Plumbing Connection Winter 2022

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7 6 ACROSS THE TRADES Winter 2022
MIKITANI’S RULE OF 3 AND 10:
KNOW WHEN TO HIRE
AS YOUR BUSINESS GROWS AND YOU HIRE NEW STAFF, SOMETIMES EVERYTHING JUST STOPS WORKING.
JAMES BURGESS EXPLORES WHY HIRING PAST MULTIPLES OF 3 AND 10 COULD BE THE CULPRIT.
A re you in the middle of hiring
more staff? If so, then you
might want to consider whether
your recruits will break your existing
business infrastructure because,
according to the wisdom of Hiroshi
Mikitani, they will.
Mikitani is the CEO of one of the
world’s largest retailers and the pioneer
of the ‘Rule of 3 and 10’, which states
that dramatic changes occur when the
number of staff a business employs
passes a multiple of, you guessed it, 3
or 10.
In other words, when a company
grows from 1 to 3 employees, it will
have changed significantly enough that
its existing practices and procedures
will no longer fit. The same will happen
again when it reaches ten employees,
then 30, then 100, then 300, and so on.
What’s interesting is just how
applicable Mikitani’s rule is for mapping
the growth of an plumbing business.
Think about your business when you
worked for yourself compared to when
you finally hired a couple of guys. An
increase in staffing probably meant you
had to restructure your processes and
create procedures that ensured your
new hires worked effectively.
Now think about what happens when
you reach ten employees. At this point,
you’ll probably have most of your time
devoted to managing people rather than
completing jobs. You’d also need admin
staff, a set of procedures for them, and
maybe even a completely new system
for managing your guys in the field
as you move off the tools and into a
permanent management role.
For trade businesses intent on
growing quickly, it can be all too easy
to blow right past one of the 3 or 10
milestones without even realising
that your hiring tactics have put your
internal infrastructure at risk. But the
reality is that many trade businesses
must grow rapidly to stay competitive.
Meaning they simply don’t have the time
to constantly reassess their processes
and procedures to make sure they still
fit an expanding business.
That’s why it’s essential to
understand the kinds of challenges
you’ll face when you arrive at the first
few milestones and what happens as
you reach the double digits and beyond.
Think of the 1 to 3 staff milestone as
what shapes your business. It’s where
you must move away from an ‘I’ll do
everything’ mindset to a place where
you delegate tasks and explain what
needs to be done to your employees
instead of doing it yourself.
The jump from 3 to 10 staff and
onwards will likely call for more drastic
changes to your internal infrastructure.
Shifting around job roles, establishing
a senior hierarchy, and of course,
delegating parts of your role to others in
the business as you get busier.
From here, every new milestone will
require more sweeping changes to your
company structure and a bigger revamp
of the processes you rely on every day.
To make transitions easier, you can
always integrate a job management
software like AroFlo into your business
during a process and procedure change.
By digitising your staff management
and automating tasks like invoicing,
quoting and scheduling, your business
will be more resistant to process
breakdowns. A digital platform like
AroFlo additionally helps futureproof
your systems and lets you create
workflows that won’t break down as
easily if your hiring practices push you
past your next threshold.
On that note, if your business has
already passed a threshold, don’t stress
too much! There’s always time to get
things back on track.
The start &
stop of growth
Example strategies for
addressing the Rule of 3 &
10 in your business.
Stop trying to do everything
yourself. Start hiring new staff
with clear roles.
So you do everything and you have
control? Then when you hire people,
what control should you handover?
Make sure everyone has a clear role.
People should be doing the work that's
best suited to their skills.
Growing from 1 - 3 staff
Stop (only) working in your
business. Start working on your
business too.
You need to become a coach and a
mentor. Begin to establish hierarchy
(e.g. a second in charge). You'll
probably also benefit from having one
or two full time office staff to manage
operations and accounts.
Growing from 3 - 10 staff
Stop trying to keep track of
everything in your mind. Start
using a system of record.
A System of Record is where you put
all the critical information (customers,
jobs, invoices, etc). This might include
job management software like AroFlo,
your accounting software or a CRM.
Growing from 10 - 30 staff
Stop creating issues through
lack of foresight. Start
assuming you'll keep growing.
If you're at 30 staff, you can grow to
100. You need to plan for that growth.
Ensure your software doesn't have
user limits, your office has ample
space and cash flow is good for
payroll.
Growing from 30 - 100 staff
Stop trying to extract more
work from one market. Start
looking for green pastures.
More growth isn't always easy -
perhaps the remaining customers
aren't a good fit for you. Look for ways
to transfer your successful business
model into new markets (regions,
products, services).
Growing from 100 - 300 staff
Jobmanagement.Sorted.
AroFlo is an Australian job
management software developed for
tradies and packed full of all the tools
you need to manage jobs, invoices,
timesheets and more. Check us out at
and get your operations
sorted.
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