subject to change and should be verified with the IRS.
Worker Contentment
Whether you're an employee or an employer, your level of job satisfaction directly reflects on your level of productivity. If your employees are unsatisfied, make the time to speak with them and discuss what you can do to make them more satisfied with their work environment and tasks.
Improving Employee Productivity
It is also necessary for a diligent business to implement policies conducive to motivating employees towards higher levels of productivity. Competition is generally reserved as a motivational tool for a firm's sales force, however, competition among individuals or teams of individuals "brings out the best" in terms of performance, efficiency and job satisfaction. Team spirit is generated, as well as a sense of pride in the accomplishments of the self, team and company as a whole.
Another easily altered influence of an individual's satisfaction with his job is his sense of personal impact on an organization. Whether a two person partnership or an international corporation, every member of the team must understand his value. All staff members, especially those holding low level positions in which they interact first hand with your customers (Web customer service, receptionists), should have a firm grasp on company goals and philosophy. Additionally, they should understand their direct impact on achieving these company goals, and be provided a channel through which they can offer appropriate suggestions to improve team efficiency and, ultimately, company profit.
It is important not only to provide a solid flow of information to your staff, but also to positively motivate them to produce additional output. Bonus structures commensurate with performance and office perks are commonly used to improve employee morale and provide the motivation necessary for elevated performance. In this manner, it is often possible to create internal employee motivation to go "above and beyond" the level of performance required to appease their superiors.
It is much more effective to be the catalyst that initiates inspiration than to force achievement through orders or harsh mandates. Some of your employees will work at a "snail's pace," constantly straying from the task at hand. Often, the more productive employees are those who work feverishly, to the point of mental exhaustion, to achieve an objective. It is beneficial to provide the additional "perk" of a respite for those individuals to refresh their mental "batteries," such as a billiards table, in house masseuse, or company lounge.
Large In-House Design Teams
Large firms have found it profitable to create in-house design teams. In-house design teams increase a firm’s ability to quickly and efficiently design products or create new and improved services. Unfortunately, in-house design teams are not a realistic option for most small firms. In fact, recent years have seen the majority of large firms, both traditional and Internet-based, cut their research and development programs drastically. The outsourcing of research and development as well as a multitude of other tasks is becoming much more common.
Multiple Monitors
Unbeknownst to most individuals, it is actually possible to hook up multiple monitors to the same computer. So if you find yourself wasting valuable time navigating between documents or searching for the right file on your desktop, this is definitely worth a try.
By using multiple monitors, it becomes simple to work on several programs and documents at the same time. Multiple monitor usage is especially productive during Web page design, where documents and programs can be viewed simultaneously.
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