20 DAYS TOO LATE

Chapter 5

The Employee Question

There is a particular look business owners get when they know they need another employee but cannot bring themselves to say it out loud. It is not quite fear, not quite frustration and not quite exhaustion, although it generally contains generous portions of all three.

I saw it many times across the desk. The owner would arrive late, usually apologising before they had even sat down, with a diary full of jobs, a phone that would not stop buzzing and a face that suggested sleep had become a rumour from another life. They would talk about turnover, new customers, unfinished jobs, staff shortages and the general impossibility of finding good people, but eventually the conversation would land in the same place.

“I probably need another bloke,” the builder would say, as though admitting to a moral failure. “But I’m not sure I can afford one.”

That sentence, in one form or another, was repeated by retailers, mechanics, farmers, café owners, electricians, plumbers, accountants, consultants and manufacturers. Sometimes it was about needing another person. Sometimes it was about needing to move the wrong person on. Sometimes it was about turning a reliable casual into a proper employee, or stopping the habit of treating a family member as unpaid labour because everyone was too embarrassed to talk about money.

The employee question is rarely just a question about wages. It is a question about control, trust, responsibility, cash flow, leadership, culture, systems and courage. It asks the business owner to decide whether the business is really a business or merely an extension of the owner’s tired body.

One of the best examples came from a small trade business that had become successful almost by accident. The owner was good with his hands, fair with his customers and hopeless with his diary. That is not an unusual combination, because many trades are built by people who can solve practical problems quickly but struggle to build the administrative scaffolding around the work.

He had reached the stage where the phone rang more often than he could answer it. Jobs were being booked on scraps of paper, text messages, the back of envelopes and occasionally in the memory of a man who was already carrying too much in his head. He was making reasonable money, at least according to the profit and loss statement, but every week felt like a controlled crash.

The first warning sign was not in the accounts. It was in his language. He stopped saying “I’m busy” and started saying “I’m drowning,” which is a more serious sentence than most business owners realise.

By the time he came to see me, he had already made the obvious mistake. He had hired someone quickly because he was desperate, not because he was ready. The new employee was not a disaster, but the business was not prepared for him, which meant the owner had simply created another problem to manage.

There was no proper job description. There was no clear expectation of hours, responsibility, communication, vehicle use, materials, quoting, customer handover or paperwork. There was no system for checking completed work, no process for invoicing immediately and no clear understanding of whether this new person was there to increase capacity or reduce pressure.

The owner thought he had employed help. What he had really done was employ uncertainty.

For the first few weeks, the arrangement looked promising because any extra pair of hands can feel like salvation when a business owner is exhausted. Jobs moved faster, the phone was answered more often and the owner felt, briefly, as though he had bought back some air. Then the familiar pattern emerged.

The employee needed direction, because employees generally do. The owner had no time to give direction, because the lack of direction was the very reason he had been overwhelmed in the first place. The employee made decisions on site, some good and some expensive, and the owner began to resent him for not reading his mind.

I have always thought mind-reading is the most common unpaid qualification expected in small business. Owners do not write things down, do not explain the standard, do not show the system, do not define success and then become disappointed when staff fail to perform the miracle that existed only in the owner’s imagination.

The employee question starts long before employment. It starts when the owner first notices that work is being delayed, customers are waiting longer, quality is slipping, family time is disappearing and the only solution seems to be working harder. The business is already speaking by then, but the owner often refuses to listen.

In this case, the business had been speaking for months. The diary showed it, the debtor list showed it, the unfinished jobs showed it and his wife’s patience certainly showed it. The warning signs were not hidden in complex financial analysis, because they were sitting in plain sight every Friday afternoon when invoices were still not done and every Sunday night when he was loading the ute for Monday before the weekend had even finished.

He had not hired too early. He had hired too late, and then he had hired without thinking.

The twenty days too late moment came when a major customer complained about a job that had been rushed by the new employee, checked by nobody and invoiced late with the wrong materials included. The customer was not lost because the employee made a mistake. The customer was lost because the business owner had delayed the employment decision until desperation made the decision for him.

That is one of the great traps in small business. A decision avoided for long enough does not disappear. It simply returns later with fewer options, more pressure and a higher price.

When a business owner asks, “Can I afford another employee?” the first answer is often, “Can you afford not to make a proper decision?” That may sound like accountant’s cleverness, but it is really just common sense dressed in a clean shirt. The cost of wages is visible, but the cost of delay is often hidden.

Wages appear in the profit and loss statement. Lost customers do not always announce themselves so neatly. Missed opportunities, owner burnout, poor workmanship, late invoicing, unpaid overtime, stressed marriages and a reputation for being unreliable can all be real costs, even if they never arrive in the accounts with a neat description beside them.

Business owners often underestimate the cost of not employing. They can see the wage, superannuation, insurance, leave, payroll administration and the extra vehicle or equipment, but they cannot always see the cost of the owner becoming the bottleneck. A business that cannot function unless the owner personally touches every job is not lean. It is fragile.

That does not mean every busy business should hire. Plenty of owners hire because they are disorganised, not because they are growing. If the business has poor pricing, poor systems, poor customer selection and poor cash flow, employing another person may simply allow the business to lose money at greater speed.

That is why the employee question cannot be separated from the earlier chapters. If the business never looks at the numbers, it will not know whether an employee is affordable. If the business thinks revenue solves everything, it may hire to chase turnover and then wonder why profit disappears. If cash is already short of oxygen, the first pay run can feel like someone has opened the window in a submarine.

Employment magnifies the business that already exists. It does not magically create the business the owner wishes existed. A good employee can make a sound business stronger, but even a very good employee can be swallowed by a business that has no structure around them.

I saw another version of the same problem in a retail business run by a couple who had built everything through hard work, long hours and the sort of customer service that cannot be faked. They knew their customers by name, remembered birthdays, carried stock to the car and stayed open late when someone genuinely needed help. It was a lovely business in many ways, but it was also a trap with a cash register.

They employed a woman who had been with them for years. She was reliable in the sense that she turned up, knew the customers and understood the rhythm of the shop. She was also difficult, resistant to change and capable of making new staff feel unwelcome without ever doing anything dramatic enough to force a confrontation.

The owners knew this. Their customers knew this. The new staff certainly knew this, usually by the end of the first week.

For years, the owners worked around her. They rostered carefully, softened conversations, apologised privately to staff who left and convinced themselves that loyalty required tolerance. The problem was not that this employee was useless, because she was not. The problem was that her usefulness had become the excuse for ignoring the damage she caused.

There are employees who underperform quietly, and there are employees who distort the entire business around themselves. The first group costs wages. The second group costs culture.

Small business owners are particularly vulnerable to this because work relationships become personal very quickly. People know one another’s families, health issues, financial pressures and private worries. A difficult employment conversation can feel less like management and more like betrayal.

That is especially true in country towns and regional businesses, where the employee may also be a cousin, neighbour, committee member, former school friend or person you will see at the supermarket on Saturday morning. The practical world of business and the emotional world of community sit on top of one another. It is easy for the owner to choose avoidance and call it kindness.

Avoidance rarely stays kind for long. In the retail business, the owners delayed the conversation for years, and every month they delayed taught the employee that the behaviour was acceptable. By the time they finally acted, the employee felt ambushed, the owners felt guilty and several good staff members had already left.

That business did not have an employee problem in the beginning. It had a leadership problem that eventually became an employee problem.

The phrase “leadership problem” can sound too grand for a small business, as though we are suddenly in a management seminar with a whiteboard and a man in a suit using words like alignment and synergy. I do not mean it that way. In a small business, leadership often means being clear, being fair and being willing to have the conversation before resentment turns into rot.

The employee question is therefore two questions. The first is whether the business needs people. The second is whether the owner is prepared to lead them.

Many owners want employees but do not want the responsibilities that come with employment. They want initiative but do not provide authority. They want loyalty but do not provide clarity. They want staff to care as much as they do, while forgetting that the business does not belong to the staff and never will in quite the same way.

That last point matters. A good employee may care deeply about the work, the customers and the reputation of the business, but they will not usually carry the business in their bones like the owner does. Expecting them to do so is unfair, and building the business on that expectation is dangerous.

Owners sometimes say, “Nobody cares like I do,” as though they have discovered a great truth. Of course nobody cares exactly like you do. The mortgage, the guarantees, the sleepless nights, the family savings and the years of effort are yours, not theirs.

The real question is not whether staff care like the owner. The real question is whether the business can define the work clearly enough that people can perform well without needing to become miniature versions of the owner. That is where many businesses fail.

A staff member cannot hit a target that has never been explained. They cannot protect profit if they do not understand pricing. They cannot manage customers properly if every exception lives inside the owner’s head. They cannot preserve cash flow if job sheets, timesheets, purchase orders and invoicing are treated as optional annoyances.

This is where accountants see things that owners often miss. The accounts do not merely show wages as a number. They show whether labour is being converted into profit, whether jobs are being invoiced promptly, whether overtime is being recovered, whether productivity is improving and whether the business is actually scaling or just getting heavier.

There is a difference between adding employees and building capacity. Adding employees increases payroll. Building capacity increases the ability of the business to produce reliable profit without destroying the owner.

That distinction is enormous. I have seen businesses with three employees feel calmer, more profitable and more controlled than businesses with thirty. The difference was not the size of the staff, but the quality of the systems and the honesty of the management.

The family business adds another layer to the employee question. When family members work in the business, the lines between employment, obligation, inheritance, resentment and entitlement can become hopelessly blurred. Everyone thinks they know what the arrangement is, until money becomes tight or someone feels unappreciated.

I have seen sons paid too little because “one day this will all be yours,” only for the business to be worth far less than everyone imagined. I have seen daughters carry the administration of a family business for years while being treated as helpers rather than key employees. I have seen spouses doing payroll, debtors, BAS preparation, customer calls and crisis management while the official accounts barely acknowledged the value of their work.

The trouble with unpaid or underpaid family labour is that it makes the business look better than it is. Profit can be inflated by sacrifice. The business may appear viable only because someone inside the family has decided not to ask the obvious question about fair pay.

That question cannot be avoided forever. It may arrive during succession planning, during a marriage breakdown, during a health scare, during retirement discussions or when the next generation finally decides it has had enough. When it arrives, it generally carries years of unspoken disappointment with it.

One farming family I knew had exactly that problem. The son had stayed on the property for years, working long days and drawing modest amounts because cash was always tight and the future was always promised. The parents were not malicious, and the son was not greedy, but everyone had quietly accepted an arrangement that only worked while nobody measured it.

Eventually the son’s wife asked the question nobody else wanted to ask. Were they employees, future owners, unpaid investors or just family members helping out until the next season improved? It was a fair question, but because it had been delayed for so long, it landed like an accusation.

The accounts could not answer it properly because the accounts had never been asked to tell that story. Wages had been low, drawings had been irregular, machinery purchases had been prioritised and the family had treated fairness as something that would somehow sort itself out. Fairness rarely sorts itself out when land, labour, debt and inheritance are involved.

The twenty days too late moment in family businesses can take twenty years to arrive. When it does, it is not merely a financial problem. It is Christmas lunch, grandchildren, wills, memories, pride and grief all squeezed into one conversation that should have started when everyone was still calm enough to listen.

The employee question is also where many owners confuse activity with value. A person can be busy all day and still not improve the business. Another person can quietly remove pressure, prevent mistakes, keep records clean and make the whole operation stronger without looking dramatic at all.

Administration is often underestimated for this reason. Many owners will pay for another tradesman, salesperson or machine operator before they will pay for someone to clean up the paperwork. Yet in many businesses, the paperwork is where the cash leaks out.

Late invoicing is not a clerical inconvenience. It is an interest-free loan to the customer. Poor job costing is not a back-office issue. It is a quiet way of discovering too late that the business has been working hard for very little reward.

A good administrative employee can be one of the most profitable people in a small business. They may not produce the product, install the equipment, repair the vehicle or serve the meal, but they can make sure the work becomes money. That is not glamorous, but neither is oxygen until you are short of it.

I once watched a small manufacturing business change almost entirely because the owner finally hired a competent office person. The owner had delayed for years because he saw administration as a cost rather than a function. He would spend thousands on equipment without much hesitation, but the idea of paying someone to organise paperwork felt extravagant.

Within months, debtor days improved, invoices went out sooner, supplier queries reduced, job information became clearer and the owner stopped losing half a day every week trying to find documents he knew he had put somewhere safe. The new employee did not transform the product. She transformed the discipline around the product.

The business had not lacked sales. It had lacked conversion. Work had been done, but the path from work to invoice to collection had been full of potholes.

This is why the question “Can I afford this employee?” should often be followed by “What problem is this employee meant to solve?” A vague answer is dangerous. A clear answer can change the business.

If the answer is “I am tired,” that may be honest but incomplete. If the answer is “We are losing money because completed jobs are not invoiced for ten days,” then the question becomes measurable. If the answer is “I am spending twenty hours a week on work that could be handled by someone else at a lower cost,” then the discussion becomes practical.

Employment should be attached to a business problem, not merely an emotional state. Exhaustion may reveal the problem, but it should not design the solution. Desperation is a poor human resources manager.

That does not mean owners should become cold or mechanical about people. Quite the opposite. A clear role is kinder than a vague one, because people are less anxious when they understand what is expected of them. A fair performance conversation is kinder than months of silent resentment, because it gives the person a chance to improve or leave with dignity.

The best employers I observed were not necessarily the softest or the hardest. They were the clearest. Staff knew what mattered, knew where the boundaries were, knew how the business made money and knew that problems would be discussed before they became explosions.

Poor employers often lived at the extremes. Some avoided every hard conversation until the final conversation became brutal. Others treated staff as disposable and then wondered why nobody showed loyalty.

Neither approach works well for long. Business is human, and humans do not thrive in confusion.

There is also the question of classification, which is where business owners sometimes wander into dangerous territory without appreciating the risk. Some owners like the idea of contractors because it feels simpler, cleaner and less permanent. The word contractor can sound like a magic spell that removes leave, superannuation, payroll obligations and responsibility.

It is not a magic spell. Calling someone a contractor does not automatically make them one, and a business owner who builds the arrangement around convenience rather than substance may one day discover that the paperwork was not the protection they thought it was.

The purpose of mentioning that is not to turn this chapter into an employment law lecture. The broader lesson is simpler than that. If the business needs a person who works like an employee, under the control of the business, as part of the business, then pretending otherwise may only delay the cost.

Delayed costs have a habit of returning with interest. That is true in tax, employment, cash flow, debt and almost every other area of business. The business owner may think they have saved money, when all they have really done is move the bill into the future and made it angrier.

This was common in businesses that grew from informal beginnings. A mate helped out, a nephew did a few days a week, a former employee came back as a contractor, or a bookkeeper was paid irregularly when cash allowed. At the start, everyone understood the arrangement because the stakes were low and goodwill was high.

Then the business grew. The arrangement that once felt practical became unclear, and the unclear arrangement became risky. Nobody wanted to revisit it because revisiting it meant admitting that yesterday’s convenience had become today’s weakness.

That pattern appears everywhere in business. The temporary fix becomes permanent because nobody chooses the permanent solution. The owner keeps saying, “We’ll sort that out later,” until later arrives wearing boots.

Employees also expose weaknesses in pricing. A sole operator can sometimes survive with poor pricing because the owner absorbs the cost through unpaid hours. Once staff are involved, those hidden hours become wages, and the poor pricing is suddenly visible.

This is one reason some businesses appear profitable until they employ people. The owner was never truly profitable. The owner was merely underpaying himself.

That truth can be uncomfortable. Many small business owners work for less than they could earn as employees, while carrying far more risk and stress. The business survives because the owner donates time, energy and sometimes marriage equity to keep the machine running.

When that owner hires, the accounts may suddenly look worse. The employee has not caused the problem. The employee has revealed the problem that was already there.

A café offers a simple example. The owner works the front, fills gaps in the kitchen, does the ordering, cleans tables, reconciles the till, pays suppliers and answers messages at night. The café appears to make a modest profit because the owner’s labour has been treated as endlessly available and conveniently cheap.

Then the owner hires a manager for some relief. Wages rise, profit falls and everyone panics. But the manager did not destroy the model. The manager exposed the fact that the model depended on the owner doing two jobs and being paid properly for neither.

That is why every number tells a story. Wages are not just wages. They can tell the story of growth, confusion, inefficiency, poor pricing, bad scheduling, under-management or the first honest recognition that the owner’s time has value.

I sometimes asked owners to imagine replacing themselves. Not because they necessarily wanted to leave, but because it forced them to confront the truth. If the business could not afford to pay someone competent to do what the owner was doing, then perhaps the business was not as profitable as it appeared.

That exercise can be confronting. Owners often say, “But I would never pay someone to do everything I do.” That may be true, but it is also the point, because the owner is often doing too many unrelated things because the business was never designed properly.

A good business does not require one person to be salesperson, technician, debt collector, bookkeeper, counsellor, scheduler, purchasing officer, quality controller, cleaner and emergency responder. Many owners become all those things because in the early days they had no choice. The mistake is continuing that way after the business has grown.

Growth demands decisions. Some work must be delegated, some work must be systemised, some customers must be refused and some habits must be retired. The employee question becomes the point at which the owner must decide whether the business is going to mature or simply become busier.

There is a kind of pride that can get in the way. The owner says nobody else can do it properly, and sometimes that is partly true. But if nobody else can do anything properly, the business may not be excellent. It may simply be undocumented.

The best operators are often poor explainers because they have internalised their skill. They know what good looks like, but they have never had to describe it. They can feel when something is wrong, but they cannot always show someone else how to see it.

That becomes a serious problem when staff arrive. Training cannot rely on osmosis. A new employee cannot absorb forty years of instinct by standing nearby and hoping the wisdom drifts across the workshop.

This is where the experienced owner needs humility. The employee’s failure may be partly the owner’s failure to explain. That does not excuse laziness, dishonesty or carelessness, but it does remind us that management is work in its own right.

Some owners hate that. They started the business to do the work, not to manage people. They enjoy the job, the trade, the product, the customer or the craft, and suddenly growth turns them into the person who must deal with rosters, disputes, training, leave, expectations and performance conversations.

This is one of the quiet shocks of business. The business you build may eventually ask you to become someone you did not set out to be. The excellent tradesman must become a manager, the talented cook must become an employer, the skilled consultant must become a trainer and the farmer must become a strategist.

Not every owner wants that transition. There is no shame in admitting it. The shame, if there is any, lies in refusing to admit it while hiring people into confusion and blaming them for the chaos.

A small business can remain deliberately small and still be successful. The owner can choose simplicity, control and quality over expansion. That decision can be wise, but it must be a decision rather than a fear dressed up as philosophy.

If the owner chooses to stay small, pricing must reflect the limited capacity. Customers may need to wait, some work may need to be declined and the owner must accept that the business cannot say yes to everything. A small business that says yes to more work than it can properly handle has not chosen simplicity. It has chosen stress.

If the owner chooses to employ, the business must be prepared to act like an employer. That means understanding the true cost, documenting the role, training properly, pricing labour honestly, measuring performance and having difficult conversations early. It also means remembering that employment is a promise, not merely a transaction.

The employee is promising time, effort and skill. The employer is promising pay, clarity, fairness and a workplace that does not rely on chaos as its operating system. Neither side will be perfect, but both sides deserve honesty.

The businesses that handled employment well tended to have fewer surprises. They did not wait until everything was on fire before talking about performance. They did not hire merely because the owner was exhausted on a Tuesday. They did not assume loyalty would replace management.

They also understood that a good employee is not just a cost. A good employee can protect customers, improve cash flow, preserve quality, free the owner’s time and make growth possible. The return may not always appear in one neat line, but it can be seen in the steadiness of the business.

The challenge is that bad employment decisions can do the opposite. The wrong employee can damage customers, weaken margins, distract the owner and poison morale. An unclear employee can accidentally do the same, even with good intentions.

That is why delay is expensive in both directions. Delaying a necessary hire can suffocate a business. Delaying action on a poor fit can infect the business. Delaying clarity with family members can turn love into resentment.

In each case, the problem is not employment itself. The problem is waiting too long to ask the honest question.

The honest question may be uncomfortable, but it is usually simple. What work needs to be done, what is that work worth, who should do it, how will it be measured and what happens if it is not done properly? Those questions may not sound sophisticated, but many businesses would be healthier if they asked them before placing the employment advertisement.

The same applies when the question is whether someone should remain in the business. What standard is required, has it been explained, has the person been given a fair chance, what is the cost of continued avoidance and what damage is being done while everyone pretends not to notice? A business owner who cannot answer those questions is not being kind by delaying. He is simply postponing discomfort.

Employment is one of the clearest places where business and human nature collide. We want people to solve our problems, but we do not always want to provide the structure that allows them to solve them. We want loyalty, but we sometimes forget that loyalty grows best where there is fairness and clarity.

I have seen average businesses become good businesses because the owner finally understood this. The change was not dramatic from the outside. There were no slogans on the wall, no grand restructuring announcements and no new management fad imported from a book written for companies with glass foyers.

The owner simply began to define roles, price work properly, review jobs, speak earlier, listen better and stop treating every employment issue as a personal crisis. The business became calmer because the owner became clearer. That is not magic, but it can look like magic from the outside.

The opposite is also true. I have seen profitable businesses become miserable because the owner would not deal with one employee, one family arrangement or one hiring decision. The accounts still looked acceptable for a while, but the business felt tired, tense and brittle.

Numbers matter, but atmosphere matters too. A business with a poor employment culture often carries a heaviness that customers can feel. Staff become guarded, owners become irritable and every small mistake feels like confirmation of a larger unhappiness.

That is why the employee question belongs in a book about problems that start before they become emergencies. Staff issues almost never arrive fully formed. They begin as small signs, small frustrations, small inconsistencies and small silences.

Someone is late more often than they should be. Someone avoids paperwork. Someone treats customers differently when the owner is not there. Someone works hard but never seems to complete the important tasks. Someone in the family is carrying more than anyone admits.

At the start, these issues are manageable. A conversation could help, a system could clarify, training could improve, pricing could adjust or a role could be redesigned. Twenty days later, the issue may still be manageable, but it has usually gathered emotional weight.

Twenty weeks later, everyone has formed a position. Twenty months later, the problem has become part of the culture. Twenty years later, in a family business, it may have become part of the inheritance.

That is the tragedy of delay. The business owner thinks he is avoiding a difficult moment, but he is often creating a more difficult future. Silence compounds just like interest.

The practical lesson is not to hire quickly or fire quickly. It is to think earlier. It is to recognise employment as a strategic decision rather than an emergency response.

Before employing someone, the business owner should understand the work, the cost, the expected return and the management responsibility. Before delaying employment, the owner should understand the cost of overload, late delivery, poor service and personal exhaustion. Before avoiding a staff problem, the owner should understand what the avoidance is teaching everyone else.

That last sentence matters. A business teaches by what it tolerates. Staff watch what happens, customers feel what happens and the owner eventually pays for what happens.

When I look back, the best employment decisions were rarely perfect. People are too complicated for perfection, and small business is too human for neat diagrams. The best decisions were timely, honest and connected to the reality of the business.

The worst decisions were often delayed until the owner had no good choice left. By then the employee had become the villain, the customer had become unreasonable, the family had become divided or the cash flow had become too tight. In truth, the crisis had usually begun much earlier when the owner first noticed the warning sign and looked away.

That is the rhythm of this book. The numbers were there before the surprise. The revenue problem was there before the disappointment. The cash flow problem was there before the panic. The customer problem was there before the resentment, and the employee problem was there before the explosion.

Business owners do not need to become perfect employers. They do need to become honest ones. They need to know what they expect, what they can afford, what they will tolerate and what they are prepared to do when reality disagrees with hope.

Once that honesty enters the business, the accounts begin to tell a cleaner story. Wages make more sense, margins become clearer, cash flow improves and the owner can see whether growth is genuine or merely busy. Employment stops being a mystery and becomes part of the design.

Of course, as soon as a business begins thinking more clearly about employees, another temptation usually appears. The owner starts looking at the numbers, sees a profit, worries about tax and begins wondering whether buying something before 30 June might be clever.

That is another familiar look across the desk. It is the look of a business owner who has survived the staff conversation, stared at the profit figure and decided that perhaps a new ute, machine, trailer, computer system or piece of equipment might solve a problem that has suddenly been described as tax planning.

Sometimes the purchase is sensible. Sometimes the business genuinely needs the asset, has the cash flow to support it and will earn a return from using it. At other times, the owner is not buying something the business needs, but something the tax bill has made emotionally attractive.

That is where we go next, because buying things to save tax has probably emptied more bank accounts than most business owners care to admit. Like employment, the purchase often looks practical on the surface, but the real question is not whether the tax deduction exists. The real question is whether the business is making a decision or merely reacting twenty days too late.