Why Some Small Business Owners Avoid Hiring Managers, Even When They Can Afford It

Contrary to popular belief, it is often the case that small business owners can indeed afford to hire managers, but elect not to due to several common reasons. This article explores the underlying motivations and considerations that small business owners face, providing valuable insights for those navigating the complex landscape of business management.

Financial Constraints

In all honesty, many small business owners cannot afford to hire managers. While their businesses may appear profitable, access to their financial records reveals a different story. Small businesses often operate on lean budgets, requiring the owner's active involvement in various aspects of the business to ensure its survival and growth. Absorbable expenses such as salaries for managers can quickly deplete the business’s resources, making it a difficult decision for the owner.

Business Needs and Employee Competence

Managers are hired to address specific business needs. In smaller businesses, where employees are highly skilled and well-trained, the need for a managerial position may be minimal. When I work with big businesses, there is typically one manager for every ten individual contributors. A good manager can effectively handle up to fifteen to twenty good employees. However, in small businesses, the owner often plays a hands-on role in managing all aspects of the business, with perhaps a few senior team members stepping up to assist where needed.

Business Growth and Transition

Businesses grow at different rates, and the need for a manager often emerges when the team expands. When a business grows beyond 30 to 40 employees, it becomes apparent that a managerial structure is necessary. This transition is critical for maintaining efficiency and ensuring that the business can scale smoothly. However, in some smaller businesses where the owner is hands-on, the business may not warrant the investment in a full-time manager until it reaches a certain size.

The Role of Retail and Remote Management

In the retail sector, the need for managerial oversight is more pronounced, particularly when the business cannot be managed by the owner every hour it is open. Owners who do not wish to be physically present for extended periods may opt to hire assistant managers to handle operations in their absence. This is also common in scenarios where the owner's presence is intermittent or variable.

Fear and Perfectionism

Another prevalent reason for small business owners to avoid hiring managers is a combination of fear and perfectionism. Many business owners fear that no one can perform their tasks as well as they do, leading them to manage everything themselves. This often results in the owners becoming overly stressed and burned out, eventually losing track of time over decades of hard work. These owners struggle with the idea of taking time off, viewing management roles as threats to their control and vision for the business.

Key Takeaways

Hiring a manager is not just about expanding the team; it is about optimizing business operations, managing growth, and ensuring sustainability. Fear and perfectionism can hinder this process, but understanding the business's needs and the benefits of having a competent manager can pave the way for long-term success.

By recognizing the practical benefits and preparing for the transition, small business owners can ensure that their businesses thrive and they do not become slaves to their own success.