If this first story sounds familiar, it is – I touched upon it in my Productive Output post. A few weeks ago the owner of a local large online retailer (approx 10x bigger than us) visited the warehouse. George worked for him prior to starting DI, and he based much of early DI off of this particular website. After seeing our shipping process on the back-end of our shopping cart, the owner turned George and his co-owner and said “I could fire two employees if I had that technology”. I unfortunately was not there to hear this, but upon getting the story from my partners it made me feel about as good as a developer slash business owner can feel.
Thus far, features like the shopping cart are how we’ve gotten our competitive advantage, how we’ve gotten as far as we have as guys just out of college with no outside funding. Anytime something takes up a lot of time we’ve either automated it or eliminated it. However, we’re rapidly approaching the time when four people just can’t handle it all. Today Mike, George, and I spent from 9 AM – 3PM packing our orders from the weekend. That’s 18 man hours doing warehouse work! Don’t get me wrong, we shipped close to 60 orders – many of which were very large – but no owner in their right mind thinks that 3/4 of their resources should be poured into $10/hr work while the high level stuff (mostly marketing) gets ignored and pushed back.
So why not just hire right now? A couple of things add to the difficulties:
- 18 man hours is not the norm. The norm is probably 4/day, but it’s not uncommon to have a few slow days a week that only take 2 man hours. Mondays are always larger because you have an extra 2 days of orders being shipped. In short, the pure warehouse work is sporadic.
- We don’t really have a lot of other work for “warehouse workers”. Shelves need to be stocked for maybe 30 minutes to an hour a day. Inventory needs to be updated (15 minutes a day maybe). That’s about it unless we want to cross train them in other areas, which I personally do not think is a good business move.
- We recently instituted a new check/balance system where one person pulls orders and another packs. Both check the invoice against the products before passing it on (either to the packer or to the outgoing packages area). This prevents errors due to pulling the wrong item, and highly reduces errors from missing an item all together. We’re pretty serious about it: if you take the product off the shelves, you are absolutely not allowed to pack and ship it. If this is the case, do we hire 2 employees? Or do we still have an owner paired with the full-timer?
- Our salaries aren’t as high as we want them to be right now. We are all getting by, but still underpaying ourselves. Everyone is living tight and that is stressful. An employee will increase revenue long-term, but we’d like to get one more raise in there for us before hiring someone.
My gut tells me that in a few months we won’t have a choice: we’ll need to hire. IF our threshold is where I think it is (fingers crossed), we’ll already have our raises and it’ll be a question of: do we hire one full timer or two part timers? I’m leaning towards two part time college age students with flexible schedules. This eliminates the need for us to provide benefits, meets our check/balance requirement (if one isn’t working that day, one of us will chip in), and enables us to have them only come in 3-6 hrs a day. I realize that there are downsides to these types of employees, but I think the pros outweigh the cons. Who knows, maybe we’ll have 3 or 4 at some pt to ensure that we get 2/day.
The good news in all of this is we’re growing. Nonetheless, every “hump” is stressful. The “getting into a warehouse without going under” hump is passed and this is the next logical part of our growth. The warehouse stuff was only February, so things are happening fast, even though a lot of days it feels like growth is happening at the speed of molasses.
On a somewhat related topic: we’re considering getting an intern or hiring a virtual assistant (usually based in India) to do a lot of the more monotonous marketing and customer service tasks. One example would be to create a list of sites for us to contact to participate in our wholesale or affiliate programs. There are many many more, but those illustrate the point that there are long tedious tasks that us, as owners, shouldn’t be spending our time on.
On a completely unrelated topic: this heatwave is ridiculous. I was sweating balls all day long doing manual labor in the warehouse. Average high temps this year: ~70 degrees. Beautiful weather right? This week: close to freaking 100 degrees with humidity that makes it feel like you’re in a steam bath all day long. Our boxes – despite being “dry” – felt mushy when we were trying to pack orders. The packing slips and invoices were curled up like you took them in the bathroom with you while showering. Last time I checked I lived in Upstate NY…not the swamps of Florida.