Thursday 19 October 2017

Problem Solver: Worker wants me to pay him more to set up on his own

Feargal Quinn
Feargal Quinn

Q: A member of staff who performs a key role within the business has come up with an idea that he wants to be self-employed and continue to do his work for me, while also taking on other clients. I'm happy this will work, but the fees he is proposing are higher than I pay and he wants to start this new arrangement in four weeks' time. What should I do?

A: Many business now outsource functions which were once in-house. Under no circumstances can you increase the cost of what you are paying for a particular function, as it will instantly affect the profitability of the business. I also get a sense that this is all rather rushed and is not running to your timescale.

While you want to be very supportive of the initiative, and it could well be a major advantage to the business to outsource this role, you need to start by sitting down with the employee and explain that it needs to be at a time that suits your business. Despite their enthusiasm for getting started, for their sake and the sake of the business, you need to be certain that you have worked out all of the minute details, as an error at this stage could be disastrous for both sides.

It would appear that your employee is looking for you to cover all of their costs and salary and is looking at additional business they will get as a bonus. While that would be a wonderful situation for your employee, in reality, there are no advantages to you for this. I would have expected the new model to offer some efficiencies to make it attractive for you to move the business to an outsourced model and this would also incentivise the employee to have to work harder to recruit other clients to boost their income above what it is currently.

It would be all too cosy for your employee to leave, get greater pay for work they are currently doing and treat their new clients as the icing on the cake. While I would encourage you to actively explore this model, it is not your job to set your employee up in business or subsidise them by over-paying for the service. You could certainly provide support like letting them use a desk in your office for the first two months until they have built up their business, however there must be a commercial benefit for you or it is a non-runner.

Q: Can you suggest any ways I might attract more customers into my hair salon business?

A: It is good that you are looking at ways to generate new business. Before I respond with suggestions on how to get new customers in, I would first like to challenge you and ask are you doing enough with your existing customers to retain them and increase the frequency of visits and spend levels with you? Working with your existing customer base is always going to be an easier win than trying to attract new people who don't know your business. Simple things you could do with your existing customer base include developing a good text marketing programme which is used no more than eight times per year; developing a loyalty scheme to encourage more repeat visits; running talks and events with guest stylists for your customer base.

In terms of attracting new customers, obviously a great website and digital media strategy are mandatory and, from time to time, I would encourage you to drop a high-quality brochure throughout the neighbourhoods you are servicing. Partnering with an existing retailer in your town who might give out vouchers for your salon or might text their customers on your behalf could also be an interesting initiative. You also need to be attracting some free PR and media coverage through innovative events to keep your name in the public arena.

Work with your existing customers first, and only when you have exhausted your energy and resources here should you start to look at attracting new customers. You will find that a much more robust strategy.

Send your small business questions to himself@feargalquinn.ie

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