Q. Morning Mr. Collier, I hope today brings you tremendous joy! When you get a moment could you please answer the below questions?
A. Ameer! You are starting to ask hard questions about inherently soft topics! i.e. no definite answers.
What should be your overall percentage of salaries to your gross profits? Example if I’m grossing $1 million a year, what should I be paying out in salaries?
No firm rule however EVERYONE should be adding value and cash flow WELL in excess of their compensation i.e. in business speak be “accretive to earnings.” The theory is that everyone you hire should create prosperity i.e. result in the business having significantly more income in excess of the additional cost incurred, each hire meaning more profits, not less. That is the theory anyway; often challenging to tell in advance or even afterwards! Can be difficult to discern the difference between competence and confidence (NOT the same), between individual contribution and group effort, between skill v. luck and/or favorable market conditions. While I do like to have a deep bench, I will frequently put off hiring until the need is blindingly obvious and a new Team Member has to hit the ground running and keep running hard. Lot easier to see if good hire that way. PS: I’m not particularly big on the “take a few weeks to learn your way around” school of onboarding, personally, I’d want to contribute/make an impact asap and I prefer to hire folks from same mold.
What kind of gross revenues justify hiring a COO/Chief Operating Officer? How many employees Team Member/Associates justify having a COO?
Let’s not get hung up on titles. Most every org needs someone keeping an eye on operations. May start out as just one hat of many that one person wears. Eventually, in my business, it becomes a FT manager (300 apartments?) then 3 to 5 managers reporting to someone still wearing multiple hats, then a Regional Manager (1000 to 3000 apartments) then a VP then a Sr. VP then a Director of Ops then finally, at 11,000 apartments a true COO.
How did you determine your “superpower” early on? Meaning what you were best at and what you should only be doing, and knowing what to hire out and what to not hire out?
I’ve always been a jack of all trades (Finance major, MBA, CPA, Attorney, Building Contractor, RE Broker, pilot, decent DIY handyman in my early days). If I have a “superpower” it is a DRIVE to live no ordinary life, a foundational belief, core value, that the BEST I can be, I MUST be. Couple that with an incredible role model of a dad who taught me to honor the social contract, respect others, and that the only right way to earn a living was to create value for others.
As always, I share what I most want and need to learn. – Nathan S. Collier