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When is the right time to hire a management team?

John Nelligan

When is the right time to hire a management team?

During the growth of an SME , there will inevitably come a time where the owner(s) can no longer cope with their workload. This might be down to sheer volume of work or perhaps a need for more qualified or differently experienced personnel as the task of managing the business becomes more complex.

Additionally in terms of building value in the business, as well as developing a succession or exit plan for the owners, hiring management who may wish to acquire the company in due course is an extremely sound practice.

So the right time is not at a definitive point in the company’s history or at a certain level of turnover, but when the owner feels it is right and aligned to a well developed plan for growth or succession.

How many people do you need?

The management team should evolve over time with the needs of the business.

After all, most SMEs do not have the financial comfort to simply hire, for example, three experienced personnel to run the business, whilst the owners take a well earned year long sabbatical in the sunshine.

The number of people required should be defined by the projected size of the business and a sound understanding of the likely workload.

If the growth plan is ambitious with a relatively rapid increase in turnover then a properly resourced and experienced management team will pay for itself by delivering that growth.

What positions are best to hire into and is it a matter of investing to grow?

The most common dilemma we come across with our SME owner clients who are on the cusp of hiring that crucial first manager is what position to hire.

The choice usually comes down to a sales management role or an operational manager. This is simply because most SME owners have developed their business by splitting their time across these two disciplines, with a bit of accounting, HR and H&S added into the mix.

The answer to this dilemma is again not definitive. An SME owner needs to ask themselves these two simple questions: If I had an operations manager, would my time be sufficiently freed to develop more sales?

Could an experienced sales manager bring in far more new business in than I can because I am not really a sales person?

In practice your people plan would probably involve both these posts being created over a one to two year period, and in either case, whilst a new salary in the business is an immediate cost, making the right choice is definitely an investment to support your successful expansion.