Developing your business demands considerable time and energy. However, taking some of the work off your own plate by growing your staff may be necessary to really allow your firm to take off.
Attempting to determine the right time to bring on additional help can be daunting. Every entrepreneur faces the dilemma: Hiring someone will cost precious money and time, but it’s also likely vital for business expansion. What should you consider if you’re trying to gauge whether it’s the right time to add staff to your business venture?
💰 Positions make you money
Most experts agree that the best position for early hire is where your “most profitable place” is. That strategy works well in many industries. However, for a tech or manufacturing firm, hiring people who can get products to market are initially more critical than bringing in people to sell them. Product designers, developers, growth hackers, content marketers, and those in other areas who can create what you can sell are key.
But what if you’re already selling a product or service? One helpful formula is to never bring anyone on board unless you can expect to gain twice his or her salary in new revenue. If the position cannot directly boost revenue, your new hire should free up others’ time or take on support tasks — such as deliveries — vital for raising revenue.
Eventually, you need people with solid experience in certain niches instead of people who wear multiple hats. You can establish key divisions within your business by adding star salespeople, a manufacturing manager, fulfillment staff members, and others.
💳 Conditions cost you money
Another major reason for hiring someone is to free up entrepreneurs to focus on building the business. Being a “jack-of-all-trades” makes sense during the initial business development phase. However, the best use of your time and talents is probably not making deliveries, bookkeeping, fulfilling orders, or doing other menial tasks. Additional staff members can enable you to focus on your expertise: business growth.
Burnout is another big concern — and not just for entrepreneurs. Regardless of how small or big your business is, a continually overworked staff will become increasingly less productive and could eventually burn out. Bringing in help lets your existing staff recharge mentally and physically.
⚖️ Practicalities and cost realities
Two major concerns with adding staff are a perceived inability to assess true costs and the possibility that you may eventually have to let people go. Salary isn’t the only expense additional personnel incur; there are also payroll taxes, benefits, worker’s compensation, and equipment costs. You want to avoid long-term payroll requirements that can impede cash flow and add to the stress of growing your firm.
If you’re worried about making a full-time hiring commitment, consider bringing in a contractor. Some company leaders bring individuals in on subcontractor bases for defined contract periods — e.g., six months — with potential for offering full-time positions when the contracts have expired. Another alternative to full-time hiring is to outsource business processes, which can help you avoid fixed costs for additional employees in favor of costs based on production levels. If appropriate for your business, this method allows you to ramp up — and ramp down — until you solidify your production cycle.
For specialty positions, such as bookkeeping or financial planning, it makes sense to bring in a part-time employee or a consulting firm adept at the process and requirements. They can offer experience in dealing with other companies and professional knowledge in areas where your company does not yet require a full-time staffer.
There’s no foolproof test that tells entrepreneurs the right time to expand their staffs. However, these considerations can help give you more visibility into your hiring efforts. Remember, employee jobs should fit one of two criteria: either adding to the company bottom line or saving money. A confident decision to hire should involve a confident assessment of which financial results the roles provide.
If you need additional help making a decision or assessing your financial footing, contact Finance Pals at 303-868-8980. You can also contact me, Paul Heffner, Finance Pals CEO and founder, by emailing me at email@example.com or via Skype at paultheffner.