In my last article, titled “Can I Afford to Hire More People?’ (Part I), we saw how to establish a salary cap for our businesses. The salary cap is a planning number, a Key Performance Indicator (KPI), that gives us a budget number we can use to hit a profit goal.

I said that because what gets measured gets better, we also need a way to track labor productivity throughout the year. To be useful, such a number should inform our hiring decisions and provide an objective measure of the results at least monthly.

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Am I getting my money’s worth out of employees?

What employer hasn’t wondered about that on payday as wages and tax deposits suck the cash out of our bank accounts leaving barely enough to pay the premiums on the group health plan.

Even when we are well pleased with our current team, how do we know if and when we can afford to hire more people to handle a growing workload? On the one hand, we’re nervous about growing sales without the people to deliver, on the other hand we’re just as nervous about hiring new people until we have the sales to pay for them.

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Owner: “You just can’t hire good people anymore.”

Me: “Okay, but has anyone hired a good person recently, maybe even today?”

Owner: “Anyone? Well, yeah, I’m sure someone has.”

Me: “So it is possible to hire good people? It can be done.”

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My client was on the phone with his inbound marketing advisor. 

“We need a sponsor,” the advisor said. “Who could we get to distribute our content that is well known in your target market?”

My client quickly named the most influential trade association in his industry.

“It would be great to get those guys. Everybody knows them, and everyone belongs to the association or at least attends their trade shows.”

Then came the four words: “Well, let’s call ‘em.”

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It takes courage to raise prices, and many of us are understandably reluctant to do it. I’ve heard many anecdotal stories about the dangers of price increases and lots of reasons to explain the reluctance to raise prices.

Both the stories and the rationale all boil down to one thing: We are scared we will lose sales if we raise our prices.

We don’t have to remain at the mercy of our competitors’ pricing strategies. Instead of relying on anecdotes and our assumptions about customers, we can test our pricing to find the upper limits. That’s the only way to know, yet I don’t recall ever meeting an owner who had systematically tested higher prices and measured the results.

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“So what’s the problem with getting the bids out?’ I asked.

“My customers! My team can handle all their issues, but customers always want to talk to me. In fact, since we’ve been talking, I got a message to call a guy back. Elizabeth said I was on the phone and tried to re-route the call, but he declined and wants me to call him back.

“I can’t afford to be rude and act like I’m blowing customers off, but it never stops. I can’t get anything done.”

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Change is inevitable, and it either happens to us or we influence events toward the change we want. Maybe we want relief from the tedious monotony, or the general angst, or the cash-flow or complaining customer, people issues, night-sweat worries of the status quo. On the other hand, maybe we’re doing okay, but we want to do better or to have the time and freedom to enjoy life.

Whatever our motives, as Thomas Jefferson said: “If we want something we have never had, we have to do something we have never done.”

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I suspect that most of us could use an extra $100,000 in cash.  It would sure be nice to have cash to pay down the line of credit, get current with suppliers, or catch up on payroll taxes. Access to easy cash makes so-named merchant loans pretty attractive.

You know the loans, they’re the ones where they make a few cursory checks of your credit score and bank statements then wire money directly into your account. Presto, cash problems resolved (for the time being anyway).

Sounds too good to be true doesn’t it? It is.

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All of us in business owners are concerned with cash.

We are under constant pressure to balance a limited supply of cash with the seemingly unlimited demand from cash-consuming sinkholes such as operating expenses, accounts receivable and inventory - and that’s just normal operations.

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We cannot afford to “settle” for substandard team members just because we are uncomfortable firing them. We cannot afford to “give them 90 more days” because that sets us back 90 days in our search for the right hire - and it sets them back 90 days in their search for the right job.  

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