Personnel Selection

If your business will be large enough to require outside help, an important responsibility will be the selection and training of one or more employees. You may start out with family members or business partners to help you. But if the business grows - as you hope it will - the time will come when you must select and train personnel.

Careful choice of personnel is essential. To select the right employees determine beforehand what you want each one to do.

Then look for applicants to fill these particular needs. In a small business you will need flexible employees who can shift from task to task as required. Include this in the description of the jobs you wish to fill. At the same time, look ahead and plan your hiring to assure an organization of individuals capable of performing every essential function. In a retail store, a salesperson may also do stockkeeping or bookkeeping at the outset, but as the business grows you will need sales people, stockkeepers and bookkeepers.

Once the job descriptions are written, line up applicants from whom to make a selection. Do not be swayed by customers who may suggest relatives. If the applicant does not succeed, you may lose a customer as well as an employee.

Some sources of possible new employees are:

1. Recommendations by friends, business acquaintances.

2. Employment agencies.

3. Placement bureaus of high schools, business schools, and colleges.

4. Trade and industrial associations.

5. Help-wanted ads in local newspapers.

Your next task is to screen want ad responses and/or application forms sent by employment agencies. Some applicants will be eliminated sight unseen. For each of the others, the application form or letter will serve as a basis for the interview which should be conducted in private. Put the applicant at ease by describing your business in general and the job in particular. Once you have done this, encourage the applicant to talk. Selecting the right person is extremely important. Ask your questions carefully to find out everything about the applicant that is pertinent to the job.

References are a must, and should be checked before making a final decision. Check through a personal visit or a phone call directly to the applicant's immediate former supervisor, if possible. Verify that the information given you is correct. Consider, with judgment, any negative comments you hear and what is not said.

Checking references can bring to light significant information which may save you money and future inconvenience.

Personnel Training

A well-selected employee is only a potential asset to your business. Whether or not he or she becomes a real asset depends upon your training. Remember:

To allow sufficient time for training.

Not to expect too much from the trainee in too short a time.

To let the employee learn by performing under actual working conditions, with close supervision.

To follow up on your training.

Check the employee's performance after he or she has been at work for a time. Re-explain key points and short cuts; bring the employee up to date on new developments and encourage questions. Training is a continuous process which becomes constructive supervision.

Personnel Supervision

Supervision is the third essential of personnel control. Good supervision will reduce the cost of operating your business by cutting down on the number of employee errors. If errors are corrected early, employees will get more satisfaction from their jobs and perform better.

Motivating Employees

Small businesses sometimes face special problems in motivating employees. In a large company, a good employee can see an opportunity to advance into management. In a small company, you are the management. One thing you may wish to consider is to give good employees a small share of the profits, either through partownership or a profit-sharing plan. Someone who has a "share of the action" is going to be more concerned about helping to make a success of the business.

Say that you're the type who's beginning new small business. You Have given focus to the general opportunities for success, and
have selected the new business you wish to establish.

What practical issues will you face in starting the business? How Much money will you require for beginning new small business?
Where can you get it? What form of business organization will you have? Where should you locate the company? (start company tips
to follow along )

The first question you want to answer is: Just how much cash will I need? But this question can not be answered until several
other questions are answered and many decisions are made.

To decide how much money is Required to start a business, enter all Of your potential income and all your planned expenses onto a
job sheet or form.

Even though you may feel that this kind of planning is more than You need to initiate a simple small business it is beneficial to
get started with this particular approach to management which puts figures down in black and white. You'll find exactly the exact
same approach valuable in an established small business.

First, estimate your sales quantity. This will depend on the total Quantity of business in the area, the number and ability of
opponents now sharing that company, and your capability to compete for the consumer's dollar. Obtain assistance in making your
sales estimate from wholesalers, trade associations, your banker, and other business-people. Several company and statistical
publications may be useful in making sales volume estimates.

In reaching your final quote of sales do not be over-enthusiastic. A new business generally develops slowly at the start. Should
you overestimate sales you're likely to invest too much in equipment and first inventory, and devote to heavier operating expenses
than your actual sales volume will warrant. As you are just starting up you might have no earnings for the first few months. At
any rate you may expect your first few months to be quite low.

You must also determine what proportion of your sales will be cash And what percentage will be sold on credit. If you guess that a
particular part of the earnings will be on charge then you must figure when you are going to get the money for all these sales. 1
month? Two months? More? Never?

Next, in our guide to starting new small business, estimate how Much money will be paid out. Bear in mind that in starting a
company you may be purchasing equipment, paying fees and licenses, making deposits on rent, utilities and so forth, several months
until you open the doorway. A few of those expenses are easy to estimate. If you've opted to lease a building (more about that
later) then you know what your deposits will be and how much you will need to pay out each month. You are probably able to get the
cost of fees, permits and utility deposits with a few telephone calls.

Other expense figures might take a little more work to get. One way Is to obtain average operating ratios for the kind of business
in which you are interested. One of the resources for such ratios include Dun & Bradstreet, Inc., trade associations, publishers
of trade magazines, specialized accounting firms, industrial companies, and colleges and universities. The normal ratios for your
type of company multiplied by your estimated sales volume will serve as bench marks for estimating the several items of
expenditure. But do not rely solely on this method for estimating each cost item. Verify and change these quotes through
evaluation and quotations in the specific market area where you intend to operate.

Don't forget to cover yourself also. You Might Need money to live on if You have to quit your job. If your partner is working and
may support the household for some time you might not have to withdraw money from the company. The longer you can go without
taking money from, the quicker you will build up a solid cash position. Now that you have estimated your cash receipts and
expenditures, write down the quantity of cash you'll put into the business to start. This goes online 1 at the example below. Then
add lines 2 and 1 for the first month to get line 3. Then add up all the expenses to find 5. Subtract line 5 from line 3 to find
line 6. This money at the end of month then goes to line 1 for the start of the next month, etc.

Should you continue this for the Whole year, very shortly you will find You have negative amounts or even a negative cash flow.
About this time you will also realize that you ought to be operating on this form with a pencil which has a good eraser.

In this overly-simplified illustration, you notice that by the end of June you're minus $200 in cash. Two solutions can be
attempted - reduce your purchases in June by $200 or start with $200 more. You might be unable to reduce expenses (they will
likely go up as your company starts). That means you'll need to put in $200 more to begin with. If all you have is 4000 then the
additional $200 you need is capital you must get from someplace else.

Do not be fooled by this very simple illustration. Many small businesses Start with the 200, and attempt to acquire the $4000 from
somewhere else. Since a Major reason for failure in the early phases of a business is Under-capitalization, be very careful in
your planning at this point. You can Almost always plan on some unexpected expenses and some flaws in anticipated income.

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