Cash Flow Issues and Attracting Top Talent
In our first episode, Will, Alex and Ian talk about the people problems owners are facing, what keeps good hires around, and how to tell if you can afford your next one.
The Short Answer
Before you hire, check three things. Cash flow: is the business profitable, and will this hire make more money, down to the margin on each type of job? Capacity: do you have the work, and could your current team cover it if roles were shuffled? Buffer: do you have reserves to carry the hire while they ramp up? Then, to keep good people, find out what they actually value. Pay matters, but flexibility, meaning, room to learn and a chance to build something often matter more, and the only way to know is to ask them regularly.
Why Hiring Feels So Hard Right Now
When Will asked what keeps coming up with clients, Alex didn't start with debt or cash flow. He started with people. Owners are struggling to find, afford and keep the right people. Some can't tell whether they should hire at all, or what they can afford to pay. Some are hiring and can't attract anyone good. Others have plenty of people but a few are in the wrong seats.
On top of that there's a new question mark: could AI do some of this work instead? With overhead already feeling high, a lot of owners stall. Alex sees them drag their feet on decisions that would make sense, mostly because they don't have confidence in their numbers, in themselves as leaders, or in the rest of the team.
Ian sees a pattern in where this shows up. Most of the businesses we work with are somewhere between about $1 million and $15 million in revenue. Somewhere in that range you hit a ceiling. A small, tight-knit team that got by without much process now needs real communication, a hiring pipeline and leadership built into the business.
Build a Team Journey, Not Just a Client Journey
Most owners can describe their client journey: how clients find you, how you bring them in, and how you keep them. Ian's point is that very few have thought through a team journey with the same care.
Where Your Best People Came From
Look back at your best hires. How did you find them, and how could you attract more people that way?
Whether People Speak Up
Is there enough trust that people bring problems to you when they see them? Do they feel free to fix things themselves?
Regular Check-Ins
At three, six and twelve months, ask what they want long term, what's been useful and what's been hardest. Treat it like checking in with your clients.
Owners push back because they feel spread thin. Ian's answer is that this doesn't take a huge amount of time. It takes consistency. Will added that weekly team touch points don't feel like they make money, but they protect it. They aren't revenue generating, but they are revenue stabilizing, because constant turnover and rehiring is expensive.
What Good Hires Want Now
Alex put it bluntly. Headcount is obviously a big expense, but the real cost is hiring the wrong person or losing the right one. When someone good leaves, you lose what they know and the relationships they carry.
What people want from a job has also changed. Pay matters, but it isn't the only thing, and climbing the ladder isn't either. Flexibility in schedule and, where possible, in where people work matters a lot more than it used to. So does meaning: how the job helps someone's life, not just the company.
This hits local businesses hardest, since your talent pool is limited by geography. Will has seen it in insurance-based healthcare like physical therapy, where reimbursement caps what you can pay. If you can't win on pay, you have to compete on perks, culture and how you get the word out. Alex's advice is to treat recruiting the way you treat marketing. Ask how you stand out to future team members, the same way you'd ask how you stand out to customers in a town with 30 competitors.
"I like to think of it as make the intangible tangible."
Ian Hogan, on figuring out what your team actually valuesIan learned this owning a gym and clinic. He once handed a team member a big cash bonus, the most cash they'd ever received, and got a quiet "thanks." The next month he paid for their roughly $100 ticket to a continuing education event, and they were thrilled. That team loved to learn. Cash wasn't what drove them.
So ask. Ian's team recently got this question: if we added one thing to the business, what would make you want to stay for a long time? The answers were about automating admin work, keeping the culture, keeping flexibility, and having room to build something. Sometimes the answers show you're attracting people who want something you don't offer. Then you decide whether to offer it or change who you're trying to attract.
Alex added one small example from our own business: a "play budget" for software and tools, so people can tinker. A few hundred extra dollars in pay wouldn't have felt like much. Saying "go try the tools you want" felt like a vote of confidence.
Can You Afford to Hire? Three Things to Check First
Will raised a scenario we see all the time in the trades. You're bidding a $500,000 project, you see the revenue number, and you start planning subs or full-time hires before you've mapped out the margin on the job. That's how owners scale themselves broke: lots of revenue, a bigger team, and less cash than they've had in years. Alex looks at three things before any hire.
1. Cash Flow
Is the business making money, and will this hire make more? Get down to the margin on each type of work. For an electrician doing multifamily, residential and commercial jobs, that means asking which of those you should be doing more of, and whether you're bidding them right, before you add people.
2. Capacity
Do you have the work for this person, and does your current team already have room? If you can get more out of the people you have, or shuffle roles to cover the work, that comes first.
3. Buffer
Do you have reserves to carry the hire while they ramp up? If not, you're stretching for it, and the cash flow question matters even more.
Alex's caution is that it's easy to measure success in headcount or revenue. The point of the business is whatever you actually want out of it.
Two Traps: Chasing Work and Hoarding Cash
As Will put it, $10 million a year at zero profit is a lot worse than $1.5 million at a 50% margin. A revenue goal means little until you know what it does for profit.
The first trap Ian sees in the trades starts with a good intention: "I've got to take care of my guys." Past jobs were underbid, so cash is short. To keep everyone busy and make payroll, the owner bids more work the same way. The lines of credit start to max out. It feels like protecting the team, but it hurts them long term, because the fix means looking hard at the numbers and having some uncomfortable conversations.
The second trap is the opposite. Some owners sit on large reserves, sometimes with great margins, and still feel unsafe. They work 80 hours a week and can't decide whether to hire. Alex frames it as a trade. Would you rather have, say, $20,000 less in the bank and get back 30% of your work week? Or keep the money and keep missing time with your family? Which one actually lets you sleep at night?
Both traps come back to the question this episode opened with: what do you actually want? Not what you think you should want, or what someone else has. Once that's clear, the hiring math gets much easier.
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Book a Free Intro Call Watch the free Profitable Hiring workshopFrequently Asked Questions
Look at three things. First, cash flow: is the business profitable, and will this person bring in more than they cost, down to the margin on the work they'll do? Second, capacity: is there enough work, and could your current team handle it with better roles or processes? Third, reserves: do you have enough cash to carry the hire while they get up to speed?
Pay has to cover the basics, but many people now value flexibility in their schedule and, where possible, where they work. Others want to keep learning, see the impact of their work, or have room to build something. A paid training event can mean more to the right person than a cash bonus. The best way to find out is to ask your team directly.
A local talent pool is smaller, so you have to stand out to future hires the way you stand out to customers. If you can't win on pay, compete on culture, flexibility, growth and perks, and put real effort into recruiting, such as video ads that show what it's like to work for you. Keeping the good people you already have matters just as much.
When someone good leaves, you lose more than a seat to fill. You lose what they know about how your business works and the relationships they've built with clients and coworkers. Then you pay again in time and money to recruit, hire and train a replacement. Regular check-ins with your team cost far less than constant rehiring.
Not until you've mapped the margin on that job. Many contractors see a large project, start hiring, and later find the work was underbid. Then they bid more work the same way to cover payroll, and lines of credit start to max out. Make sure the job is profitable and your current team is fully used before you add people.