Small Business 101: How Well Do You Really Want To Know Your Employees?

These days everybody is an “entrepreneur” which is usually code for “I don’t know how to run a business.”  For over 20 years I owned a small business and experienced all its different phases from the start-up process to the exit sale, and everything in between (and I do mean everything).  

In this series I will share some of my insights so that if you are currently running a small business or thinking about starting one, you can benefit from my experiences and hopefully avoid my mistakes (and there were a lot of them).  And remember, every small businessman is an entrepreneur, but not every entrepreneur is a small businessman. 

“How well do you really want to know your employees?”

Most small business owners have never asked themselves this question, but they should, because the answer to this question is critical. It influences the way you will deal with troubled employees going forward, and how you answer may even affect the overall productivity of your company.

People often asked me what was the biggest mistake I made while running my small business?

The biggest mistake I ever made was trying to forge relationships, in essence, friendships with my employees.

I had the bright idea that I should get to know everything I could about my employees; know their spouses, know about their children, know about their personal lives outside of work, etc. In my mind, if I could forge a relationship, a friendship, with my employees, they would be more motivated to perform above par, because they would be working for a pal, a buddy, their friend.

Unfortunately, most times just the opposite happened. Since my employees felt that I was their “friend,” they also felt they had more leeway in their performance standards with me.  They thought that I would give them more slack if they weren’t performing up to par, because hey, I was their buddy. And they were right, I did.

Deep down, I’m a softie. But my weakness wasn’t in being a softie; my weakness was in not recognizing it and setting up my company in a way that it couldn’t be exploited.

Many times I carried sub par and troubled employee’s too long because I knew them personally. The last thing I wanted to do was fire someone whose wife and child I knew.

But by carrying these troubled employees too long, it not only affected my business, it affected my livelihood, as well as the livelihood of all my other employees. In addition, I was being unfair to all of my employees and I was being unfair to myself.

Everybody has to perform to certain standards, myself included. And to let my personal relationship with individual employee’s cloud my judgment as to what was best for the business, was unacceptable.

Fortunately, I solved this problem early on in my small business career. I decided I didn’t want to know anything about my employees other than what I needed to know about at work. I was still friendly with them, I was still fair with them, but I didn’t confuse “friendliness” with “friendship.”

It is important to ask yourself if you are the type of boss who can have a friendship with an employee, but if need be, turn pragmatic and do what needs to be done if that employee becomes a liability to the company?

But if you are the type that will let relationships get in the way of making critical and necessary decisions that affect your company, I highly suggest you take the tact that I did.

Another more “Solomonic” option is to insert someone in between you and your employees, like a manager. Someone who will buffer those issues between you and your employees, and let you focus on the “less personal” aspects of running your business.

These middle-managers are often an expense that a small business owner doesn’t think they can afford, but trust me, their cost will more than be made up for in the piece of mind they bring you, allowing you to run your company better, more efficiently, and less emotionally.

Remember, this is not about casting judgement on the “preferable” type of approach as a small business owner; it is about being honest with yourself, recognizing your personality traits, and creating a structure that best compliments them, all for the good of the company which includes your employees.

Small Business 101: The Market Segment To Avoid At All Costs.

Small Business 101: How To (Almost) Always Get The Winning Customer Bid.

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  • Jeff Watson

    I’ve been the same way with every prop trader who has ever worked for me. If they don’t meet the goals, see ya….and they knew this from the get go,

    • What percent of prop traders that worked for you were able to “make it” at trading?

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  • Cam

    Couldn’t agree more! I have run my family’s business for almost 20 years. In the beginning I always tried being the nice guy, the buddy, and always got sh!t on. Sad but true. I like (almost) all the people who work for me, but have my circle of friends outside the business. Harsh, but its the only way to operate. To be honest, I think they like it that way too.

  • Guruprasad V

    I’m planned to start my new biz. This article has definitely given me an idea to deal with employees. I’m planned to recruit college students to do coding for me and I thought of forging better relationship with them and this article is a timely reminder and I’m thankful to your article.