Heat and the human element

Down in Vancouver, we’ve been having a bit of a heat wave. 28-30C temperatures every day can get pretty warm and even our warehouse which is mostly made of concrete and set below ground-level (slightly, it’s on a slope) stays warm through the day. Without air-conditioning, it’s not much fun.

Why am I talking about heat? Just that I notice people moving slower, getting less done just because it’s not as easy to do so. It also makes us more irritable, less prone to thinking kind of thoughts of customer sand suppliers like who do something minor.

We’re all human, but sometimes, it’s easy to forget that. Small irritations, after a while, get blown out of proportion. A customer who loses his temper at us and sends a bitter e-mail doesn’t have to apologise, we’ll still take their money the next time they are in. We can’t afford to do so, working on the other end; having to keep each e-mail / reply / interaction pleasant. It gets hard, and so things slow down, as we take a moment to step back and just consider the best options.

Delegating & Outsourcing

There are only so many hours in your day.  If you don’t want to let work take over your life, you have to learn to prioritise and finally delegate as you grow as a business.  One of the biggest problems of a successful business is a boss / owner who doesn’t know how to delegate.

Types of Tasks

Which is fine, but how do you know what you can delegate? Well, for me I delegate or outsource a task, they generally fall into one of a few categories :

  • Low Knowledge Tasks

Oh look, we need to do inventory. Or packing. Or receiving.  All important tasks – but you don’t need a lot of training to do any of these.  This is not a specialised task or one that is particularly complex – so why are you; the owner doing this?  If you can afford to delegate, why don’t you?

  • Specialised knowledge tasks

On the opposite end of the spectrum, you have specialised tasks that require a high level of specialised knowledge.  Our yearly tax returns are a great example.  Could I learn how to fill out the tax form? Probably.  Would it be worth the time and effort taken? No.  There’s too great a liability to getting it wrong as well.  So these are great tasks to outsource.

  • Tasks I’m Not Good At

There’s a lot of things that you might be good at.  There are a lot of tasks or types of tasks that I just am not very good at.  These days, I do my best to delegate these tasks to others.  As a great example – anything that has to deal with detailed work.  My mind spins too fast, running away from the task at hand and I often make mistakes on detailed work even when I try to focus.  It’s better and easier to actually delegate a lot of this type of work to someone  else, just to get it right.

  • Things I Hate to Do

Here’s the part where I abuse my privilege of being the business owner.  I do outsource and delegate some work that I could do, which I just have no desire to do.  The Video Reviews are a great example.  Could I do them? Sure.  Are they a detailed / knowledge-heavy enough task that it’s not low value? Yes.  Would it cost a lot more to outsource than produce in-house? Yes.  So why don’t’ I do them? Because I don’t want to.

Sometimes, you should use the privilege of being the boss.

When to Delegate

Great.  So you know the types of tasks I generally delegate, but when do you do delegate?  Here’s a few criteria I use:

  • Can I afford to? – Obvious and no explanation needed
  • Can I replace the delegated task with another higher value task? – Assuming you still intend to work those hours, sometimes it’s worth asking if there’s a better task you could be doing.  If there isn’t, you should just do the task at hand after all.
  • What’s my liability if this task is not completed by me?  – I still double-check our petty cash books on a regular basis, ensuring that everything totals up correctly.  It’s a boring, tedious task that I dislike doing but it’s a necessary fraud-check behavior.  If I delegated this task, it would lose most of its importance and increase my liability to being defrauded.
  • Can this task be done faster, more effectively and cheaper than by someone else than me? – If I’m not really good at a task and have to continuously redo or recheck a task to ensure it gets done properly, perhaps it’s better done by someone else.
  • Is this task important enough that someone else should know how to do it? – Nearly every single task in the store has been completed by me at some point or another.  I can takeover almost every single task, and that’s good.  The opposite should be true – in case of accident / injury / illness; your employees should still be able to run the store without you (mostly).  Some things might require you to use a 3rd party (e.g. a director, your lawyer or accountant) if you would prefer not to give them that level of power / control (e.g. the ability to pay the bills).
  • How much problems are there going to be delegating this? – delegation of tasks takes time.  If it’s a one-off task, it might be better to just bit the bullet and do it yourself.

If you can get most of those checked off, you’re good to go.  That lists even works for tasks in-house if you are looking to outsource it.

Independent Contractors

I’ve talked about volunteers, interns & other free help before.  So today, let’s talk about another one of the most common ‘shortcuts’ businesses take in terms of cost and hiring is to hire an individual on as an ‘independent contractor’.

The Business Case

Hiring an independent contractor to do work for you has some advantages for a business, at least at first glance:

  • Less bureaucracy –  You get an invoice, you pay it.  You don’t need a Canada Revenue Agency Payroll account, you don’t have to withhold funds for EI or CPP or deal with the paperwork involved
  • Lower cost – you don’t have to pay EI or CPP or WorksafeBC.  Often, you can ‘bargain’ lower salaries / rates overall because the contractor sees more of their actual pay.
  • Quick termination – if they are contractors, there’s a lot fewer requirements if you are looking to terminate the contract
  • HST / GST savings –  as an ‘expense’, you get to clawback some of your HST / GST revenue if the contractor charges HST

The Contractors Case

So why do these contractors agree to this? Well, here’s a few reasons why:

  • Lack of power – sometimes, the job is offered only on these terms.
  • Expenses – whether it’s HST / GST that they charge and thus can use for other input tax credits or general expenses (e.g. telephone, rent, internet, etc.); there’s definitely financial benefit here
  • Multiple sources of income – as a theoretical contractor, you could potentially have more than one source of income as a contractor.

It sounds like a win-win situation for everybody doesn’t it? Except…

Business Liability

The problem is, there’s a definite liability if your ‘independent contractor’ is found to be an employee.  You are liable for:

  • unpaid taxes, penalties, interest, CPP and EI premiums
  • injuries on the job since the contractor wasn’t covered by WCB
  • the onus is on the business, not the contractor to prove a contractor relationship if any complaints go to HRDC or the like

Contractor Liability

  •  obviously, the contractor is also liable for unpaid taxes, penalties, interest, CPP and EI premiums
  • in addition, you aren’t automatically covered by HRDC and other employee laws.  You can always complain, but it becomes a longer process to get restitution

What CRA looks for:

  •  Control – how much control does the employer have in this relationship? Does he dictate when, where and how you work? A great example is our bookkeeper.  She does all our work remotely, I just send her the files.  The only real control I have is when I expect the work to be completed.
  • Ownership of tools – whose tools are being used? how significant are those tools? Rob who shoots all our videos brings and uses all his own equipment
  • Chance of profit / loss –  who runs the biggest risk here of profit or loss? Is the contractor taking on any potential risk? Kaja for example isn’t a contractor since she’s guaranteed her pay and she hasn’t taken on any operating expenses for the business or herself
  • Integration – This is a kind of a weird one and discusses who is absorbing who into their business practices.  It’s often an indicator of how much work is being done by the contractor for the employer / number of clients the contractor has.

Now, I’m obviously not a lawyer so this isn’t legal advice.  However, from all that I know of, the risk of not ‘hiring’ an employee properly is often quite high.  Sometimes, the line can be quite grey.  Other times, the hassle might seem too much – example, hiring a really short-term worker (a few days).   In both cases, as a business owner and as a potential independent contractor; it’s worth knowing your rights and liabilities.

 

Managing & Personnel

As many of you know, we’ve recently been hiring and are now are a 3 person company.  That’s a great thing for us (if slightly a strain on our cashflow at the moment); but the real change has been in me having to relearn management.  It has been quite a few years since I had to manage anyone other than myself and relearning best practices has been a journey for me.

There’s a few stumbling blocks I’ve had / have and I thought I’d articulate them here as a reminder to myself:

Project Timelines

Perhaps my biggest frustration at the moment; and one that I keep forgetting.  I hand-out projects to the employees; and while I get updates, I’ve been forgetting to ask for timelines and deadlines.  Now, in the course of our business, we receive a number of set-backs and delays (a rush of orders, delays in getting products in which force us to have multiple receiving days, etc.); but there’s no reason why we shouldn’t at least have deadlines clearly articulated and pushed back (if necessary).

My biggest stumbling block here; and frustration is that I often intuitively have a deadline in mind for a project when I start it (or assign it).  I rarely articulate it (after all, who am I articulating to other than myself?); but it’s there.  Unfortunately, not articulating to employees doesn’t exactly work – and then having a project not completed to an unarticulated deadline just causes frustration.  Mostly with myself; but to a small extent the employee.  Which is obviously not fair to them.

Tasks & Documentation

Another major  area that I have a problem with currently is actually documenting the variety of tasks that I do on a daily basis; and that the company does.  It might seem strange needing to document things as simple as ‘Approve Reviews daily’ or ‘Transfer PayPal funds’ but if you don’t; and for some reason I can’t do it (like a holiday); it doesn’t get done.  As I try to shift more mundane tasks like that away from myself to the employees; forgetting to tell them about minor tasks like that becomes a major problem that can fall through the cracks.

Delegating

Of course, that’s when I do want to let go.  Much of the delegating right now is to move ‘easier’ tasks away from me so I can tackle more complex tasks.  However, at the same time I need to learn to delegate even the more complex tasks and that’s tough. Part of that is of course the old maxim – You can delegate authority but not responsibility. It’s my company, so I still feel responsible for even the smallest tasks.  It’s a tough thing, learning to let go.

Training

Lastly there’s training.  Adding new tasks requires training, adding new projects often requires training (sometimes in simple things like project management).  Then there’s the entire realm of online sales and the complexity that is running such a site – everything from using FTP programs to uploading new modules to payment gateways.  All that at some point will need to be taught, to create redundancy in the company.   Unfortunately, I’m not necessarily the best teacher – sometimes because I’m still learning the subject matter; at other times because of my lack of patience.