As the saying goes, it's easier to conquer than to rule, and the same applies to running a business. To grow a company, a boss must not only retain key staff but also address management loopholes. Practice is the best teacher; the author started from scratch and built a company with hundreds of employees and annual sales in the tens of millions. How did he do it? Let's look at his experience sharing on every key issue!

  1. How to Retain Key Staff in a Small Company

Over the years, prices and costs have risen, but company profits haven't increased much. Every employee hopes for a significant salary increase, but it's estimated that over 90% of small companies can't achieve this. Sometimes I, as the boss, wish I could just close the company and invest in stocks or real estate for peace of mind. Although in recent years, due to providing social insurance and housing fund for each employee, the per capita monthly cost has increased by several hundred yuan, employees don't appreciate it. They only count how much they take home each month; company expenses are none of their business.

Since I can't satisfy everyone, I only satisfy the 20% of key staff.

First, I develop key employees to become shareholders: I sell company shares at half price with a buy-one-get-one-free deal. If they withdraw within five years, they only get back the principal; after five years, I redeem at three times the price. Each year, I distribute 60% of profits as dividends. After all, if there's money, everyone shares, but if a shareholder does something against the company, they are doubly penalized, deducted from their shares. This tactic has worked well; in the past five years, no shareholder has left, and key positions are held by shareholders, saving me a lot of effort.

Why not give shares to key employees for free? Actually, I don't care about the money, but people don't cherish what's given for free, and the investment serves as a deposit to prevent shareholders from misbehaving. Moreover, employees can recoup their investment through dividends within five years. No investment, no return!

  1. On Delegation

I remember when the company had just over a dozen people, I was the busiest, often taking two or three sales calls at once, arranging deliveries, settling accounts, and purchasing. I arrived earliest and left latest. Once my younger brother visited and remarked, "Brother, I feel like you're supporting everyone in the company!" I was proud at the time. But the company didn't grow for four or five years, staying at a dozen people, and employees felt oppressed with no room for growth. Eventually, I realized I had to delegate, even if employees could only do 70% of what I could. Sometimes it's frustrating; a salesperson just can't close a deal I could, and I want to rush in, but I have to restrain myself, or how else will they improve?

In a small company's development, 15 people is a hurdle, 50 is a hurdle, and 200 is another. Without improving management methods, further growth is impossible. A boss who does everything himself rarely exceeds 15 employees. A capable person can directly manage seven or eight people; an average one can only lead four or five.

  1. Some Money Can't Be Saved

When I first started, it was just one or two people. I handled sales, purchasing, repairs, and bank runs. I had no registered capital, so I borrowed a friend's business license. After learning accounting for a few months, I made up reports. At the end of the month, I went to the tax bureau to file. The inspector glanced at the report and started asking questions I didn't understand, let alone answer. The inspector frowned and asked, "Do you understand?" I smiled and said, "No, I don't." "If you don't understand, why are you here? Send someone who does." "Okay, okay, next time I'll send someone who does." The next month, I made another fake report and went again. The inspector recognized me: "You again?" I lied, "The accountant is pregnant and can't come, so I came." The next day, I hired an accounting firm for 300 yuan a month and never went to the tax bureau myself again. Even when the company had a dozen people, I still used the accounting firm; I only had a cashier, no full-time accountant or warehouse keeper. In the following years, business was good, and I made money, but at year-end, the company's bank balance didn't increase much. I realized that once the company exceeds ten people, a boss can't oversee everything; the company is like a sieve with holes everywhere. It's a miracle if money remains. Expecting employees to be like Jiao Yulu or Lei Feng is impossible. Even if you give employees 70% commission, they'll still covet the remaining 30%. Only a fool wouldn't embezzle. Only with sound systems can you prevent those with bad intentions. I thank my current accountant for being extremely responsible. If I ever start another company, as long as there are four people, it will be one boss, one accountant, one cashier, and one warehouse keeper. I'll never save that money again.

  1. Cross-Industry Ventures Don't Make Money

This saying holds true for 90% of companies. Of course, if you think you're in the remaining 10%, feel free to try.

Generally, once a company survives three to five years and makes some money, the boss starts thinking about other ventures. Most people think other industries are more profitable than their own. Unfortunately, I'm one of them (I think my experience could fill a book on small business mistakes). At the end of the last century, on a whim, I opened a restaurant, and my troubles began. I thought my sales skills would make it a success, but a restaurant needs more than sales; if the food isn't good, customers won't return. I'm not a foodie and lacked patience to develop new dishes with the chef. Moreover, running a restaurant involves purchasing, hygiene, industry and commerce, public safety, and more. It's exhausting and different from running a company. I lacked patience, so I hired a department manager to run it, but he messed it up, losing hundreds of thousands in six months, and I closed it. Now, if anyone mentions opening a restaurant, I get angry. Eating out is fine, but nothing else.

  1. On Recruitment

Over the years, I've done a lot of recruiting. At one point, I interviewed 50-60 people in an afternoon. Initially, I had no experience and always hired the best. For a customer service position with a salary of 1,000 yuan, I often hired top university graduates with CET-4 English. Later, I found they didn't stay. For simple jobs, a vocational school graduate is sufficient; hiring a bachelor's degree holder is a mismatch for both sides, though it looks good on the company profile. Also, don't fully trust what candidates say in interviews. Sometimes they've just lost their job and are desperate, so they'll promise anything. Once, we were hiring for a business position with a salary of around 2,000 yuan. A girl applied with a bachelor's degree and three years of experience, earning 2,500 at her last job. I asked if she could accept a lower salary. She said yes without hesitation. Since she was suitable, I hired her. Half a month later, after the previous employee handed over and left, she quit the next day, citing low pay, leaving us in a bind. Next time, I hired a girl who had earned 1,500 yuan. She's still in that position, doing well and satisfied with her salary. Most people can only go up, not down, in job position and pay. Few can accept a step down.

My recruitment experience: Better to miss a thousand than hire one wrong person (from a famous historical figure's saying). In my experience, it's better to hire one level lower and pay one level higher (i.e., hire third-rate talent, do second-rate work, pay first-rate wages. Of course, these are relative). During recruitment, take the time to verify candidates' identities. Last year, two new employees absconded with company funds. When we called, they were brazen: "My ID, diploma, and address were all fake, and the police won't bother with a few thousand yuan." Indeed, the police didn't. Now, we verify local employees one by one, and for non-locals, we require a local guarantor. Anyone falsifying information is rejected. Since then, no such incidents have occurred.

  1. The Boss Should Play the Good Cop

Every day, many things happen in the company—some deserve praise, some criticism. Who should deliver criticism and praise?

When I first started, I didn't feel like a boss and hated managing people, so I rarely said anything about employee issues. As a result, employees were undisciplined, no one respected anyone, and work couldn't proceed. Later, I realized I had to change, so I started being stern. But new problems arose: almost all conflicts were between me and employees. Employees often argued with me face-to-face. Being a boss was depressing, and I didn't want to be a harsh manager. After interacting with Japanese companies, I discovered some secrets. Japanese general managers rarely scold ordinary employees; they're kind to them, but they often reprimand middle managers in front of employees. Ordinary employee mistakes are handled by their direct supervisors. At month-end, the GM is strict with pay. This way, the company is well-managed, and employees feel balanced.

Stones from other hills can polish jade. So I did it. Our company is small, but we have a few supervisors. I held a meeting to clarify responsibilities: whoever's subordinate has a problem, that supervisor handles it. Don't push everything to me. I usually only praise good deeds and encourage, and when supervisors make mistakes, I rarely criticize them publicly, preferring private talks. Soon, management became smooth, my image improved, and employees respected me more.

Sometimes, a boss is like an emperor to a country. If the emperor is wise but ministers are incompetent, people still have hope; at worst, they'll remove the ministers. But if the emperor is incompetent, people lose hope and think of rebellion. As a boss, I can't let employees revolt or leave. Since supervisors and department managers enjoy position allowances, they should share the boss's burdens and play the bad cop when needed. The boss should remain detached, an observer. But when department managers need support, as long as it's not a matter of principle, I support them clearly.

  1. Relatives in the Company

On this issue, I have only lessons, not experience. Fortunately, my wife works at a Fortune 500 company and has no interest in my small business. So when the company was founded, I decided to avoid hiring relatives and friends. Later, when the company reached a certain size, an elder from my hometown called, saying her son (my cousin) had graduated a year ago and was working as a salesperson at a small company in our industry, with low income, and hoped he could come to Beijing. My relative's family was struggling; one child couldn't work due to special circumstances. I had met this cousin before; he was 18 or 19, quite smart. At the time, we needed people, so I agreed readily.

When my cousin first arrived, he lived with my parents. Young and old have different habits, and my mother often complained. After a while, I moved him to the company dormitory, solving that problem. He was sharp and personable, adapting within months, and performed well in his department, often ranking top in commissions. Later, I noticed he often flaunted his special status, bossing colleagues around, causing resentment. I talked to him several times, and he promised to change, but with little effect. A year passed, and he was thriving in the industry. Then he asked if he could bring a few smart and reliable classmates from his hometown to work at the company. I thought it was a good idea, so I agreed. That's when trouble began.

My cousin and his friends lived and ate together, speaking only their hometown dialect, which no one else understood. Although they were in different departments, supervisors noticed they colluded to earn dirty money. My cousin was clever; he spread rumors that there were conflicts among shareholders, and he was on my side, warning his direct supervisor not to pick the wrong side. Many employees were intimidated. Eventually, the issue reached me. Our policy is: first offense, a fine and warning; second offense, dismissal. I talked to my cousin, and he swore not to repeat it. Within a month, another supervisor reported that my cousin's clique was doing shady work, not even hiding it, and even encouraging others. I was in a dilemma. If I didn't act, I'd be raising tigers. I wanted the company to grow and provide for the founding shareholders in their old age. Short-term pain is better than long-term pain. I gritted my teeth and gradually let my cousin and his clique go. The business suffered for six months.

My cousin, using clients he took from the company, is still in the industry, earning well and even bought a car.

It's better not to hire relatives or friends; otherwise, you might lose both the relationship and the business.

I once heard another company president talk about how he handled relatives after growing his company. His five or six relatives helped him selflessly during the startup, but as the company grew, they couldn't keep up and occupied high positions, making management difficult. He chose to sacrifice money to preserve family ties: he gave the older ones a sum to start their own businesses, and for the younger ones, he paid for their education abroad, covering all expenses, and after they got MBAs, he helped them find jobs. This solved the problem neatly. Impressive!

  1. Being a Boss and Driving

Last year, I went back to my hometown and rode with a relative who had just gotten his license. The road was wide and straight, but his hands were constantly moving, the car swerving. I sat in the passenger seat, nervous, buckled up, and pressed my feet as if braking. Cars in other lanes honked. Fortunately, we arrived safely. I recalled ten years ago when I first got my license, my brother, an experienced driver, rode with me and mentioned the same issue. I was confident then and didn't understand his concern. Now I do.

Running a company, I often make similar mistakes. Policies change frequently. I see another company's new rule and adopt it on a whim, then find it ineffective and overturn it, leaving employees confused. Some existing commission and reward methods were already good, proven by practice and accepted by employees. But after listening to an expert lecture or reading a management book, I'd copy ideas without deep thought or adaptation, immediately creating new policies. Then accountants complain about complexity, employees complain about unfairness, and after all that, I revert to the original.

Now I often think running a company is like driving. The boss is the driver. As long as the car stays within the lane lines, there's no need to constantly adjust the steering wheel. Otherwise, the driver and passengers get tired, and the car swerves dangerously. Similarly, as long as the company operates within controllable bounds without major errors, policies should be stable and consistent, giving employees confidence. In a small company, the boss has all power and lacks oversight, so policy-making should be cautious. Otherwise, constant changes make employees feel insecure, and they'll leave. Think about why Deng Xiaoping promised that Hong Kong's system would remain unchanged for 50 years after the handover.

  1. Pay Wages on Time

This is the most basic quality of a boss. I estimate every boss would agree (at least verbally), but in reality, many companies fail to do this.

During daily operations, companies often face cash flow issues, such as stocking up at month-end or year-end for discounts, project payments withheld by clients, or bank loans due. All these are excuses for not paying wages on time. Bosses think: It's not that we won't pay, just a few days late. The company is short on cash; employees should understand. The truth is: no matter the reason, employees can't understand late or partial payment. Wages are not a gift from the boss; they're earned through hard work. Maybe they're waiting to pay rent, mortgage, or school fees. Late wages can threaten their livelihood. Normally, the boss has more financial flexibility, so he assumes a few days' delay is fine.

So what to do when cash is tight? Generally, do business within your means. If you can't, borrow from a bank. If the bank won't lend, consider internal fundraising or from relatives and friends, explaining the purpose, agreeing on terms and interest. Most employees are willing to participate in projects the company is confident about. If you truly can't pay wages at month-end and want to continue, the boss should first use personal savings, then pawn property if needed, and redeem when cash flow recovers.

Delaying wages is like drug addiction: once you do it, you'll do it again. Whenever cash is tight, you'll delay wages, eroding employee trust. Surveys show that the most intolerable thing for employees is delayed wages, often the main reason for turnover.

  1. Learn to Say "No"

Chinese people value face, so saying "no" is hard. But the boss is the last line of defense and sometimes must say "no."

Our company has a rule: company funds are never lent to individuals. Of course, in special cases, employees can get an advance on wages. Two years ago, a key employee asked me, "If an employee contributes several times more than others, would the company lend him money?" I hesitated and thought for a while, then said, "The company has a rule: company funds are never lent to individuals." He persisted, "Even for key employees?" I said, "The company treats everyone equally. Key employees can get higher salaries and bonuses, and favorable terms for shares, but this rule has no exceptions." Then I asked if he wanted to borrow. He admitted he wanted to buy a house and needed 300,000 yuan. I was puzzled; he could get a bank loan. He said bank loans require interest and fees, and he thought borrowing from the company would be interest-free. Later, I learned he already had a house and wanted to buy another to profit from appreciation. A year later, he left for other reasons. If I had lent him money, it would have been hard to collect. After refusing once, similar situations became easier. Over the years, all shareholders, including me, have borrowed from banks for house purchases, not from company working capital. No matter how much money the company has, it can't replace a bank's function.

Sometimes, company rules have exceptions, but on matters of principle, the boss must stand firm. Rules apply to everyone equally. As the saying goes, it's not the scarcity but the unfairness that causes discontent. There's no wall without wind. Once you set a precedent, managing others becomes difficult. In recent years, the media has advocated rule of law over rule of man, and there's reason. When the boss should say "no," he must say it, to anyone. Though it may be unpleasant at the moment, it's better than the company failing. Many companies have gone bankrupt because bosses couldn't refuse to guarantee or lend money. If the boss doesn't take responsibility for the company, no one else will.

  1. Don't Expect to Make Friends Within the Company

When I first became a boss, I wasn't used to managing people. I thought everyone should be equal and friends, and we could discuss things. After a while, the company was chaotic, rules were ignored, mistakes cost little, and everyone did as they pleased, but wages had to be paid in full at month-end.

One day, a friend working at a large company visited for half a day. As he left, he said, "You need to strengthen management. I couldn't tell who the boss was. Employees aren't afraid of you or listening to you." I thought he was right, but I didn't know how to fix it. Eventually, problems erupted: serious embezzlement, low efficiency, employees felt hopeless, and several key employees decided to start their own business. Seven or eight out of a dozen left, taking half the clients.

Fortunately, I had a smaller branch company and had hired a few new salespeople. Since I started from scratch, I had strong mental resilience. I gritted my teeth and started over. This time, I learned from mistakes, established strict rules, and enforced them. Business quickly recovered, and within a year, staff returned to a dozen, with profits exceeding before.

I think my initial mindset was wrong. I thought my company should be like a state-owned enterprise, where everyone is a master, equal, and works voluntarily. That's nonsense. In a company, interests and positions differ; absolute equality doesn't exist. Though people are equal in dignity, how can positions, authority, wages, and bonuses be equal? Why do most state-owned enterprises fail, except monopolies? Because their management concepts and methods don't fit the current market economy and social environment. I think the education we received fundamentally contradicts human nature. In the play "Red Lantern," the villain鸠山 said, "If a man doesn't look out for himself, heaven and earth will destroy him," which was always criticized as a negative example. But I now think it reflects people's natural first reaction. The world bustles for profit; even monks understand this. So be a boss. You can't have it both ways. I no longer expect to be friends with employees. Everything follows rules. As long as I manage well, ensure everyone gets good wages and bonuses, social insurance, and key employees share in growth through shares, I've done my conscience. Being a boss is a lonely profession; make friends outside the company.

As for rules, every moderately sized company has a thick book, but management levels vary greatly. The key is whether rules are enforced, and whether the boss accepts and supervises them. If rules are enforced, personnel management follows naturally. Everything by the book, and the boss doesn't need to scold employees all day. In fact, from the start to now, I've never scolded any employee. A few times, employees left and returned, saying they couldn't stand their new boss's temper. But I feel I have authority now; at least friends won't say they can't tell who the boss is.

  1. Avoid Making Decisions on the Spot

In movies, TV, and radio, there are often scenes where leaders visit grassroots, and people complain about long-standing issues. The leader waves his hand, angrily reprimands corrupt officials, dismisses or prosecutes them, solving in five minutes what wasn't solved in years. It's satisfying!

Not long after becoming a boss, as the company grew, my desire for leadership expanded. I often made decisions impulsively. Once, salesperson A complained that salesperson B was poaching his client by deliberately quoting a low price, causing the client not to buy from A and reducing company profit. I was furious. Such selfish behavior was intolerable. I posted a notice: B would get no commission, be criticized, and all commission and rewards would go to A. Later, B reacted strongly, saying he had been following that client for over six months, had basically agreed on price and model, and when he was out visiting another client, the client called to confirm details, and A answered. A didn't relay the message but told the client to deal directly with him, promising more discounts, nearly ruining the deal. I was shocked; it was completely different from A's story. I checked with other salespeople, and B's account was mostly true. The notice was already posted. What to do? I did damage control and established rules to prevent recurrence. Reflecting, why didn't I investigate before deciding? If B had been introverted, he might have quit without defending himself, causing greater loss and affecting other employees. I regretted my hasty decisions. The bureaucratic phrase "Let's consider and study it" has merit. Emperors' words were final, and today's bosses can't make decisions without thought and investigation, or they'll lose authority by changing policies daily.

Now, when employees come to me, I usually say, "Okay, I'll look into it and get back to you within a few days." This has reduced such mistakes. Don't act for momentary satisfaction; consider all aspects. The higher the position, the more you should avoid on-the-spot decisions. That's why big companies seem slow; if they were as fast as small businesses, they'd soon become small.

  1. Policy Formulation

After years of effort, our company finally got the agency for a famous brand in Beijing. I was thrilled. To meet the annual sales target, we held a sales meeting where I assigned tasks to each salesperson and set annual goals.

Three months later, sales of the agency brand didn't meet the quarterly target. Why? Overall sales were good, but the product mix was scattered. Was it that salespeople weren't good at selling the main product? Or was training lacking?

I overheard a conversation between two salespeople that solved the mystery.

After work, I was about to leave when I heard two salespeople chatting outside.

A: "You did well today, a single order over 50,000. Why don't you push our main product?"

B: "Customers are used to another brand. Besides, selling that brand gives me 500 yuan more profit, so my commission is over 100 yuan more."

So that was it. B was not only a key employee but also a minor shareholder. If he thought that way, others would too.

I reflected for a long time. The mistake was mine. Selling the main product might yield slightly less immediate profit, but considering after-sales costs and manufacturer support for meeting targets, it's more beneficial. The key is employees don't care; they only care about their own income. Human nature is selfish (not in line with the mainstream, but true). The sales policy was flawed.

The next day, I revised the sales incentive policy to favor the main product: sales of the main product earned both profit commission and turnover commission, and failing to meet quarterly turnover targets would affect the quarterly bonus. The policy change had immediate effect; the main product's sales target was met in the second quarter.

Generally, employees' interests differ from the boss's, and conflicts arise. Expecting employees to sacrifice personal interests for the company is unrealistic. But the boss has an advantage: he makes policies. He can use people's tendency to seek benefit and avoid harm to align employee interests with company interests, making them rise and fall together. Then no ideological work is needed; employees naturally work toward the boss's goals. Like ancient Yu the Great controlling floods, guide rather than block. A wise policy must align with human nature; all empty talk should be discarded. Some leaders (including me, who used to think about reducing bonuses and giving lectures on life philosophy) give grand speeches they don't believe themselves. Who's fooled? Without benefits, policies won't work. In the last century, rural land reform succeeded because it finally aligned with human nature.

  1. Choosing the Best of a Bad Lot

The sales department had no supervisor for a long time; I managed over a dozen salespeople myself. It wasn't that I didn't want a supervisor, but the key employees were similar in ability, none outstanding. Due to industry constraints and sales policies, each salesperson worked independently with little cooperation, becoming selfish over time. Other employees were less capable and had high turnover. So the sales department had no head.

Every day, besides communicating with other department managers, I had to manage a dozen salespeople in detail. It was exhausting. When the sales department needed coordination, other managers often didn't cooperate because there was no supervisor of equal rank. So they came to me. Ugh.

Unable to bear it, I decided to promote a sales supervisor from the existing staff.

I set criteria based on performance, ability, and teamwork, and finally selected a supervisor. Not ideal, but I'd train him on the job.

A year passed. The supervisor wasn't outstanding but managed daily affairs well. Previously, I had to personally assign tasks like unloading goods, cleaning common areas, and holiday duty, often playing both good and bad cop. Now, with a supervisor, since he gets a monthly allowance, he should take on more responsibility. I just tell him to arrange things. I also delegated contacting manufacturers for training and coordinating with other departments. No major mistakes in a year. It seems a mediocre supervisor is better than none. People's abilities aren't innate; like bees, they start the same, but if fed royal jelly and raised as queens, they become queens.

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