One of the critical questions that beginning and intermediate-level real estate entrepreneurs struggle with is, “How do I know when it’s the right time to hire help?”
I’m not talking about VA-type help here; your lowest-level administrative work (sorting lists, looking up names in the public record, etc.) and your high-skill but non-real estate work (designing logos, creating websites) can be quickly, easily, and above all CHEAPLY farmed out to VAs practically as soon as you understand what that “work” is.
I’m talking about “inside team”—people who work with you on a day-to-day basis, who understand your business more deeply than an outside team member like a VA, who may, by necessity, be ACTUAL rather than VIRTUAL employees.
THIS decision—bringing actual “staff aboard” is always challenging. It seems as if the point at which your business grows to where it’s difficult (or impossible) for you to keep up with the day-to-day activities does NOT usually coincide with the availability of a ton of extra income to pay an employee.
So most people (and I’m one of them) wait a lot longer than they should to leap into hiring inside team members to grow the business.
But there’s a relatively objective way to evaluate whether taking that (admittedly scary) step is a good idea, and it has nothing to do with the size of your business or how many years you’ve been at it.
You should hire help when (and only when):
- You become skilled enough at your strategy that when you’re working it (as opposed to working on filing, bookkeeping, and other “housekeeping”-type functions—including actual housekeeping), your hourly income is significantly more than what you’d have to pay help.
For instance, if you’re rehabbing a house monthly with an average profit of $25,000 per deal, and your administrative work keeps you from expanding that to TWO houses a month, it’s time to hire. You’re throwing away the entire annual salary of a part-time admin EVERY MONTH by continuing to do the work they could do for you.
- You’ve tracked your results enough and for long enough to be sure that #1 is accurate and;
- You’ve systematized what you want THEM to do so that they can follow your systems without needing constant supervision and hand-holding.
In other words, you hire help when the time that your help frees up allows you to make more money than the help costs you. Here’s what I mean.
When I first decided to consider bringing on help in my wholesaling business, I knew that 1) it was going to be challenging to give up control of the many things that I did on a day-to-day basis and 2) that if I didn’t, I wouldn’t be able to grow the business any further—I was just stretched too thin.
But before hiring my first acquisitions coordinator, I analyzed the numbers from my business over the previous 2 years like this:
- Our average net profit per deal has DROPPED since hiring our first AC because, with her help in doing all the administrative work, we’re now willing to do deals with a lower profit margin. However, the overall net has grown enormously.
- The average number of leads/calls needed to get a wholesale deal is 20
- The average number of mailings required to get 20 leads: 300-400
- Average mailings we were able to get out per week: 90-150
- Number of good names we could generate per week: 300-500
- Extra calls we could generate if 300-500 mailings were going out: 15-20
- Additional wholesale deals/month based on the higher number of calls: 2-4
- Additional profit this would generate: at least $20,000/month
From there, the question was straightforward: could I hire someone for LESS THAN $20,000 per month to send out mailings and do all sorts of other things (like pre-screening sellers, setting up closings, etc)? The answer was a resounding yes.
In all likelihood, your first hire won’t be a full-time, in-house employee, and it won’t be someone dealing with your customers. It will, instead, be:
- A virtual assistant, as mentioned above
- A part-time personal assistant who can take chores, from housekeeping to errands, off your hands so you can spend your time on more income-generating tasks.
- A part-time on-site administrator to answer and screen calls, file documents, do essential bookkeeping functions, set up closings, etc.
If you need help, and that help will help you make more money, get it. In today’s employment market, multiple employee-employer options, from VAs to temps to part-timers, can be exploited.
But remember: you must have systems in place for them to follow first, and every person you add to your organization has to add income to your business.