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Growing pains

Growing pains

(OP)
My firm has been growing quickly since starting it over the last 3+ years, and I feel like I'm at a crossroads right now. I have four engineers that I subcontract work to. The vast majority of the time, this works out great; however, they sometimes miss deadlines and don't respond to calls or emails as the deadline is approaching or has passed for a day or two...which really gets my blood boiling, especially considering how well I'm paying them. We all work from home, which eliminates the high cost of office overhead. But this also leaves me no recourse when I need to contact one of them and they are not responding. Does anybody else with this same arrangement have the same issue? If so, how have you handled it? Get rid of subcontractors who don't respond when needed? I'm considering looking for an office and hiring one or two full time employees and keep a couple subcontractors to provide help as needed, but on the other hand I really enjoy being able to work from home and not endure the maddening traffic in my city that is getting worse every day, and not to mention working in gym shorts and a t-shirt if I choose to. I'm about maxed out right now if I continue working from home based on the 70 hour weeks I'm spending doing my own jobs and checking/revising everyone else's work. In the opinion of others who have been there, would getting an office and having engineers there every day in the same place make my days more efficient? I guess I'm at a point where I could possibly use a business consultant. Has anyone gone this route?

RE: Growing pains

Can you set up a for-real office in a portion of your home, or in an addition (like a 2-story garage apartment)? Or maybe a small storefront close to your house (low rent)? You get to keep the convenience of closeness, but you maintain a definite office, and office atmosphere. We did this starting out in Birmingham, and it worked well, until we outgrew the setup. Distributed work among subconsultants is great - when it works - but they often lack a compelling interest in your jobs, especially if they also support other engineers too. Nothing like having your own, dedicated staff.
Good luck,
Dave

Thaidavid

RE: Growing pains

I'm actually looking forward to the day when my workload forces this question upon my company. I'm not there yet, but hopefully you have enough saved up to make this jump in your growth curve. It definitely sounds like you have met the threshold to hire some full time staff, and all the burdens that go with it.

Do you need an actual office space, though? Maybe not.
W2 employees will likely respond more to your calls and emails than consultants, even if they are remotely located. You still get the shorts and t-shirt atmosphere but with a more responsive staff. And, of course, keep the consultants in your back pocket to continue your company's growth. (I'd love to be one of them.)

--Scott
www.aerornd.com

RE: Growing pains

Ah, the problems of starting your own firm. You can't make any money (or really get anything done) without employees, but employees need space, regular pay, benefits, accounting, equipment, etc.
So you have to make a choice; Either rent space, hire people, and have all those worries or stay small and limited.
If you have contract employees, you're lucky you're getting anything done. They're not very loyal, staying around until the next shinier (or more lucrative) project comes around. The breed that likes to contract is not always dependable.
But hiring is a major pain. You're committing to 2000 hours of work, distributed into 250 8 hour days. Even if you have a day or two slowdown, that employee needs to get paid. A mistake can hamper you for a long time. And employees have drama; deaths, births, hangovers, illnesses, etc. Plus, do you locate where you can get good employees or stay where you are and make them come to you?

RE: Growing pains


This is a well-known dilemma in business. As a business expands, you will reach new levels along the way, each level demanding one step up in amount of management. You have already reached a typical limit: advanced, non-repetitive work and somewhere between (say) 3-6 persons.

As you are now your 'product', engineering hours, satisfies your customers, you are satisfied professionally, there seems to be a larger potential market out there, but management work amount is burdening and you have not reached your target in management quality.

A traditional solution is, as you indicate, to evaluate a traditional office, to get better communication and control. This has all the disadvantages that a traditional company has: cost will increase and demands a steady and larger flow of orders from customers.

This is obviously not the solution you prefer. You have already formed a 'new age company' with home offices and electronic cooperation, but wish less management and better control.

In my opinion you have two ways to go if you want to keep all the positive effects of home-work:

1. Downsizing a bit. A combination of less work, higher prices, highest priority on quality and dependable delivery time and the best and most solid associates. Use contracts in writing for your associates and be brutal in cutting pay and barring engineers not up to standard. Will and availability for ommunication to be included in contract and fined if not kept.

2. Upsizing by increased network. Reconstructed as some sort of self-supporting/self managed 'franchised' cell-organization.

The first you could manage yourself, perhaps with some help on business/contract/legal side.

The second will lead to a larger organization where it would be better to have outside participation and financing, and professionals to do the business development side. Normally such a development will lead to that you will have to give away your ownership down to less than full control. Legal and professional advice recommended

Good luck!

RE: Growing pains

I am in a similar situation. I have been in business for 11 years, working from home, enjoying the flexibility and being nearby as the kids grow. At one point I hired a detailer and I can tell you this added a lot of time and expense. I rented a small office in town 5 minutes away where we both could work. It was a nice situation but he eventually moved on to better things. It was for the best because the benefits didn't outweigh the cost in my opinion. Plus I got to go back to working at home.

What I took away from the experience was that if I plan to expand in the future I need to hire an engineer that can hit the ground running with minimal supervision, or hire several in order to cover my salary and allow me to manage. Like I said, when you need to make sure they have work, take care of payroll, answer their questions, etc. it takes a lot of time. I had often thought about contract workers but never could find anyone I was comfortable with. Also, my insurance would not cover this. I am not sure how others set up those relationships. Maybe I need to investigate that further since I now know some people that would fit well with my type of work.

As for contacting a business consultant, I have never done that. Maybe I should. If you do I would be interested to hear how it works out.

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