Espresso: Giles Brook, The ONE Single Biggest Hiring Mistake Brands Make As They Scale (avoid this!!!)

0:06you talked about a lean team what do you think and again I know a lot of this is all case specific right but what do you think of some of the the absolute must-have hires because i think what can happen and john taught me this on the podcast is oh just because we've got more distribution doesn't mean we're getting more account managers yeah because i think what can happen is you get more distribution right let's let's raise more you know not raise more get more people in to fund that so i think what it fundamentally again it'll be circumstantial and brand specific but the crazy thing is dan i can basically give you an example of a brand that's turning over 40 million who have potentially got a team of 60 but i've got another brand who's doing 40 million and there's eight of them in the office right it depends on the model you got clearly if you've got in-house production and manufacturing by the nature of the beast you can have more people right sure so but you know at the end of the day it comes down to all you've got to think about every time it's right i look at the way i look at it is that so i've got various different ways i look at i look at you know revenue and profit per head or per pound of employment income or whatever it is you know i look at all various different indicators and stuff like that but it's quite simple for me which is if you're making let's just say you're making a 30 or 40 gross margin right and long term you want to make 20 you know 10 ebitda as a minimum yeah so let's just say 40 percent gross margin in terms of ebitda you've got 30 margin points to deploy between your marketing between your people and between your overheads right and you've got to think it that way to say right how much money can i afford to spend all on all three of those and how would i want to rent the money because it's already i could say to you like you can justify putting in eight or ten head counts but of that example there where you've got that 30 to play with If that represents 22 % of the 30%, you've only got 8 % left across your office, your overheads, and you're actually marketing, right?

2:10So I'm just a big believer is that every single role that you hire, that individual person on the sale, if we're talking about sales role particularly, has to basically pay back. so if i'm you know let's say i'm bringing somebody on a 30 000 salary as a minimum i would be saying that person there needs to generate as an absolute minimum 100 000 pounds worth of revenue because obviously 30 of 100 000 let's say 30 yeah but but i actually go one step further and say actually look if i assume a 10 ebitda model right yeah that person actually needs to generate 300 000 pounds worth of sale because we're going to make 10 of the time that's all flowed down to bottom line they then pay back at least now that's only them breaking even on that role right so what may or may not be a useful number for for listeners is that and the figures i speak with my own my own portfolio guys about is that i normally talk contract i keep simple we're saying look if i'm a business it's like naught to five million i'm thinking you need to have about a hundred k to 200k per head if i'm like five to fifteen million i normally try and go you're gonna normally go between a quarter of a million to half a million pounds revenue per head and then anything that i think is like 15 20 million above you should be at 750 000 pounds to a million pounds per head so for example in my world let's just say you've got 40 million turnover i would try and get i'd say you don't know more team of 40 in that which is a million pounds per head quick one guys espresso's got a brand new sponsor unleashed unleashes inventory management software that talks directly to your finance and econ software we use unleashed daily islands i bloody love it we've got our admin time in half saving approximately 30k a year why use it save money save headaches save stress get granular clarity on your margins no way stock is don't miss availability look your favorite brands literally use unleashed as their backbone candy kittens tiny rebel trip always religiously look there's a link in the show notes please feel free to book and a call with josh and his wonderful sales team at unleashed they're amazing even nothing comes of it and even better news you'll get your first month free if you reference hungry thank you it's quite a crude way of doing it but it's just so valuable so what you were talking about just then which was super fascinating is the the revenue ahead per head yeah does that make does that make sense yeah so that per stage i'm relatively speaking around so how do you work out sorry no no it's very crude which is like yeah so let's just say if you've got five million turnover and you've got 10 people in the office that's half a million per head right right five thousand per head yeah so that is just again it's just it's a very crude way of way of looking at it but that's what i've i've looked at because again when i typically when you look at the whole shape of the pnl and stuff but like i said you have to be careful here because certain businesses require you know different models and are more people intensive and stuff like that ultimately what it comes down to is what's your business strategy and you build the team around the business strategy but all i would say is that and okay if i put my investor hat on and just to see what i'm it scares the life out of me when i look at businesses which are still quite early but i see they've got a battalion of people already sitting in the office and they've built team before the revenues come in because invariably in nine hour ten that ends in tears because they've just got way too much cost base and the revenues don't quite materialize and then they've got a problem and you'll be amazed how many people you see it and obviously the difficult thing as well is this then you know there's two issues as well which is the the emotional side of having to go through redundancy letting people go is big but also it can often have a very significant of financial cost also having to you know let a lot of people go as well again it kind of goes we've talked a lot about ego and heart versus head and this conversation which is a fascinating kind of thing to dance between but i think it does go back i wrote about this in one of my newsletters like do you actually but i think some people want a big team because it's a bit like a swinging dick contest at lunch trade show oh yeah my team's 15 people i mean you can see it in the you can see different founders characters and you can see it right yeah see you can i can meet a character and i can almost say that they've got a battalion of people behind them and lo and behold somebody sells me yeah they've got 40 60 70 people there i'm like but you know it's i'm never going to criticize anybody i'm answering this in terms of the way i look at it yeah sure i'm the model the business models that i like to get involved with or i've liked to have built or i now invest in today typically i much prefer staying lean and you know all i will say is that the majority of founders who've i've worked with who've i've either curtailed how many people want to bring in or else take them on the journey about why that's the right thing to do the lion's share those and come back and god thank god you told me that that's one of the best bits of advice i've ever had because staying lean has just been brilliant because i can now spend loads more money on marketing i don't feel as pressured because i've suddenly not got huge amount of overhead and people costs that i thought was going to be there and you know invariably but equally you don't want under the resource of business if it's really growing quickly it's on a high growth trajectory because you might miss the boat thank you so so much for listening it honestly means the world to me i hope you enjoyed your morning coffee and go and have an amazing day let's be having ya if you want the full episode it will be in the show notes i think will be in the show notes the episode thank you so much please leave friends as well means the world to me