We had a $9,000,000 surprise tax bill…(what I learned about employees)

Summary

• Accelerate business growth by recognizing where you might lack expertise and hiring people with the necessary experience.
• Understand the financial implications of business decisions, such as tax obligations related to equity in a company.
• Make strategic decisions about hiring based on the knowledge gap you need to fill, especially for roles critical to your company's success.
• Recognizing the challenges in finance, I learned that hiring specialists with industry experience and those who have been in similar company sizes is crucial.
• From personal experience, when problems arose due to inexperienced team members, I found that hiring practiced individuals lessened risks and improved team performance.
• A healthy team balance is approximately 20% of team members with solid experience ('been there, done that'), especially in key areas or leadership positions.
• To ascertain if potential hires truly have "been there, done that," evaluate their experience across three areas: industry or market experience, role familiarity, and experience within a similar type of company.
• A mismatch in company culture or the type of company experience can result in difficulty adapting, even for those with extensive experience.
• Regularly reviewing your team composition and experience levels each quarter ensures you have the right balance of expertise to drive the company forward.

Video

How To Take Action

I would suggest implementing strategies to fill knowledge gaps in your small business by bringing in experienced personnel. First, evaluate your company's needs and identify areas where you may lack expertise. Look for potential hires who have a solid track record in the industry or market relevant to your business, are familiar with the roles you need to fill, and have worked in companies of a similar size and type.

A good way of doing this is by reviewing your team's composition every quarter. You want to maintain a healthy balance with approximately 20% of your team members having solid experience, particularly in key areas or leadership positions. This helps in reducing risks and improves team performance.

To ensure you're making financially sound decisions, you need to be aware of the tax obligations related to equity in a company. For example, when gaining equity, you should understand the implications of capital gains tax. This will help in strategic planning and avoiding unexpected financial burdens. It could be beneficial to consult with a financial advisor if you're unsure about these issues.

When hiring, to ascertain if potential hires really have "been there, done that," evaluate their experience across three areas: industry or market experience, role familiarity, and experience within a similar type of company. A mismatch in company culture or type of company experience can cause difficulty in adapting, even for those with extensive experience.

Finally, it's important to realize that a lack of experienced team members can be costly, as seen in my personal experience. Inexperienced team members can lead to significant issues like the mishandling of tax obligations, which could lead to financial strain or even bankruptcy. By having a mix of seasoned and less experienced team members, you can foster growth with minimized risk. Take the time to carefully select individuals who not only match the job description but also fit into the company culture and have appropriate experience for the company's stage and strategy.

Quotes

"You want 80% of people to be new, can have areas of inexperience, as long as you have 20% who damn well have."

– Leila Hormozi

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"Every single person that has been there done that… the amount of effect that they can have on others and how much they can raise others up is tremendous."

– Leila Hormozi

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"If there's someone that's on the team that's been there done this before, they can usually pull from their experience."

– Leila Hormozi

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"When you bring on someone who has experience, you decrease your risk immensely."

– Leila Hormozi

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"Experience has to have context, otherwise it actually can be more harmful than good."

– Leila Hormozi