--- title: Do You Need a GM—or Just a Better Second-in-Command? description: Revenue gets you into the conversation. Headcount, owner hours, and the actual job decide whether a general manager earns the salary. category: Owner author: Shawn Duncan published: 2026-09-13 updated: 2026-09-13 canonical: https://businesscoachshawn.com/blog/do-you-need-a-gm-or-just-a-better-second-in-command site: Shawn Duncan Business Advisory --- # Do You Need a GM—or Just a Better Second-in-Command? Revenue gets you into the conversation. Headcount, owner hours, and the actual job decide whether a general manager earns the salary. ## Key takeaways - Use revenue, headcount, and owner hours together. None is a hiring trigger by itself. - Budget the full employment cost, then test whether existing profit can support it without imaginary growth. - Hire a GM to run the operating business—not to fill a poorly defined gap that needs a supervisor or administrator. - Define the results, authority, and owner role before advertising the position. An expensive person with a general manager title will not automatically make your business easier to run. Sometimes you’ve just bought yourself another employee to supervise. For six figures. A general manager runs the operating business: people, scheduling, service delivery, and financial performance. You still own the strategy, major investments, and oversight. They own getting the weekly results. The question isn’t whether you deserve help. You probably deserved help three summers ago. The question is whether you have a GM-sized job and enough money to fund it. ## Revenue opens the conversation Use these as **planning ranges, not industry averages or automatic hiring triggers**: - **Below $1 million:** Start by testing a narrower role. An office manager, dispatcher, or working supervisor may solve the actual problem. - **$1 million–$2 million:** A hands-on GM can make sense when operations are complicated and profit is strong. Affordability needs close inspection. - **$2 million–$5 million:** Put a GM seriously on the table, especially with multiple crews, departments, shifts, or locations. - **Above $5 million:** If you still personally coordinate daily operations, examine whether your management structure has kept up with the business. Revenue alone is a lousy hiring instruction. A $3 million contractor with substantial material and subcontractor costs may have less room for management payroll than a smaller service business. Your gross margin determines how much revenue remains after direct delivery costs. Your net profit tells you what survives everything else. A big top line cannot pay a salary twice. ## Count people—and the management hours Headcount matters because people create coordination work. But ten technicians spread across trucks are different from ten employees working beside one supervisor. For an initial screen, use these headcount ranges: - **Fewer than eight employees:** Check whether you need administrative help or a lead employee before adding a full GM. - **Eight to fifteen:** Identify whether several functions need coordinating, or whether one overloaded department needs a manager. - **Fifteen to thirty:** A dedicated operating leader becomes a serious option, particularly with supervisors underneath them. - **More than thirty:** One owner handling every direct report is a structure worth fixing, whether the next hire is a GM or department managers. These are decision prompts, not laws. Then track your hours for two weeks. Separate sales, technical work, administration, daily people management, and ownership decisions. **Twenty-plus hours a week of recurring operational management is a useful investigation threshold.** Not a proven benchmark. A practical signal that there may be enough transferable work for a substantial role. If you work 65 hours but spend 35 installing equipment, you may need another installer. If you spend 25 coordinating three supervisors, handling staffing, and correcting service failures, that looks much more like GM work. ## Price the whole hire Consider an illustrative budget: $100,000 salary plus $25,000 for employer taxes, benefits, and incentive allowance. That’s **$125,000 a year**, before recruiting and onboarding. Actual compensation depends on your market and responsibilities. That annual cost equals: - **12.5% of revenue** at $1 million. - **5% of revenue** at $2.5 million. - **2.5% of revenue** at $5 million. Now test profit. Suppose your $2.5 million business produces $300,000 in annual operating profit after paying you a market-rate salary for your current work. Add the GM while keeping your compensation unchanged, and profit drops to $175,000. Your margin falls from 12% to 7%, before any improvement. Can you accept that? Can cash flow handle payroll during the ramp-up and slow season? Does enough remain for debt payments, equipment, taxes, and reserves? If the answer requires immediate miracle growth, you cannot comfortably afford the hire yet. ## Make the payoff specific “The GM will grow the business” is not a financial plan. It’s a wish wearing a polo shirt. In that example, replacing the $125,000 cost through additional sales alone would require $312,500 in extra revenue at a 40% contribution margin. Contribution margin means what remains after the costs caused by those additional sales. That calculation assumes existing capacity can handle the work without another layer of fixed overhead. A mixed plan might be: - $200,000 in additional sales at 40% contribution: **$80,000**. - Verified reductions in overtime, rework, and other costs: **$45,000**. - Total annual improvement: **$125,000**. Don’t count savings already included in the contribution calculation. Don’t assume every hour you recover becomes a billable hour. You can also deliberately accept lower profit to recover time. That’s a legitimate ownership choice. Just call it buying back time, not guaranteed ROI. ## Define the job before the title A GM needs measurable responsibilities and enough authority to deliver them. Specify who controls staffing, schedules, purchasing, customer recovery, and pricing within agreed limits. Give them reliable financial reports and usable SOPs. Otherwise, you’re hiring someone to interpret your habits. Build a weekly scorecard around sales, gross margin, labor percentage, service quality, and staffing. Watch reviews and turnover for signs that short-term results are creating longer-term damage. Define your role too. If you keep changing schedules behind the GM’s back, expect confusion—not accountability. ## What to fix first Monday morning **Write the job before you post the job.** - Pull trailing 12-month revenue, profit, and payroll figures. - Start the two-week owner-hours log. - List the recurring decisions and results the hire would own. - Price the full employment cost and test it against current profit. If the work is mostly dispatch, hire dispatch. If it spans people, delivery, and operating performance—and the numbers survive the salary—start recruiting a GM. --- Source: https://businesscoachshawn.com/blog/do-you-need-a-gm-or-just-a-better-second-in-command Author: Shawn Duncan, business advisor to established small businesses (Austin, Texas). Advisory: https://businesscoachshawn.com/ · Marketing: https://businesscoachshawn.com/marketing · Systems: https://businesscoachshawn.com/systems