The Hiring Process that Dave Sherwin uses to Find the Right Employees and Contractors For His E-Commerce Business.

Owen: Hi, everyone. This is Owen McGab Enaohwo and welcome to Process Breakdown Podcast. While I get successful entrepreneurs are coming here to reveal how they create systems and processes for their business which enabled them to now literally run their business on auto-pilot without a constant involvement. Today my guest is Dave Sherwin and he’s the founder of Escape the Matrix a holding companies that has several E-Commerce website that sells wellness, products and supplements. Dave, welcome to the show.

Dave: I’m excited to be here. Thanks for inviting me, Owen.

Owen: This show is all about having entrepreneurs come here to talk about how they created systems for their business. But if you create a system and then you don’t have the right people in your company to use those systems to deliver results to your customers then the systems are essentially pointless. And during our pre-interview, you talked about how you literally have a step-by-step process for finding and hiring the right people for your company and that’s what we want to talk about during this interview. Before that, I want to know more about what does your company do and what kind of pain did you saw for your customers?

Dave: Well, I’m an online marketer. That’s kind of my main skill set. I’ve done this for about 10 years. I’ve got really intrigued with the internet and online marketing in about 2003. The supplements came later. I’m a health nut. I do triathlons. I’m very competitive, I’ve been to the national championship, I try to get ranked in my age group. I’m really into this. Okay, so I’m really into health and wellness.

And one of the reasons why I want to know automated business is so that I can enjoy my real passions which is my family and my sports and my friends and I don’t want my entire life to be work which is what I see a lot entrepreneurs fall into. So it started with online marketing and then overtime, one of the things I learned from some pretty good marketers, “Does the auto-market stuff you really love and really are passionate about?” But even then as I got into supplements, I realized the main need was weight loss. The fact is most people can’t go out and do a triathlon and the reason why is because they’ve got a lot of pounds to lose. You know, 60% of Americans for example are overweight. And so that led me to really research the wellness arena especially the weight loss arena which is hyper competitive but as I was able to find niches with the weight loss arena and set up sites for products and that’s really where we’d have the most success.

Owen: So basically, you set up this company where you have different niches where you provide wellness products and supplements to different niches and you have several different websites all on the need this holding company. That’s the essence of what you said right?

Dave: That’s right. We had about probably 80 websites now in play. Some of which do very little, some of which do a lot, all of which were constantly working on and trying to get the next thing to pop, plus as an entrepreneur as you know, Owen, you can never get fat and happy. You can’t think that, “Hey, we got a few things really going on here and as much as we want to automate our businesses, we just have to be smart and monitor.”

You never want to let something gets a lot updated and then 6 months later it dies because you weren’t paying attention. So it’s always at monitoring and all is looking because also things can break, websites that were performing 2 years ago may not be performing today. And so my main job, Owen, is to set these things in motion to get the systems happening but then do not get lazy. I love what I do, I like work but I like to not have to work, right? It’s nice when the systems are working so that the work you do is optional.

Owen: And so let me ask you quick question. How many employees do you have at your company right now?

Dave: The technical question is actually zero because I don’t hire employees. I only hire contractors. But in actual fact, those contractors are full-time, several that only works for me and I have a combination of some contractors I don’t need full-time. So for example right now, I have two full-time people in the Philippines, one full-time person in India. I’ve got a staff of a team in India that has 54 employees. I have a one “Go-To” guy who will give the right assignment to whoever on his staff needs to do it.

So that firm has been great and for me, I only have to work with guy but I get the accumulative brain power of 50 and then I’ve got a contractor in Salt Lake City here locally that works for me part time as needed but is an excellent PhD developer, very talented in all areas of under the hood type of development and working on websites and he works for me probably 30 hours a month. And the answer is 3 full-time, 1 part-time and the staff that as needed.

Owen: And one of the things that I want to do is give you as a kind of context as to how much revenue you were generating in your business and maybe you want to talk about what it was last year and what you expect that’s going to be this year?

Dave: Yeah. And you had warned me you’re going to ask those questions. I actually looked at my tax return last year. Our revenue was $967,000.

Owen: Awesome.

Dave: And frankly this year, it’d probably be lower. I am not to be negative but I think we may only do $800,000 and honestly, that’s okay. I’m rebuilding a couple of things and there are a few things that we kind of taking a step back. So this will probably a down year but rebuilding with the hoops that we can scale bigger in 2014. So if my business does anything over 300,000, I’m a happy camper. So I’m not going to complain.

Owen: And the reason I asked that question is in case the listeners are wondering because I want you to know that we’re about to talk to the phone who is really running a real business, generating a real revenue. We’re not just wasting your time. This is real information that you can use in your business. And so, I was trying to find out. When was the lowest point in your business, describe how bad it got in your business so far?

Dave: Well, I tell you. I had a real low point a few years ago before I discovered the wellness products, I was selling a service— we had a system 4 online marketers. I developed some skill in online marketing, has having some success and I put together a tool that online marketers could use and include an auto-responder and capture pages and we hit on the network marketing niche. We found that network marketers were coming to the internet and they didn’t really know what to do and we built a system for them.

And we got that system up to about $20,000 a month in revenue and I’ll tell you what happened though and it was really awful. So I was making a living from that, things were going pretty good and one day we found out we got hacked. Well, it shouldn’t be too big of a deal. We had about 5 servers running this business but that hacker was a good hacker if there’s such a thing and got into our business good and he start sending e-mails up our servers so our data centers shut us down and we could not get that guy out of our server. We changed our password and did all these things and long story short, I went from $20,000 a month revenue stream to zero in 6 weeks and that was the low point of my career.

Owen: You also mentioned that in your business will have a lot of moving parts from large to small and so there’s always this issue of back in the day before you systematize your business of overwhelmed and you’ll be in the bottom in your business. Can you explain more about that?

Dave: Well, the story I just told leads to a great example of that. So for example, I knew enough to build up the revenue stream but not enough to secure my servers. I didn’t have that level of expertise. I had no one on my team that had that level of expertise. I didn’t even know who to go to. So the first thing I had to do is scramble. What do you do when your server gets hacked? And it was a learning process and so, that is one of the moving parts that because I was so focused on everything else, I had ignored. I didn’t know that security was an important part of an online business, a very hard lesson to learn.

And so to your point, what I found is, issue number one, you’ve got to know your business and the only way I know how to do that Owen, is to find people that are bigger and better and smarter than me and to network with them, that’s one thing. I love to find people that are more successful than me and take them to lunch. I do that pretty much every month and sometimes more often. Any time I can get around on someone who’s done something bigger and better than me, I pick up these little tidbits and describing to them my process and then they’ll say, “Dave. Have you considered this?” And they tell me something I haven’t considered and so, that’s one great tip, Owen that has really been great for me is developing a network of people.

And let me tell you something, I don’t care how successful a person is they like to be taken to lunch. A small time guy, the people listening on your podcast right now that might be thinking, “Well, I don’t have any skills. I’m not doing anything yet.” Think of people that are successful and offer them lunch and you’ll be surprised of the caliber of person that can teach you and mentor you in your business for 20 bucks, for an inexpensive lunch somewhere. So that has really helped me.

And then I’ve learned to break my business down into the major parts. So for example, when we build the website, there are three major headings. There’s graphic design, development and marketing. And what we’ve found is from those three major points, we have to have the right people on board who are experts in development. Development is different than graphic designs and graphic designs is different that development typically and marketing is different again. And so what I found is when I break that in my tool down into those three components and from them, they’re sub-categorized everything into those categories and make sure that somebody besides me is on top of each of those areas. So we start with that type of organization from the three major elements of the site and then drill on down there of who would be responsible for each area?

Owen: I see how you came to the point where you’ve broken down your businesses on different parts of the business. It’s kind of a like a conveyor belt with different parts to it and you have things flowing through and everybody at a specific part is responsible for getting things done. But then, it now come to the point where we have to talk about your hiring process because that was something that really got me saying, “I want to interview you specifically on your hiring process.” So, could you walk me through kind of each of the stages on the hiring process that you have?

Dave: First of all, I use an online service called oDesk. Some of your listeners are quite familiar with oDesk and if not, they might have heard of E-Lance. I don’t know that there’s any advantage one over the other and so I’m not here to sell those services to anybody but I’m just going to say I’m very happy with oDesk, that’s the service that I use.

And so first of all, the thing I love about oDesk, Owen is they already have a fairly significant screening process in place. The person has to take certain test for example, a big on is English. A lot of people now all around the world speak English as a second language but may not have the skills necessary to work with me and in the particular task. So oDesk forces them to do or not force them but they offer various test. There’s test in SEO, Graphic Design, there’s test in how fast they can type and many of the different skills they may require.

And not only that Owen, what’s really amazing, they track that user’s hours spent on oDesk for other contractors like myself and those contractors, I can look up what projects they have done, what kind of rating the person gave them for the works that they did, how much experience do they have, what skills do they list. So when you go to the service like this then you’re starting with a huge head start because you are able to only look at job applicants that have the basic skills that you already require and they’re doing well on the test.

Owen: Okay. And so, I guess you use primarily use sites like oDesk. And so, what makes you that process and you know, you have a specific rule in your business now that even though they are not employee, they come in as contractors. They’re going to be doing the work on an ongoing basis.

Dave: That’s right. The word employee, really they are as technically contractors but yeah, they’re going to work for me hopefully long term. Now here’s a couple high level tips on that I’ve learned through blood, sweat and tears. I hope people realize how valuable these tips can be as they go about this process.

Number one is that a lot of entrepreneurs don’t think about and this is a little secret magnet that is the key. Give the job description, the job posting a really great title. You see, one of the things that contractor wants, they don’t want to be a Graphic Designer but they’d love to be a Senior Graphic Designer. And that little difference between “Senior Graphic Designer” or you put something on there. For example when I’m hiring an Executive Assistant, I put Executive Assistant, not Virtual Assistant.

Owen: Okay.

Dave: The word exactly that sounds better and to the person applying for the job, you see what they want is good history. They want to build up their own resume and have some experience, a good sounding job. So if they ever leave my employ, it sounds like they done a really great job when they go to apply for the next one. And great title is critical.

Owen: I guess at that very stage of where you’re trying to find the right person to handle the task is you have to think like a marketer, you’re trying to sell the position.

Dave: You are. That’s right. You’re looking for a person that’s responding well. That’s thinking, “Well, that’s the type of job I want to have.” Yes.

Owen: Okay. And so when you have now applicants come in, what kind of tracking systems you have to be able to choose the right people? I mean go to the next process which is the interview process. So now we have to track in.

Dave: Well, before you get to that point, once you’ve copied the great title, what’s really important is that you do an excellent job of describing exactly what you want. You not only want to list the skill you’re looking for. You want to give them examples. You want to tell them, for example, I’m hiring a developer, I need a lot to know we use WordPress. That’s our platform. You must have experience in Word Press. For example, I’ll state, do not apply if you have less than 3 years experience. Sometimes I might say 5 years of experience. So just think through how many years of experience were you looking for? What do they have to know?

Sometimes, I will state that it’s Graphic Design, I’ll say, “If you apply, please provide me three links to work you’re most proud of.” You see how that works? I want to know what have they done and you’d be amazed how many people you weed out about I’m asking them for examples of their work. A lot of people can’t provide examples and so they don’t apply for the job because they can’t answer that question. So if you really think through who you are looking for and how much experience they have to have and what skills they need, they have to weed themselves out. So you’re only looking at the best people.

Owen: And what I get from that is you really need to be clear on the job description is what you expect from them and kind of experience that you need them to have. But then the inside of the job description, you’re also putting things in there that they’ve got to critically ask to have read the job description and have to deliver those things to you like you’re asking them for example, now you’re saying you’re asking them to show you the best work they have done. If they’re someone who is not diligent enough to read the entire description, they won’t see that. They will just jump over it and you just know it’s on the sense of your response and it’s not what you ask for in it then think, “This is not the right person.”

Dave: That’s it. And you’ve got to be prepared because Owen, once you post some of these jobs you can have 50 applicants to go through within 24 hours. So you’ve got to be prepared and if you didn’t do a good job on that description, the reading process is going to be a lot harder than it needs to be. So other criteria that you can set is how much you’re going to pay, how many hours a week you want them to work, what are the things that they are looking for?

Now think about this one. On oDesk for example and I’m sure it is similar on E-Lance. It will say for how long will this job last and some jobs, I only need someone to do something for a week but for the most part, they’re not interested in doing a job for a week. They’re looking for a long term thing. They’re looking to feed their family and so, anytime you can that you put a job that lasts 6 months and more, you’re going to get more applicants and more qualified applicants plus one thing you’re going to get when you offer a long term gain is that people often give you a lower price. If they feel like you’re legit and you’re offering them something they can count on for a year, 2 years or 3 years, they’ll often give you their best hourly rate.

Owen: And I’m curious just on the part of posting the job out there and trying to weed themselves out, is that a discovery from your experience that you can share with us based on how you created the job description and the information that you were able to weed out the flop and get the right people, anything that comes to mind that you can share?

Dave: Well, I wish I had a better answer to that question because the fact is, even when you nail it, even if you nail it every bit of it, you do a perfect job, people lie. And there are people that are going to apply any way that never should have applied and you just going to have to go through and delete some of them anyway but to give a better answer to your question, what I do is I do keep track of all my job descriptions. I have a file on my computer for hiring because it’s easy to forget. It’s easy to just kind of get lazy and go, “I need a new Virtual Assistant.”

And you’re just jumping in and cuff and then you forget a little thing. For example, I’ll give you an example. I recently hired somebody and I forgot to mention they must work US hours 8:00 until 5:00 Mountain Time. That’s pretty important. I forgot to mention it and I end up hiring a guy who is in Pakistan who didn’t get the memo and he’s going to work while I’m asleep, you see and it was my fault.

And we were able to resolve that luckily because he was actually willing to work US hours. He kind of said, “You know, what, I’m kind of know I got to start working US hours anyway. I’ll accommodate you. I’ll just start with you as my first contractor I work US hours for.” But that was my bad. That was a pretty big mistake to not tell someone they wouldn’t be working their normal daylight hours.

Owen: So basically, if you see yourself hiring for the same kind of position over and over again, craft kind of like a story or set of requirements that you’re always going to be needing and keep it someway so that you can always use, refer to that simply for hiring that same person over and over again, next time you need it, right? That’s what I’m getting from there.

Dave: That’s right. And another little trick I’ve learned Owen is, although we as entrepreneurs, we’re like ready fire aim mentality. We’d like to get things done. We like to shoot from the hip. We like to go with the flow. In this process, you don’t want to do that. Better to write it all out and then not post it yet, come back to it tomorrow, come back to it and review everything and really think through that and “Have I forgotten everything? Is there a skill I forgotten? How does this read? Will they really understand it?” It’s worth getting this part right. If you can nail that job description on what you’re looking for right up front on everything you really want is not a plus you want to rush. So you want to get it right.

Owen: Okay. So now we’re going to this point where the applicants are coming in. So do you have an applicant tracking system to weed all down from all the applicants that you get and this process in which you use?

Dave: Well, that’s another part of using oDesk. So here’s what happens. Let’s go back to what I said a minute ago. See you’ve got 50 applicants to weed through. Well, the first thing that I can do is I can see how much their hourly rate is. So for example, if I’m willing to pay $5 per hour for this particular position and I’ve got applicants who are $17 and $15 and $12 and $11 per hour, I can immediately eliminate those.

Now you can actually establish not an exact range but you can say on oDesk whether you’re looking for low wage, medium wage or high wage and that’s more fair to the contractors that they know what they’re trying to show up for. You’ve got to remember, Owen, for some people that are new to this game. I’ve got a Virtual Assistant that’s been with me for 5 years in India and I pay him $180 and he’s got a college degree in Computer Science. He’s phenomenal. He’s my right hand now. Over the last 5 years, he’s learning my business better than I have. If I’m on vacation and something breaks, he can fix it. Okay. He has become my “Go-To” guy and he’s wonderful.

And some people might think, “Well, they have you cheap skate, a $180 a week?” That’s not that much. You know what, that’s equivalent to about $60,000 a year in Rupees. It’s a job he’s very happy to have. He’s been able to get married on that wage. He’s been able to enjoy his life and travel and get new clothes for the first time. Here’s a guy who is born in a hut with a dirt floor who is now got a decent working wage with me. And so, this sounds sort of in consequence. It’s a win-win. You know, this is one thing I’m passionate about. I’m passionate about hiring people from disadvantaged countries.

I’ve been to the Philippines. I’ve worked with people on the Philippines. I’ve been to India, flown out there, I’ve worked with them. I’m seeing their conditions. We’ve sat together, we’ve broken bread together and for me, that’s part of the passion is actually hiring contractors on some other countries, getting to know their culture and their language and their customs and their holidays and their families and knowing that I as a US businessman and able to take US dollars and create a great lifestyle for them and yet it’s a win for me too because I can do it at lower than US market rate and so there’s some people don’t agree with that but that’s part of my [22:34].

Owen: You’re click into the choir right here. So I wouldn’t even get into that because I actually have a Virtual Assistance Firm, that’s a different story. But anyways, the thing is, I’m trying into more details about the applicant tracking system that you have now because when these applicants come in you said you’re screening based on maybe the price that they are willing to take on job?

Dave: Yeah. So, there would be terms on some obvious ones. Another big one you might want to look for is there are firms out there that are applying for the job and you have to decide, “Do I want a firm for this one or am I looking for a Go-To person that just reports directly to me?” Because there’s a big difference there and so you might weed out according to that.

And the other one is right away, Owen, just reading the description of themselves, the person can’t even write a good description of themselves and they do a poor job representing themselves and I can learn a lot about their English skills just sort of how they reach out to me and how will they communicate with me. So I’m able to weed out some and so now I’ve got my list to 50. I’m able to quickly go some that are out of my range in terms of price. Can they not communicate very well? Do they not have the skills that I listed?

And in oDesk, you can click a little button that puts them on your short list. So step number one is to short list. Typically I’ll end up with 10% to 20% of the entire list on my short list. From the short list, my next process is to carefully review each of those before I contact them and look at their sample work, their history, the exact projects they have done for other entrepreneurs and whether it is fixing what I do and I’m able to eliminate another faction of them again. And now, I’ve got a short shortlist and now I contact those people and this is critical, Owen. This is how I weed it out again without wasting any time contacting anybody.

I send the people on my short shortlist a simple e-mail saying, contact this on e-mail, you contact them through oDesk. But I send the contact saying, “My Skype ID is… reach out to me during US business hours and I’d like to discuss this job with you.” And now, a lot of them will weed themselves up because they wouldn’t even find you on Skype and show up and try to contact you.” And that to me just let’s them eliminate themselves because they don’t even have the initiative to come on Skype and find me. So I make myself a little bit kind of hard to get and once I see those people pop-up on Skype now I know okay, now I’ve got the people that are really worth talking to.

Owen: Let me see if I can summarize that a little bit. So after you go to the applicant list, you create like a shortlist, now your diving and look at the feedback they’ve gotten from previous jobs and see if they actually can do this job and how long did they do the task that are similar to yours then you create a second shortlist based on those who you liked the feedback that they got from who hired them in the past and then this part now is you’re giving them the opportunity to reach out to you proactively. And to the listeners who are listening to this can even come up with a different kind of test to test. But this is your test so you get them to proactively reach out to you on Skype and only a few of them will and that leads into shorter shortlist and now you come to the interviewing process point, right?

Dave: That’s correct. And now after doing all that, guess what you learned over time?

Owen: What?

Dave: You still don’t know until you hire them. They’re still on trial. You’re only getting started when you hire them. Now I’ll give you an example. I mentioned hiring this firm in Pakistan. When I hired them, I had narrowed it down to two firms because in this case I wanted a firm. I wanted a Go-To leader that I could give any task to and he would get it done. That’s what I was looking for, something more broad, so not the limited skill set of an individual but the part of a team.

I narrow down at two. They both look equally good to me. So you know what I did? I hired them both. I hired them both, I gave them both the exact same assignments and that particular time, I was developing a logo for a new website, some Graphic Design. I have some transcription that I needed done and one of the thing that I’m forgetting now, I hired them both. I gave them both the exact same projects and said go.

And by the time that first project was done, I knew which firm is better than the other firm because of the work that I got back. And so I let the one guy go and said, “I’m sorry but we’ve done this project together, it hasn’t been that good, your communication wasn’t what I needed and you took too long and this isn’t going to work out. I’m sorry.” And I closed that contract and got going with the one that worked. And so, you’ve got to be willing to actually put them to work and that’s when you really find out if you’ve got the right person.

Owen: And so, what I get from that, you get down to your shortlist and you do your interview and now you’re about to hire them, you want to also note just to hire them out and you want to test the nature that they were. It was going to be like the split A B test. Maybe you now have like three candidates out of the 10 that you have paid, right? And you just speak test on all of them and maybe you have to even pay them too to do the work. And say, “Okay, go ahead do the work. Let’s see how it goes.”

Dave: It’s not that much money, right? It’s not really expensive. It probably cost me 50 bucks to find out that firm wasn’t any good, well that’s $50 well spent.

Owen: Yeah.

Dave: Now I really do that. I really hire two at the same time. It’s just in that particular time that makes sense. Keep in mind I can hire the person number one and if I’m unhappy with their work, I can always go back to my shortlist and hire person number two as well. So you don’t have to do it the way I did it.

Owen: Okay. I like this, you really broke it down and now you are at the point where you test and you’ve chosen the right person. Is there anything I’m missing in between the steps between test and then choosing the right person? Is there anything that you want to cover regarding this hiring process that you use?

Dave: We talked about it but not alone and that is actually reviewing sample of their work. You want to get samples. You want to see what they’ve actually done and even there Owen, unfortunately, people lie, people will give you a website that they didn’t built. So really until you hire them and put them to work, you don’t know for sure what you’re going to get even after going through all that. So be prepared. Don’t expect to hit a home run every time you hire somebody. That’s the tip of the day right there. It doesn’t work that way.

Owen: And also, when you hire them, are you putting them kind of like on a probationary basis where it’s like they’ll also have to be in a steady performance in order for them to eventually now become “This is really an ongoing relationship as supposed to we’re still in a test phase.” You understand the distinction I’m making?

Dave: I do but no, I don’t do that.

Owen: Okay.

Owen: I simply hire them with faith. After doing all that work, I assume they’re going to work out and do a good job. They’re contractors so there’s no long term commitment and if they don’t work out then that’s the tough decision entrepreneurs have to make is going back and saying, “I’m sorry. We’ve worked together for 2 weeks or 2 months or whatever it is and I’m just not getting the quality of work that I need or in a timely manner, whatever the case is.” And so no, I don’t do a probationary phase. I just hire them and hope they work out.

Now, Owen, you’ve got to be fair with people. I see people too often hire someone and you’ve got to take responsibility because you’ve got to give someone a chance. Don’t let someone go to quickly who just needed to get to know you better. You need to understand your communication better. And also, I can’t tell you how many times I’ve embarrassed myself by getting angry with somebody and giving a little attitude when I didn’t get a project the way I expected it to be or when I expected it to be and then finding out that my communication was poor.

I had one just very recently where I told the Web Designer Firm to hold off on a website and then later I had given them assignment to make the logo bigger in the upper left-hand corner of the website and they didn’t do it. And I called the guys on Skype and said, “Hey, listen. I had made this site improved.” And he said, “Sir. You told me to stop working on the site.” I had sent him a mixed message. I never said it was go time again. You see? And he didn’t know whether he got the assignment for the logo before or after I had shut them down. And I came in there with attitude that wasn’t deserved and so I’ve done that too many times. I’m trying much better. We’ve got to all be patient with people. Give people a fair shot and understand it. A lot of times we make mistakes in our communication so be willing to be patient and work through it with people before you just let them go.

Owen: I like how you’ve gone through with your hiring process and the difference steps in full. But I’m wondering how do you manage each stage of your hiring process so that nothing falls through the cracks?

Dave: You know, actually oDesk. This is one of the reasons I love oDesk is because it really makes a dummy proof for you. For example they track all these people. They track it on the shortlist. If you sit too long with an open job, they’ll send you a reminder saying, “Hey. This job has not been staffed yet. Did you still want to fill or did you want to close it?” And so, they just make it so easy for us, Owen, as entrepreneurs to hire people that this one of the reasons I’m so committed to hiring people through oDesk.

Now let me throw out another little thing. They charge 10%. If I want someone to receive $5 per hour, I’m going to pay $5.50. Now you’re going to hear people to say, “Well, here’s what you do. You run with it for 90 days or 2 months or 1 month and then you reach out to them and you just hire them directly to save 50 cents.” Owen, that’s a bad philosophy. Basically in my opinion is kind of like stealing. That service found it for you. They do a lot of good things for you. Every Monday, they charge my credit card for all the hours that I have to pay for the previous week. They do a lot of stuff. I feel like I get more than my 10% worth.

And I like the fact that they’re all in oDesk and for a lot reasons from integrity to the management and the tools they provide, I recommend that you think a little bigger. Don’t trip over dollars to save dimes, right? You’re already getting a great value through outsourcing and so I recommend you stick with the service that you start with.

Owen: And just so you know that some of the people listening to this call now are in that same thing where they are at the same level with you where they’re going out and hiring contractors on outsourcing work but there are some people who literally want to craft the ideas you’re sharing only with the hiring process to literally turn it into a hiring real employees that are coming in-house. Is there anything that based on what you’d be sharing so far that such a person who is kind of hire real employee in their in-house. Am I need to borrow from this idea and craft for themselves, is there anything they might need to know specifically?

Dave: I’ll throw out a little philosophy and that is “Hire slow and fire fast.” Right? Be careful who you hire. Now unlike the contractor situation, I have the luxury of being, “Let them go after hiring them if they don’t perform and they understand that’s what they signed up for and that’s life.” Now it’s different when you’re hiring someone to come into your building and sit at a desk. You’re making it kind of a commitment to them now. They are now excluding other job opportunities they may have taken. They’re coming to work with you and so I’d say, “You need to take more time even than I just described. You need to go through all the same steps. You need to talk to their employer, you need to find feedback. You’ve got to do all the same things you just heard from me and maybe even more slowly and maybe you can actually do what you mentioned a few minutes ago and say, “Hey, would you come work with us just for a week? We’ll pay you for your week and let’s just get to know and make sure you like and we like you before we make a longer term commitment” because hiring an employee is a higher level of commitment than hiring a contractor.

And Owen, as business owners, we have human responsibility here. We’re providing a livelihood for people. It’s a big deal. And too many business owners don’t take that seriously. And so if you’re going to bring someone into your building to sit in the seat and use a desk, you’re making a commitment to them as well as they are making to you. So be even more careful.

Owen: And so, maybe I’ve been thinking at this point now is if the person listening to this is on a situation where they want to hire employees because there’s a more longer term commitment than a situation where they’re contractors. Even though you are hiring contractors that stay with you long term like you just mentioned, your Virtual Assistant in 5 years. It’s different in the sense of the employees. Maybe the person listening to this now might have to be able to include things like drug testing, background checks and even reference checks just to make sure that, “Hey, when I hire this person on board and give them a job offer, I’ve done everything on my checklist of hiring to make sure that I got the right person,” so hire slow and fire fast I guess.

Dave: Yeah. Taking in mind what I said earlier. Make sure it’s not your fault. Don’t fire so fast that you realize, “Wait a minute, I should have been more patient with that person.” But what I mean is, if you discover that they just can’t do the job, don’t let them linger. That’s not fair to you or them if they cannot perform. But don’t fire fast if they possibly could perform and you just need to work with them a little bit more. One more tip, Owen, for the guy that has a real business. I had a real business. As a matter of fact, I built up a business…

Owen: You have a real business making $900,000. Let’s get that straight so the people will understand. You have a real business it’s just you’re going about is different.

Dave: Got you. It is a real business grinding virtual.

Owen: Yeah, online. Virtual.

Dave: Virtual, right?

Owen: Yeah.

Dave: I have a brick and mortar business. And from 1993 to 2000, I built that business up and I sold it for $430,000 in 2000. It’s actually kind of cool. That’s the first business I sold. But I learned something in the last 2 or 3 years of that business that I would do again if I had a brick and mortar business and that is, I hired an employee leasing company. They did my payroll, they helped me with the hiring, they provide Human Resources. I highly recommend it.

It’s kind of like a glorified payroll service but it’s better than that because they actually lease the employees to you. And so they are full-time to you. They are just like any other employee except as a small business, you can have the power of a big business. For example, I had a guy crashed a vehicle while he was on drugs while working for me. And I had the employee leasing company and they were able to walk me through the legalities of it. Do I need to fire him? How do we take care of insurance issues and whole of that, it was wonderful! If I had been on my own through that, I would have make different decisions and probably wrong decisions. So check into an employee leasing company if you have a brick and mortar business. It can work out well for you and for me.

Owen: I like that because what I find from that is even if you’re going to hire the employee out, right? There are some things that you don’t want to concentrate on like HR, benefits and all of these things that even some states might even require.

Dave: Yeah.

Owen: So there are companies out there that provide this stuff for you and you could just lease on them and they can help you manage the aspects of HR benefits and all that you don’t want to focus on but they will help you manage it while you and your employees focus on stuff that drive revenue, the more than important parts of the business I guess.

Dave: That is exactly right and just like you said we were able to offer health insurance and every other things that I could never have provided as a small business owner. That business we had about 14 employees, it wasn’t very big. We had a 6,000 sq. ft. shop. We had a few vehicles. So a small business did about $1,350,000 our last year to give you an example of the size of the business and that size of business is tough. It’s hard when you have a lot of employees to provide very much. And so my employees were able to go directly to the leasing company to get a lot of benefits I couldn’t have done. Yeah. It’s a great concept.

Owen: And I really enjoy the fact that you can walked us through this whole entire hiring process you have on your current business and also share some ideas that someone was hiring an employee and maybe a brick and mortar business, you know, ideas that you can use. And now we’re done with the hiring part of the interview. I want to talk more now about your systems because we are telling the audience that you had basically systematized your entire business and literally run without you for the most part. And we want to just ask you a couple of questions regarding that as well. So what kind of challenges did you have initially when you are trying to create systems for your business?

Dave: Well, I had a lot of challenges because that’s not me. I’m not a numbers guy and I’m not a systems guy. Those things are not natural to me so I had to overcome… I’m more of the visionary and the marketer. And guys like me, we love to create sales funnels and do advertisements and all that kind of stuff. But to do anything that is methodical and systematic was against my nature. So the first thing I had to overcome was my own weaknesses.

One of the things that really helped me was a book called the E-Myth by Michael Gerber and all the buddy goodie. I spent enough long time and that helped me to get into system thinking. And so, that was the biggest challenge, it was myself. IBM’s old statement, “The system is the solution.” It’s so true and as entrepreneurs we have to remind ourselves when something goes wrong and something not going how we want it to go, we don’t need to look usually past the system. It’s usually not the fault of a person. It’s rarely the fault of anything except a system breakdown. And so we have to adjust our thinking to that.

Owen: So anytime there’s an issue, it’s an opportunity to go back to the system that you have to figure out why is that the issue because it’s not a person problem, it’s a system problem. That’s what I’m getting from that.

Dave: That’s right and that’s a certain philosophy, right? It’s a way of thinking. It’s not necessarily true but it’s effective. You see what I’m saying?

Owen: Definitely. If we go through the hiring process, Dave, you have which has helped us to screen out to get the right person. Now, so let’s say everything worked out correctly. Now you have the right person. If there’s a problem now you can no longer blame the person. It’s more about the system. So that’s why the hiring process that you covered is very important.

Dave: And that’s the opposite of how a lot of people do it, right? They’re always blaming people. And the owner of the businesses is saying, “Well, what’s your fault. That’s your fault. That’s your fault.” And this way of thinking, they say they may be right but that’s not effective instead you want to think the system is the problem. How could that person have succeeded in a better system? And so even when it is the person’s fault, we don’t call it the person’s fault, we fix the system in which they perform.

Owen: Yeah. And there’s so much noise in the background. Can you get that noise? I cannot even mute the noise. But anyways, let’s go ahead regardless of the noise in the background here. One of the challenges that you had was the issue of communication. How did you solve that problem especially how do you even teach your employees to better communicate? That was one of the things that you mentioned during the pre-interview.

Dave: What I did is I started using a service. At first we started using simple docs and communication that everyone else uses like e-mail and we became power users of Google Docs, it’s now called Google Drive as I’m sure you know. But we would use spreadsheets. We would keep track of systems on their docs who would share those with everyone that needed to be shared with them and we ran a long way down the track with that. But finally, on the big part that was missing was task management and assigning task and follow up on task. So my business kind of outgrew the whole Google Drive thing. The tool that I use now is called Basecamp. And I’m sure you’re familiar with it because you’re in that genre of sets of rules.

Owen: Yeah.

Dave: And we use that tool and in that tool, I’m able to create documents, the document processes. I can upload videos that describe how to do certain things which we do a lot of by the way. I’m able to give the tasks, involved with the tasks, it automatically sends me a daily recap of everything that happened on every project that day and Basecamp is a huge part of our system now.

Owen: And one of the things I want to find out is can you dive me into more details about what systems you have in place to enable all your employees to know exactly what to do. I’m assuming that most of the stuff happening on the recurring from reaccredited basis is that the case and have you documented the way to get stuff done?

Dave: Well. That’s a hard question to ask because in the one hand mind, the initial reaction is what you just do. You just have to detail out. So let’s go back to the original job description. You remember we talked a lot about the skills they needed to have and what they would be doing. So think about that. How well did you do that because ideally what you laid out for them on day 1 is what they will be doing and so much of it should already be explained to them other than the details of how to implement it in your particular business?

So for each Basecamp project we include the right people and then we also we include things like their job description. I actually included a piece of job description and sometimes I go and review that with someone and say, “Hey listen. Let’s review all the things. Because you know what I found on time and time again is there might be 10 specific tasks that a person has to do on a daily basis for example.” And 3 weeks into the job I’d be shock if they have mastered more than three of them and it needs some review. And again, don’t assume.

Here’s a saying for you, “Telling is not training.” Don’t assume that because you trained someone thoroughly one time that they are trained, that’s a bad assumption on your part and it’s unrealistic. Neither you or me or anyone else on the planet can sit and listen to instructions for an hour, remember them all and execute them perfectly for the next month. This is not possible and yet as business owners, we sometimes expect like a, “Hey, you dummy. You should have known that. Come on. I told you that on day one.” Well that’s not fair. Telling them that on day one is not enough. There’s got to be repetition, reminders, follow up, interviews. “Hey, let’s talk about your job description.”

I’ve got an employee right now that’s been with me. It’s a very high level job. As a matter of fact I don’t believe I did this. I totally forgot to mention and he’s local. I have a local employee for Escape the Matrix. And he is my assistant on the radio show and he has many things to manage in his world. His name is Dan. He’s always very talented. I’m very to have him onboard but I’ve got to tell you that at least weekly right now, I have to review the entire list with him because it’s so overwhelming and because there’s detail in there that is easy to miss.

So I have to be very patient and never think, “Hey, I told you this.” Because again, there’s a lot I’ve told him. I can’t expect him to remember it all and there are different levels of learning. Learned knowledge or like textbook knowledge is the fundamental first year of learning but until you go out there and implement it a little bit, you don’t really learn it, right? It’s like teaching swimming lessons in a classroom. You can describe water to the children, you can talk about what it will feel like when they jump in, the sensation of the cold and the water and the floating. You can describe all of that in the classroom and it means nothing until you throw them in the pool.

Owen: So I get that you’ve documented for all of the different aspects of your business, how tough it need to get done. Is that based on the fact that you knew how the task should be done that’s why you documented them? I guess maybe the question I intend to ask is in situations where you don’t know how the tasks seems to get done, how do you still systematize and document it for those who were coming to do to work?

Dave: That’s an excellent question because keep in mind. Some of the people I have on bus, I’ve got Stan who is a PHP Developer who is very talented and I don’t know what he does. All I know is the result that I want. I can’t micromanage him because I don’t know his world. The best that I can do is describe to him the end result that I want and that’s where we can back to “Did I hire the right guy?” because if he doesn’t understand what I want… I may understand how he did the programming and how the code works, all I know is, “Just do what I want you to do or not.” And in some cases it’s going to be beyond your ability. You’re not going to understand how they do what they do in case of a developer or a graphic designer for example, and some are building you an app or whatever the case might be.

And so in that case, that’s where it comes right back to “Did I hire the right person? Is this person capable of building what I want?” I’m putting my confidence in them and I may understand every moving part in their world. So I’ve got to depend on them knowing the job. In other cases, I know the whole job description inside out like my Customer Support Reps. I can train them personally. I can know exactly everything they have to do. I knew the tools that they’re going to use. I can easily train them. I can listen on some of the actual live phone calls that they make to make sure I’m happy with how they’re answering the phone, etc. I can monitor. We use a service of, what is it called? It will come to me. But we use a ticketing service, OS Ticket.

Owen: Okay.

Dave: That’s part of our systems so our customer can create a ticket, my rep can respond to the ticket and I can go in there anytime I want and see how did someone sort of respond to this ticket, what question was asked, how was it answered? And so that’s the monitoring that we have to do to make sure they’re implementing correctly. So we create a great job description. We then have documents within Basecamp that they can easily access on what the details of it are.

Also Owen, one of the other things we found is that accessing tools can be a problem. You know, there are a lot of tools that we use on my marketing, log-in details, etc. And so that’s also another thing. We actually keep a document with every project for all of the log-in details of a person would need for whatever tool they would have to use. So those are the types of documents and lists that we keep to help them get their job done.

Owen: And you also mentioned because one of the things that you’ve actually kind of said is on some cases you know how to work as getting is documented but then you also have to monitor and track that when it gets done because after the training it’s also them doing the work and as they’re doing their work, you’re tracking to make sure that they deliver. And then the other case where you highlight the PHP Developer where he’s doing stuff that you have no idea how to do, you are still tracking to verify the results to make sure that, “Hey. This person is delivering what you want.”

And I’m curious, are there any other ways in which you’ve tracked and verified the results delivered by your employees? I think you mentioned something about tracking based on revenue that’s generated on the business, something about Google Analytics if you can remember. It can explain that.

Dave: Well, Google Analytics is how we track the end result. If all of these works doesn’t lead your revenue, we’re doing something wrong, right? I mean, it’s one thing to be busy and to get all these tasks done. So in my particular business, it happens to be a very task-oriented business. Give a task, get it done, follow-up next task, sometimes issuing 5 or 6 tasks in times where we’re very task-oriented. We don’t use a calendar very much. Most businesses probably use a calendar a whole lot more than we do. We’re very task heavy and at the end of the day, yes. Google Analytics is the key, did all the tasks that we gave out and all the assignments to build a website and make it function end up in revenue?

And if it didn’t end up in revenue, we’re in trouble. Now I’ve been around the block with this and I’ve got to tell you, the fact is most of the projects I set up to do fail. It’s just the way it is. Most websites I think were a great idea. I put out there, I spent money on them, we go for it and a year later, they’re not making much money. And so, that’s part of the difficulty of online marketing is not everything you think is a good idea is a good idea. So at the end of the day, we have to be determining, “Okay, we’re tracking this. This is how much money we’re bringing in. At what point do you pull the plug? And that’s an important decision as an entrepreneur that at time you’ve got to make.”

I pulled the plug on a project I put over $20,000 into just recently because we just could not get it to fly and finally I just had say, “Well, the opportunity cost of working on this and not working on something that’s probably better is too high and yeah, we learned all that from Analytics and from the bank account, it wasn’t generating the cash.” And so at the end of the day it’s Google Analytics. So Google Analytics is one of the best online tools out there. Owen, a lot of people are not using it and if they are using it, they’re not using it fully.

The E-Commerce functionality of Google Analytics is unbelievable and I can’t tell you how many small businesses I see that have Analytics on, they know how many people visited their site for example but they haven’t linked it to their shopping cart, major mistake, you wouldn’t believe the data and what you can learn from turning on the E-Commerce side of Google Analytics.

Owen: And so, I think one of the things I want to also find out is now that you have so much free time and that your business is running without you. I’m curious, what’s kind of the longest time that you’ve been away from your business and not to even had to do anything working in business. What’s the longest time you’ve been away from your business?

Dave: The longest period I’ve been away for my business and completely disconnected because you know, there’s times I’m away but I’ll check e-mail and I’ll take care of business during the day, right? But the longest time I’ve been totally disconnected was 11 days. We went on an Alaskan Cruise from Seattle. We cruise from Seattle to Alaska and literally I didn’t even try to get online. I just left my business a 100% but I’m thinking about it. Me and my wife had a wonderful time on this cruise. It was amazing.

And I came back and of course, one of the things I was wondering was, what kind of fires might have started that need to be put out by me and what kind of problems might happen to my business because it was a real good test of how automated my business was, right? And I’m happy to report that I was able to come back and fire up my computer and check in and find out that nothing had happened that hadn’t been taken care of by my team. We’ve made just as much money as I would have made if I stayed home and that was a beautiful experience. The world didn’t fall apart. Everything happened and my whole business functioned and for 11 days, I wasn’t even checking an e-mail and so that was a great epiphany.

Owen: And so now that you have so much free time on your hands, where do you spend most of your time in your business? What do you focus on in your business? Not that you are not literally have to work inside of it. What do you do most of the time?

Dave: Most of my time, the first place I go to when I’m ready to go to work is Basecamp. I go into Basecamp and I often start with a review. If there’s a particular task that’s really important to me at the time, I’ll usually go to that project first and get an update. The second place where I’ll go to when I’m working my business is Skype. I’ll check in with people. This is a people business and I like people.

I’m not trying to automate my business because I don’t like to work. For me, automating the business is wise. It’s better to run a business in an automated fashion not because we don’t like work. I love work. Honestly, if I go on vacation for a week, really by day 5 or 6, I’m ready to go back to work. I like work, okay. It’s not that. And I like the people that I work with. And so, I’m just touching base and say, “How are things are going, do you need anything from me, how is that project coming, any problems?” and so touching base with a few people, going through Basecamp.

And then Owen, I think probably the most important thing I do is what you are doing right now. It’s content creation whether that’s recording content, creating videos, going through our Facebook pages. I feel like the best thing I bring to my business is the content. I can do that better than anyone else on my team. That’s why I do a radio show for example.

On the radio, I can produce content in an hour that now creates all the status updates, tweets and facebook posting that my team is going to do for the next week. And so at one hour of content generation, we generate anywhere from 5,000 to 7,000 words and from that, we generate all the social marketing that we need for the next week. That’s a high level task that I maintain control of myself is a content creation and the one that I enjoy. So that’s kind of my job. And then my team’s job is to distribute it and make it into a useable content out there on the social sphere.

Owen: If anyone can tell. The noise on the background, I’ve been trying so hard to keep a straight face and I’ve been pissed. You cannot come through somewhat on all these things sometimes but anyways, we must go on even though the construction crew is doing crazy stuff out there.

Dave: I think your mic has sound happening because I can hear you very clearly. The background music has faint.

Owen: Oh really? Because I am going paranoid here because the noise is really loud and I’m wondering if the audience can hear this.

Dave: Hardly.

Owen: But anyway the show must go on. And so a couple of more questions, anyone who has been listening to this so far, started listening to the interview based on the fact that they want to learn your hiring process so they can hire be it an employee or a contractor but basically someone to come in to work with them. And what would you say is the very first thing that that person has been listening so far that he needs to do now to get started with creating and hiring process for their business.

Dave: It kind of ties into the last question. As you’re going to ask yourself, “How does this going to make money for my company?” I have gone through periods of time on my business when I’ve had a team of people be really busy and not be that effective or profitable. And so we’ve got to think lean and mean, right? We are small business people. We’re not big business people. You know, a million dollar business is not a very big business, right?

Owen: Yeah.

Dave: And for some people listening right now if they have a little home based business and they’re thinking, “No. That’s really big to me.” But trust me, it’s easy in this size of business to waste time. And so we don’t want to do that. And so, part of the key to this is knowing what you’re going to do and how that’s going to drop revenue to a bottom line. So make sure that you understand the effect. Is this the person you need right now or is there a more important role that has to be fulfilled in your business? What is the biggest obstacle in your business that you need to overcome to reach your financial goal and make sure you’re hiring towards that? Honestly, it’s easy to hire someone to do staff only to find out that that staff isn’t effective and isn’t going to make you money. So you want to be careful if you hire the person that’s going to do the right stuff for what your business needs right now.

Owen: And also, my listeners are always asking to ask my guest. You know, what books are and had the most influence on you and why? You named the E-Myth but is there any other book that comes to mind, as maybe who can help with hiring process thing.

Dave: Let me turn into the desert island question. If I was on a desert island and can only have three business books, here’s what they would be. The 4-Hour Workweek by Timothy Ferriss, Think and Grow Rich by Napoleon Hill and The Slight Edge by Jeff Olson. And those three books I’ve listened to them, I have all three on audio and I have all three in book form and I’ve listened to them and read and reread them and those books have shaped my life literally.

And you know, I highly recommend all three and not only that, I’ll have you recommend exactly what I said. This is inexpensive. People go and they spend a hundred thousand dollars to get an under-graduate degree in an MBA that had a great college and honestly don’t come out up there with the power and knowledge and philosophy they could get from reading those three books. It would cost a person, what? 50 bucks to get the physical version and listen version of those three books and they have made a huge influence, a huge impact on my life and I revisit them again and again and again.

Owen: Awesome. And what is the best way, Dave for the listener who has been listening to this all the way to this and regardless of the noise going out with the construction that we’ve been listening patiently hearing everything and wanting to go out there to implement. What’s the best way for them to contact you and thank you for doing this interview?

Dave: You can send me an e-mail at Dave@EscapeTheMatrix.net. You can contact me at our website, EscapeTheMatrix.net. And by the way, we have a lot of great resources there for small business people. I’ve been told many times that our blog post, we had to charge money for and so I take that as a great compliment. So if you want some free great training on entrepreneurship, go there.

But yeah, Dave@EscapeTheMatrix.net. I’d love to hear from you. I’d be happy to answer your questions or do your podcast, whatever the case maybe. I enjoy this Owen and I know you do too. I enjoy both interviewing people and being interviewed. We both learn through this, right? I had to think through my answers on how do I do think and that’s good for me and hopefully good for your audience. Yeah, I’d love to hear them.

Owen: Definitely. And so, we’ve been listening to this interview so far and if you know another entrepreneur who will find this interview useful especially the part where it has to be with creating a process to hire people for their own company, please share this interview with them. And if you knew any other entrepreneur who has systematized the entire business, please let me know. I would love to bring on the show and interview them.

And one more thing, Sweet Process is about helping you create a system that will allow you basically to document is that it how repetitive task has to be done in your business so you can systematize your entire business. If you want to state your business where you have to systematize the task in your business, go ahead and sign-up for the free 14-day trial of Sweet Process or if you’re not at that stage yet but you want to understand the basics behind systematizing your entire business, go to our blog and sign-up for the checklist that will help you understand which task you need to systematizing your business and why. I hope every you have enjoyed this interview as I enjoyed interviewing Dave. And, Dave thanks for doing this interview.

Dave: Thank you so much. It’s been fun.

Owen: And we’re done.