3 ms·

If you can only afford 10 people, you can usually also get by with 9. Even a healthy male full-time employee is a much bigger commitment financially to a compan

by lhorie 8y ago

If you can only afford 10 people, you can usually also get by with 9. Even a healthy male full-time employee is a much bigger commitment financially to a company than just the salary number (i.e. you need to pay payroll taxes, insurance, benefits, equipment, recruiter fees, etc) If you're going to be stretched thin financially after hiring a single new person, you probably shouldn't be hiring.

Teever 8y ago
> If you can only afford 10 people, you can usually also get by with 9. With that kind of logic why should the company even bother hiring a 10th person?
- lhorie 8y ago
  Because it has money in the bank, and it wants to invest it into growth. Let's put it this way: if 9 people can only produce enough revenue to pay for themselves, it would be risky to take on a new large client if doing so required an upfront investment that completely depleted your cash reserves. If things went south and you couldn't capitalize on your investment, you'd have no way to fund a pivot or a recovery strategy. If taking a new client only required a 10th of your bank and things went bad, it would still hurt but you'd have some breathing room. A new hire poses a similar risk.
  - R_haterade 8y ago
    You obviously live in inflated-margin land. I'm going to guess NY, SF, CS, or greater Denver (maybe austin) or worse, Academia. Startups don't work this way in heavy industry, especially when jobs are on the line. I envy you, actually.
    - lhorie 8y ago
      This is finance management 101. Don't put all your eggs in one basket, don't bet money that you can't lose, etc. > Startups don't work this way Just because it's common nowadays to offload risks to early employees in startups doesn't make it less scummy. It's one thing to operate in guerrilla mode when it's two dudes in a garage struggling to get ramen profitable, but it's an entirely different ball game when one's hiding their inability to deliver with angel money and cruising on the back of a dozen employees. My wife was let go from a startup shortly after returning from mat leave. The company went belly up a while later. It was already clear to me from her descriptions they were toying w/ people's expectations given there was no path to profitability, and a completely illogical hiring spree. That's simply not how the vast majority of successful companies survive.
R_haterade 8y ago
This argument is so reductionist it physically hurts me to read. Yeah, I can eat the 10% productivity hit on labor expense, but why should it be my duty to? This is the classical problem you labor-liberals have--you can't see past your nose to spite your face.
- lhorie 8y ago
  You don't know me or my political inclinations. Why the ad-hominem? > why should it be my duty to? If you own the effing company, you take responsibility. If you're the type that spends your last dollar to make paychecks because you overhired and think "things will get better", and then screw over your employees when revenue falls short the following month, that's on you. Company finances don't collapse because your employees had to take the kids to the doctor, or went on mat leave or vacation, or whatever.
not_kurt_godel 8y ago
Here's an equally logical statement: If you only have 10 fingers, you can usually also get by with 9. Even a healthy finger consumes a non-trivial amount of oxygen from your blood and has a nail that must be trimmed so it's not a big deal if you accidentally chop one of them off. If the loss of a finger would endanger your livelihood, you probably shouldn't be in that profession in the first place.
- lhorie 8y ago
  If you're trying to suggest that you should hire if you had 1M/yr revenue and 9 employees making 100k each, go ahead and try doing the accounting math for a new hire and see how that goes, vs if you were making 2M/yr.
  - not_kurt_godel 8y ago
    I'm suggesting that your blanket statement about the triviality of hiring or not hiring a 10th employee is patently absurd on multiple levels. Even the dichotomy you posed in your reply is nonsensical - why is your assumption that the 2 options for revenue are 1M vs 2M? What if it's 1.3M, and your 9 employees are barely able to handle the workload?
    - lhorie 8y ago
      > What if it's 1.3M Then you do your risk analysis and determine if the risk of the person not working out is something you can stomach. At 1M/yr, the risk is you hire a salesperson who gets you no new accounts after a year, existing revenue drops for other reasons and then you are forced to fire someone productive to make ends meet because you're 100k in the hole. At 1.3M/yr, maybe it'll be extremely stressful, but there's a least a fighting chance that you won't be in the red at the end of the year. At 2M/yr, the worst case will still suck, but it won't put your business anywhere near danger of extinction because you have a rainy day bank. Revenue is often not directly tied to headcount. Even if your 9 employees can barely keep up, your revenue should still be rising over time until a time you can financially support another hire. If your revenue is not increasing, then increasing your headcount is likely going to make things worse, and more importantly, you should be questioning the viability of the business.

by lhorie 8y ago

Teever 8y ago

> If you can only afford 10 people, you can usually also get by with 9. With that kind of logic why should the company even bother hiring a 10th person?

lhorie 8y ago
Because it has money in the bank, and it wants to invest it into growth. Let's put it this way: if 9 people can only produce enough revenue to pay for themselves, it would be risky to take on a new large client if doing so required an upfront investment that completely depleted your cash reserves. If things went south and you couldn't capitalize on your investment, you'd have no way to fund a pivot or a recovery strategy. If taking a new client only required a 10th of your bank and things went bad, it would still hurt but you'd have some breathing room. A new hire poses a similar risk.
- R_haterade 8y ago
  You obviously live in inflated-margin land. I'm going to guess NY, SF, CS, or greater Denver (maybe austin) or worse, Academia. Startups don't work this way in heavy industry, especially when jobs are on the line. I envy you, actually.
  - lhorie 8y ago
    This is finance management 101. Don't put all your eggs in one basket, don't bet money that you can't lose, etc. > Startups don't work this way Just because it's common nowadays to offload risks to early employees in startups doesn't make it less scummy. It's one thing to operate in guerrilla mode when it's two dudes in a garage struggling to get ramen profitable, but it's an entirely different ball game when one's hiding their inability to deliver with angel money and cruising on the back of a dozen employees. My wife was let go from a startup shortly after returning from mat leave. The company went belly up a while later. It was already clear to me from her descriptions they were toying w/ people's expectations given there was no path to profitability, and a completely illogical hiring spree. That's simply not how the vast majority of successful companies survive.

R_haterade 8y ago

This argument is so reductionist it physically hurts me to read. Yeah, I can eat the 10% productivity hit on labor expense, but why should it be my duty to? This is the classical problem you labor-liberals have--you can't see past your nose to spite your face.

lhorie 8y ago
You don't know me or my political inclinations. Why the ad-hominem? > why should it be my duty to? If you own the effing company, you take responsibility. If you're the type that spends your last dollar to make paychecks because you overhired and think "things will get better", and then screw over your employees when revenue falls short the following month, that's on you. Company finances don't collapse because your employees had to take the kids to the doctor, or went on mat leave or vacation, or whatever.

not_kurt_godel 8y ago

Here's an equally logical statement: If you only have 10 fingers, you can usually also get by with 9. Even a healthy finger consumes a non-trivial amount of oxygen from your blood and has a nail that must be trimmed so it's not a big deal if you accidentally chop one of them off. If the loss of a finger would endanger your livelihood, you probably shouldn't be in that profession in the first place.

lhorie 8y ago
If you're trying to suggest that you should hire if you had 1M/yr revenue and 9 employees making 100k each, go ahead and try doing the accounting math for a new hire and see how that goes, vs if you were making 2M/yr.
- not_kurt_godel 8y ago
  I'm suggesting that your blanket statement about the triviality of hiring or not hiring a 10th employee is patently absurd on multiple levels. Even the dichotomy you posed in your reply is nonsensical - why is your assumption that the 2 options for revenue are 1M vs 2M? What if it's 1.3M, and your 9 employees are barely able to handle the workload?
  - lhorie 8y ago
    > What if it's 1.3M Then you do your risk analysis and determine if the risk of the person not working out is something you can stomach. At 1M/yr, the risk is you hire a salesperson who gets you no new accounts after a year, existing revenue drops for other reasons and then you are forced to fire someone productive to make ends meet because you're 100k in the hole. At 1.3M/yr, maybe it'll be extremely stressful, but there's a least a fighting chance that you won't be in the red at the end of the year. At 2M/yr, the worst case will still suck, but it won't put your business anywhere near danger of extinction because you have a rainy day bank. Revenue is often not directly tied to headcount. Even if your 9 employees can barely keep up, your revenue should still be rising over time until a time you can financially support another hire. If your revenue is not increasing, then increasing your headcount is likely going to make things worse, and more importantly, you should be questioning the viability of the business.