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How do I hire people?

    • 2 posts
    December 23, 2006 7:15 AM EST

    My new consulting business consists of myself and a partner. Our (currently one and only) customer is asking for us to hire more talent so they can utilize us more. This sounds great, but we do not have the cash in the bank to afford the temporary cash outflow to hire and pay salaries.  Once we can invoice and be paid for their work, we will be fine, but there is about a 2 month gap we need to cover.

    What is the best way to fund this 2 or 3 month cashflow gap?

    • 2 posts
    December 23, 2006 7:28 AM EST

    We are a software consulting startup, and I will be hring software developers who are also business analysts and can work with customers to solve their problems (rather than just sit in a corner and code).

    I would like to get some kind of loan or credit that I can pay off in 3 months rather than giving away part of the company, but I know you have to have collateral for a loan.

    Chordial2006-12-23 13:34:34
    • 14 posts
    January 4, 2007 8:09 AM EST
    This is a great thread... I`d realy like to hear more stories (and learn from them) of how people made the leap from one person to 2 or more.

    I`m currently a 1-man graphic design business with a home office. I don`t like the stigma of "freelancer", so I`m trying to get enough work in to keep a sub-contractor busy (you know, a freelancer!). It seems a prudent step towards hiring an employee.

    Everything takes time and effort, of course... looking for qualified people, charging enough, constantly marketing and meeting, paperwork, etc. – the classic "do it all yourself" situation.

    Anyway, BrandAlchemy has some strong opinions which sounds like he speaks from experience. Keep those `growth` stories rolling in..!

    :: Good Design is Good Business ::

       bruce colthart creative llc

    • 36 posts
    January 5, 2007 2:22 PM EST

    Contact me:

    bfleming98 at

    - Bryan



    Bryan C. Fleming

  • January 27, 2007 7:00 PM EST

    I`m just getting caught up on this post.  Interesting and colorfull reading.

    There are some intersting ideas, and I have one simple one.  Don`t hire until your business can afford to hire.  Certainly, don`t hire simply because a client thinks it is time.  You know it`s time to hire when you begin to have to make exceptional effort to meet the demands of your business - or when service feels like it is slipping. When you add employees, typically you add them at an entry level and try to give yourself relief from the smaller stuff (data entry, billing, filing, answering phones, ect..) so that you have more time to work on the bigger stuff (service and deliverables).  Perhaps adding part time and inexpensive help will get you where you need to be - and then monitor some more.

    Using 1099 subcontract help is good too if you need more expensive talent and don`t want to pay for services until you know you will be paid for services.  Just be careful.  You can call them what you want, but the IRS and other regulatory agencies have a litmus test for whether someone is a subcontractor or not.  Subcontractors are not "hired" they are "engaged".  You do not give them "payroll" checks, but they supply invoices and you remit payment.  You can not provide them any tools to do their work and or direct direction on how to perform their work. You really have to be careful, and most people aren`t. 

    Say you have a subcontractor you have used regularly for the past year working on a particular client or two.  Then, you loose that client so you no longer use the subcontractor.  The subcontactor applies for unemployment benefits (you can`t stop them).  When the case is reviewed, depending on how the subcontractor was dealt with during the past year, it could be determined that the subcontractor was "treated as an employee" and you/the company could have to pay the benefits along with a variety of other fines and potentially back taxes  It isn`t pretty - so be careful.  Make sure you understand the rules of engagment in your state and with the IRS.

    Finally,  no matter who you hire - subcontract or direct - make sure you know who you are hiring.  That`s my little plug for my business.  Trust but verify. 40% of all applications contain lies or omit important information.  Where did they work before? What did they do? When did they do it? Do they REALLY have that degree?  Also, don`t hire a dirt bag.  Do the criminal background check.  Many small companies have lost everything simply by skipping the due dilligence up front.


    Linda Case Night Hawk Security Uncovering The Past to Secure The Future

    • 36 posts
    January 4, 2007 7:33 AM EST
    I`m really hesitant to offer anyone equity unless I truly want them as a partner. It`s not just about skills - they have to share your vision and motivation to really be worthy of a chunk of your company. You`ve worked hard for it, so don`t give it away!

    I think contractors are a great way to get your feet wet with managing other people. I subcontract a lot of my work. The beauty of it is, too, that if you negotiate your terms right - they won`t get paid until you do.

    Another valid option is that of retainers. I love retainers - they give you steady cashflow upfront to cover some of your costs (including payroll). Even if you got some startup funds at project launch, that could tide you over for a bit. There`s a million and one creative ways to do it, but please don`t give away that equity!

    Good luck! It`s a tough leap and you should give yourself credit for getting there. I`d like to be in your shoes!

    Dan Pickett
    Enlight Solutions, Inc.

    • 36 posts
    January 6, 2007 1:28 PM EST
    Seriously tone it down - this is a great learning environment and we`re all at different stages of the game. There`s no value - to anyone - in being condescending and aggressive.

    IMO, Starpointe`s idea is right on - negotiate with your client to find something that`s comfortable for you to take on more help. They`re demanding it so there`s obviously a need on their end.

    What are some other creative ways that SuN members have done to bring help through the door?

    Dan Pickett
    Enlight Solutions, Inc.

    • 7 posts
    January 7, 2007 8:18 AM EST
    As a small business I require a 50% deposit to be prepaid before the start of a project and retainers to be paid in full in advance. As with any small business or start-up we are all ready working on a tight budget and then not to receive any type
    of payment only puts the success of our business at risk.  Would your customer be able to work how he is asking you to work?  I bet not....

    Just a thought - Good luck to you

    All the best,
    Julie Barnes
    Certified Virtual Author`s Assistant

    Let`s Coordinate, LLC
    866-880-8511 ~ Toll Free
    253-541-3737 ~ Fax ~ Email ~ Web

    • 11 posts
    December 24, 2006 3:01 AM EST

    Perhaps you can find people that will start off working as 1099s and invoice you?  or if this is important to your client have them fund your expansion by paying upfront.  I would think that your client would pay a percent of the project at start anyway.


    Good Luck and Happy Holidays-


    Laura Glynn the art of e-learning the science of web design multimedia in a Flash!

    • 2 posts
    January 4, 2007 7:47 AM EST
    You might want to check out as a way to get quick funding.

    LaShon James-Major
    Mobile Notary & Loan Signing Agent

    The Document Diva

    "Have stamp, Will travel."

    • 1 posts
    January 4, 2007 7:05 AM EST

    Contact your bank. They may have a plan which will loan you money on your accounts receiveable.  They will may loan you approximately 80% of your accounts receivable upfront and then the remainder upon receipt from the client.  The fee for this is usaully only 1 - 2 percent per month.  That`s a bit high but it may solve your problem.  I believe the technical term is called "factoring".

    Therefore, if you have $30k or so in AR you will get a check very quickly for $24k and you can hire someone.

    Good luck.


    Mike Chandler
    408-261-2325 Main
    408-348-2399 Cell
    408-261-0619 Fax

    • 0 posts
    January 4, 2007 10:30 AM EST

    I run a busines that supplies local physicians to medical practices when the practice needs more help.  We are all subcontractors (1099s). 

    Issues to consider: how reliable are the subcontractors? Do they fit the subcontractor criteria ?  (Check with your accountant, it IS very specific.)  Will they uphold YOUR standards, and deliver the quality of work you want to become known for?  (This has been big issue for my business!)  I suggest having a very clear contract with your subcontractors, noting the obvious (be on time, don`t bad mouth the client, etc.)


    Good luck. I have been through a lot of this, and hope to hear more from you!

    ExtraMD, physicians helping physicians take care of patients, committed to bringing joy back to medicine.

    • 31 posts
    January 4, 2007 10:27 AM EST

    BrandAlchemy had some excellent points.  Be confident and run your own business. 

    Here`s the solution, give them what they want.  Here`s how: politely but firmly tell your client that if they require someone to be dedicated to them full-time, you`d be happy to source that person as long as you received a % of the payment upfront for this situation (you should be receiving some payment upfront anyway).  It can be as simple as that.  You won`t offend them by being firm, they actually expect it.  If they sense that you`re waffling on it...they`ll likely start looking for a firm that has more experience (i.e.- is more confident/firm). 

    If it`s really important (i.e.- valuable) to them, they`ll be happy to pay the premium.  If they don`t want to pay the premium, then you`ll know that it wasn`t really that big of a deal to them. 

    Ryan J StarPointe Marketing Website Development, Hosting & Marketing Consulting

    • 9 posts
    December 24, 2006 2:41 PM EST

    If you build it, the work will come.

    We fretted over hiring our first person 5 1/2 years ago, and now we have 25 employees.  Sometimes you just have to do it.  Seek out some financing, ask your clients to pay in advance.  Offer some sort of pre-paid discount.  We do this with our maintenance plans for our IT support services.  We offer our clients a discount to get their money ahead of the work being done.

    Something to chew on.


    Stuart R. Crawford Business Development Representative IT Matters Inc. IT Matters is the Microsoft IMPACT Award Winner in 2006 for Small Business Specialist of the Year and CEA Silver Medal for Best Small Business Solution in Canada. 412,1000 8th Ave SW Calgary, AB T2P 3M7 Canada Phone: 403.710.4357 Fax: 403.206.7317 EMail: Web:

    • 6 posts
    December 24, 2006 8:02 AM EST

    Are you and/or your partner taken salaries at this point? If so you may be able to be creative. Maybe not pay the partners for a month. Or maybe alternate month one partner takes pay and the other doesn`t then flip it the next month......




    Shaun M. Smoot, Principal, Totus Company Atlanta Technology Firm

    • 1 posts
    January 4, 2007 6:14 AM EST

    With Warm Regards, Sheby Thomas Cell # 91-9824108949