Business, like poker, is a gamble. Some people will lose, some will win and some will simply break even. Employees are one of the most critical variables in your success at the table -- they will make or break you. You can up your odds of success by taking the following steps:
Don't be afraid to go "all in." A good employee is almost always worth a big bet; they are like the pocket aces of the poker world. If you are fortunate enough to find one, do what you need to do to get them on board and keep them engaged.
Granted, reading people isn't quite as easy as reading cards. "Aces" don't always announce themselves. There is a deluge of recommendations on how to identify great employees. You'll have to decide for yourself what is most valuable to you and your organization. Is it cultural fit? Is it aptitude? Experience? There's no single "right" answer. The best thing to keep in mind is, if in doubt, then odds are you don't have pocket aces. Don't rush a hiring decision.
Betting large is a good thing, but only if you've taken the steps to figure out what kind of hand you're holding. This may involve multiple interviews in different settings with different people (e.g. other team members if this isn't your first hire). Background checks are always a good idea. People lie. A few minutes on the phone can save you from a costly mistake. Going "all in" with pocket nines may mean you never make it to see those pocket aces.
Know your bankroll. While there is little formal research available on failure rates of small business, some statistics suggest that as many as 50 to 70 percent of small businesses fail within 18 months of opening, according to Tim Caroll, Deluxe's VP of small business engagement. One of the most common mistakes that leads to failure involves hiring too many employees or too often.
Related: Think You Need to Hire? Think Again.
A business with several employees will have a harder time surviving trying times than one with few employees. It really comes down to simple physics: a smaller mass allows you to adapt, change directions and surmount unforeseen obstacles (three things that you often need to do during the business's infancy). You can't win if you don't play the hand, but you also can't win by playing too many hands. Pick and choose which hands to play, keeping in mind the risks associated with being "short stacked" (or the errors that can be made by playing too aggressively with a flush stack).
Fold your hand early. In hold'em, a 3-7 is bad hand. Sure, you can hit a straight, but the odds are against it. If you've already paid the ante and the flop doesn't bring the cards you need, it's time to fold. Too many employers make the mistake of continuing to pursue a lost cause. Perhaps because of our inherent nature, many entrepreneurs think that by sheer force of will or through coaching, they can turn a bad hand into a winner. This may be the case, but like the 3-7, the odds are against it.
If you have given your employee a reasonable shot at success and it isn't working out, the best move is usually to fold. Beyond the initial ante, continuing to play can cost you -- probably much more than you realize.
According to CFO Daily, there are six factors that contribute to bad employee costs. These include the cost of hiring, their total compensation, the cost of maintaining the employee, the cost of disruptions, severance and money lost on mistakes, missed business or unhappy clientele.
The longer a bad employee is attached to your company, the more money you will lose. Considering direct and indirect costs, by some estimates a bad employee with a yearly salary of $62,000 can cost a company around $600,000 over a two-year period. Beyond the dollar cost, most entrepreneurs can't afford the opportunity cost associated with such a loss. Fold early and give yourself a chance to keep playing.
Have patience. Mike Caro, an author, casino executive and professional poker player, once said, "Aces are larger than life and greater than mountains." Pocket aces are rare. You have to play enough hands to get them, but when you do, they can make all the difference. The same is true of great employees.
The author is an Entrepreneur contributor. The opinions expressed are those of the writer.