“YO SHATTUCK!”

I turned back into the parking lot I was walking through to look for the familiar voice. I didn’t see anyone at first but then out pops my tattoo artist. He’s one you wouldn’t typically overlook for very long. He drives a big truck with a massive black grill in the front, has badass tattoos all over and has that Fast & Furious deep Vin Diesel voice. 

It has been a few months since I last had any work done so we spent a few minutes catching up on life. The life conversation eventually turned into a business conversation, like they often do. Everything was going great at his tattoo parlor for the most part but there was one thing that was weighing on him: some of his artists (team) weren’t spending enough time in the chair in some instances.

In this case, each tattoo artist that worked in his shop paid a percentage of the money they were responsible for bringing in to Stu for providing everything else- including their space.

The reason this was weighing on him was because he hears the potential future customers calling in looking to book time in the seat with his artists. He hears those future paying customers being told how many months out they are booked. Some get on the calendar for months out and some move onto someone that has time for them sooner than later. (I’d highly recommend seeking out tattoo artists that are so highly recommended that they can’t see you on any random afternoon without notice.) Anyways, Stu knew that in some cases these artists could have added more to their current calendar to land more of those inquiries. He knew they were leaving money on the table for themselves, and the business. He only has six seats. He uses one spot so that leaves him 5 spaces for his team to work out of. Each artist has his, or her, own work station. 

This is what is problematic in this situation. He only has five seats and some of his artists aren’t actively making enough money in their seats some days. The artists are happy because they are able to make what they want and work when they want but what they were not realizing was that if they choose to work five “billable hours” when there should be seven worked- the business is losing out on a percentage of those two hours. 

I don’t know if they use the term billable hours or not, but essentially an artist will work like an attorney. They have an hourly rate and will charge accordingly. What I suggested Stu do is to stick to the data and seek to understand the revenue potential of each seat. 

How many billable hours is the minimum amount needed to justify someone occupying a space to themselves? If there are two artists that tend to work half days- that’s awesome but they should share a space. This will allow those two part-timers to become one full-timer and allow the owner to go recruit another full-timer. 

Let’s assume that if you average out the amount of billable hours this business operates on average each day the total is 30 hours (6 hours x 5 artists/employees). If Stu could motivate some to work an additional hour and then consolidate a couple, freeing up one seat for another full timer, it isn’t crazy to think that he could jump from 30 to 40 billable hours. That’s 50 more hours of tattooing each week (not including Saturday). This approach will help Stu make more money while not working any more himself. In fact, he could choose to work less and still make more. 

Ask yourself these questions:

• What is the potential revenue of each seat, or role, in your business? 

• What is the output needed to reach that potential?

• Can you consolidate positions and free up payroll, or space for an additional hire? 

• What is that minimum expectation to justify having a spot on your team? 

There are only so many seats. If you don’t have that last one figured out- start there. If certain team members are missing the mark- it’s time to coach them up to see if you can get them to where they need to be. 

Once you have clarity on what you need to justify occupying a space you remove any grey area in regards to deciding who needs to remain on your team and who needs to be cut. 

Understanding what you need out of each seat will help you in several key areas: 

• It will help you with what you’ll need to focus on from a recruiting standpoint. 

• It will allow you to set clear expectations while onboarding new hires. 

• It will allow you to understand what level you need to coach to. 

• It will allow you to hold your team accountable.  

Steps to determine what you need out of each seat:

1. Direct or Indirect: Determine which seat will give you a direct return on your investment and which are indirect. If the seat is responsible for customer acquisition you should be able to land on what that minimum expectation is to have that seat be a profit center for your business. If the seat is responsible for servicing existing customers, administrative support for the back office operations and/or support of the acquisition team- that seat will most likely have an indirect ROI. 
2. Find Comps: If you determined the seat’s main objective is customer acquisition you now need to work to determine not just what that minimum expectation is, but what others are doing with a comparable opportunity. Look within your own business first to see how she compares to her peers. From there look at your competitors and what their team is accomplishing in your market. If you determine the seat is for an indirect role you’ll need to work harder to determine whether or not this team member is operating at a level that justifies occupying a chair. Finding comps within your market still can assist you with this. Locate five businesses with a comparable role. Ask to speak to the owner, or direct manager of that employee. Find out what the compensation looks like and what that individual is responsible for accomplishing during their workday. 
3. Your Comfort Level: In 2016, I sold my house to a friend of mine. I had a number in mind that I was comfortable with. I could have sold it for more to a stranger but I was comfortable with the check that I’d walk away from closing with. I understood what I was leaving on the table but I was willing to leave that amount on table for my convenience and to help a friend. I’ve never regretted that decision. You can apply this to your team as well. Be sure to factor in that leaving money on the table from living with limited team output is a residual loss every other week and year after year. Compounded over the years this can be millions of dollars… so be careful. Being charitable is great- just know how much you’re gifting. 

Now that we’ve discussed the key areas you need to focus on to have an understanding of what you need out of each seat, and also the steps needed to be taken to determine what you specifically need out of each, you should have more clarity with what you need to recruit for. Continuously recruiting will put you in a position of strength leading to maximizing productivity from each team member. This will ultimately lead to maximizing profits from your business.