As a result, Geisel hired someone without thoroughly checking his background and references. "And boy, did I pay for it," he admits. "There's a tremendous investment of time and effort to bring somebody to a level where they can add value." It took a year before Geisel finally realized that this new hire was not the right man for the job. He was "unable to handle the complexities of dealing with large projects and large clients," the CEO says.
At the time Geisel, whose background was in information technology, didn't have any real experience as a manager. He was looking for a senior executive who would have the sales and organizational management experience to complement his own skills. "I was looking for balance," he says. "I got that, but there was no overlap." In terms of skills, style, and strategic goals, Geisel says, the manager he hired "was too far on the other side." The executive left the company by mutual agreement.
Now, with 52 employees and a stronger management team, Geisel uses an outside agency to screen potential senior hires. And he has learned to rely on advisers for input on candidates as well. In retrospect, he can easily see how his management style led to problems with his first big hire. "I've always kind of carried things on my own back," he says. His company remains 100% employee owned, without any outside investors.
Regret 6: Not hiring an in-house recruiter
Company: T2 Systems (#394), in Avon, Ind.
Business: Designing software that tracks parking tickets
CEO: Mike Simmons
For the first four years after its founding, T2 Systems doubled its revenues every year. In 1998, however, its growth reached critical mass, and CEO Mike Simmons found himself needing to double the number of employees, which then stood at 12. Lacking any kind of human-resources department and faced with the "exorbitant fees" of outside recruiters, Simmons charged his three managers (and himself) with recruiting their own workforce. It was, he admits, a costly mistake.
"There were not enough people to do all the work there was," recalls Simmons. The recruiting process made matters worse because, he says, "it took the managers out of the work process." Instead, they were busy screening résumés, checking references, and traveling around the country to find qualified employees in the company's high-tech niche. "The talent pool for us is very small," Simmons explains. The ideal potential employee needs to know software plus the principles of the parking business.
Simmons did use several professional recruiters, who, for a total of $50,000 to $60,000 in fees, yielded only two or three hires. He realized he could have hired a full-time recruiter for that amount and gotten more bang for the buck. Finally, last year, he did just that, tapping one of the few outside recruiters who had really impressed him.
After his entire management team had spent a year hiring 12 people, the recruiter was able to match that number in about seven months. The company now has 44 employees. As soon as he had hired a recruiting manager, "our sales went up, our customer service went up, and our hiring became more efficient," says Simmons. "Most of all we had suffered because of the burnout factor for managers."
The recruiter, at his own request, has since moved over to a sales position. Simmons is going out for a round of additional funding and promises that one of his first hires after he gets that money will be a new in-house recruiter.
Regret 7: Charging too little for too long
Company: Synergy Investment (#219), in Framingham, Mass.
Business: Designing and retrofitting energy-efficient lighting systems
CEO: Daniel Gould
Daniel Gould went into the lighting business on his own in 1994, when he was all of 25, and created a niche for himself with few, if any, real competitors. He was constantly hustling, offering his customers what he calls "the Wal-Mart attitude: give them rock-bottom prices all the time." But at the end of the day, he says, "I didn't have much to show for it. Basically, I was giving it away."
If only I hadn't charged so little for such a long time.
He also found that he would give his customers estimates up front, and even if he found the work more time-consuming or more expensive than he had expected, he didn't adjust his fees accordingly. "I had to figure out how to tell them I had to charge them more," says Gould. And that was something he was loath to do, because he both wanted to honor his commitments and feared losing customers.
As he gained more experience and more regular customers, he began to get a sense of the true market value of his work, which is a highly specialized combination of consulting and contracting. He realized, belatedly, that "I could've charged more, and people wouldn't have blinked."
Gould thinks he's been "continually behind the curve for pricing compared with the market," though he has gradually raised his prices over the past few years. He remains "the low-cost provider," he says. "When I started the business, I was happy just to draw a salary," he explains. "It's been a slow awakening to what I needed to charge to be slightly profitable by the end of the year."
Rifka Rosenwein is a senior writer at Inc.
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