How can I grow my business with a shortage of labor?

Paul from California asks: How can I grow my business with a shortage of labor?

Great question Paul, and in my opinion the answer will be found by doing many things not just one thing.

Indeed, Business Owners across the country have been squeezed by the pandemic, by government regulations, lack of customers, lack of employees, increased wages, and increased costs.

Tony Robbins, amongst others, have said; “if you are not growing you are dying” … Then how can we grow our businesses when the world seems like it is working against us?

Multi-prong Approach:

First, let us address rising costs of labor and materials.  The short answer is “pay it and pass it on”.  But it isn’t always easy to raise prices, is it?  And some businesses have constraints regarding pricing that may already be locked in.  But for those of you that have control of your pricing consider this; typically, when a business raises prices, without increased costs, by a mere 10%, it can afford to lose 30% of it’s business without diminishing its bottom line.  This would mean you could do what you do with roughly 30% less labor and remain as profitable with a simple, modest price increase.  If your costs have gone (or will soon go) up, perhaps you could still sustain a 15-20% decrease in business without affecting the bottom line.  (Please reach out if you want to understand the math better)

Second, we look at efficiency, or more importantly, “throughput”.  How can we improve the throughput (output) of the work that our company does?  I won’t go through the whole process of how to approach throughput improvement here, but if you are interested in learning more, please contact me directly.  But imagine that we could just improve our output by 10%, that would probably mean you only need to recruit half as many people as you think you need now.

Third, we need to better retain the good workers that we have right now.  Of course, moving people up the pay scale as quickly as they may deserve and bonus programs will help retain. But I would first look at the “culture” and working environment of your present operation.  Is it a happy place or is it “toxic”?  Find out why your best performers enjoy working here, ask yourself is there something you can do to make it more enjoyable.  Just like “adding value” to your product or service, how can you add value to your workplace?  Remember that wages are usually 3^rd or 4^th on the list of reasons that someone works for you.  It is those intangibles that make work rewarding.

Forth, solve the recruitment problem!  And here is why it is so important; imagine that in this difficult business atmosphere that you somehow had an unlimited supply of labor, and that your competitors continued to struggle with the labor shortage.  It would be a tremendous competitive advantage, a time to grow, and take a bigger percentage of the available market share. It would set your business on a trajectory for exponential growth in the years/decades to come.  Therefore, as difficult a task as solving this problem is, the value of solving is huge, and an opportunity that will only be here for a limited time.

The solution includes many of the things that you are already doing, but just like customer acquisition, employee acquisition is a “marketing problem”.  And when it comes to marketing the creation of a MDP (Market Dominating Position) or USP (Unique Selling Position) is the critical first step.  Then using the same conversion equation to produce conversion, compelling offer, and most of the other marketing concepts that we teach to business owners daily will become the process to having both unlimited customers and applicants.

While it would be difficult to go into great details of these concepts within this response, I do hope this helps you Paul, and other business owners that struggle to solve the employment problem that face most business owners today.  Please feel free to reach out if you would like more details or to take a look at your specific circumstances.