Naked CEO series: Number one frustation at the moment is resourcing

by oneafrikan on April 27, 2007

My first post here where I’m just ad-libbing as it comes off the top of my head. I need to go to bed, so trying to get this out now instead of delaying.

My number one frustation at the moment is around resourcing. How do you balance the growing needs of a business, with taking on more work to keep the engine running? Unless you have 3 to 6 months of cash cover in the bank, it’s a difficult problem to juggle, and if you get into situations where projects start to run over, you end up with no cashflow, too much work to do, and not enough people to do it with.

How can you commit to project 5 when projects 1, 2, 3 and 4 are still in progress or finishing? Do you turn away the business?

So resourcing is an art in itself. Who is the best person to do this? vs. Who has time to do this? I used to think that productivity and efficiency are where you would make the gains, but now I’ve realised that the more successful you become through efficiency and productivity, the more you become a victim of your own success (How can you commit to project 5 when projects 1, 2, 3 and 4 are still in progress or finishing? Do you turn away the business?).

Unfortunately, when you’re a smaller business, you’re not dealing with projects where you have an entire team working on a project. At most you may have a few devs and a project manager, so you can’t reach economies of scale. Upwards of 5 to 6 people and a PM is where you start to reach those economies, not before. So, your calculations around utilisation and availability are your most important calculations to make – one or two weeks out and you could severly crap your cashflow. No cashflow, no salaries, no employees, no business. Back to square one.

Added to that, you have overheads and non-billable resources (like myself of late – I’ve not written more than a week of code at a time since January this year because I’ve focussed on growing the business – now we’re at 8 people) which eat up your profitability, but the problem is that you need them for the business to run.

Most clients, in my experience, used to working with freelancers and contractors, think that paying the average freelancer/contractor day rate to a business with more than 2 people and an office is enough for them to make a profit. Unfortunately, it’s not – the business needs to charge at least 3 times that day rate just to break even. Fixed and variable overheads and non-billable resources are what cost the business money, and as it grows, you need them – imagine your developers interfacing with the client directly all the time? Who is going to go to meetings?

Anyways, I’m sure there are many tech / software / professional people out there who have the same problem, so I’m not alone. I guess the deepest frustration is the anxiety this brings all the bloody time – you’re never free from the thought of salaries and resourcing.

So, I love what I do – don’t get the wrong impression; but until we crack the resourcing challenge, the frustration will always be there.

What about you?

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