Good employees are the backbone of any successful business. However, before good employees can make money for your business, you must first invest money in the process of finding those employees. This presents a problem for many startups, which are often torn over decisions between competing budget expenditures. When it comes to determining when to hire new employees, and how to afford it, it is helpful to keep a few considerations in mind.
Signs it is time to hire. There are some tale-tell signs it is time to hire new employees, and learning to recognize these signs is tantamount to your business’ survival. The most obvious sign is when you can’t seem to keep up with all of the business that is coming in. If you find that you are struggling to fill orders in time and no amount of restructuring your efforts is helping, then it is time to bring in some extra hands. A more insipid sign that is easier to overlook (or ignore, out of denial) is a rise in customer complaints. An increase in customer complaints for any reason–from customer service to product quality–is a sure sign that your business output is floundering in ways that may be remedied by taking on new hires.
Expenses to consider. Before you can determine how much you can afford to spend on acquiring new employees, you must first calculate how much new hires will cost you. This requires that you consider a number of costs outside of the new hire’s salary. Expenses to account for include increased workman’s comp (and other insurance) costs, job posting/marketing costs, the cost of creating a work schedule for multiple employees, the money equivalent of the time you will spend screening applications and interviewing candidates, and the costs (time and money) associated with training a new employee.
Finding the money. Once you know how much you will have to spend to take on new employees, you will need to find the money with which to do it. Of course, the most obvious first step is to go over your budget to find any ways in which you may be able to cut some fat; you can also consider the items in your budget, line by line, to determine which might be reprioritized underneath new hires. If you don’t have the money for a much-needed hire in your business budget, then you have a few options: You can pay the new hire out of your personal funds, apply for a small business loan from a bank, or find an angel investor who is willing to put some money into growing your business.
Hiring new employees may be your next step in growing your business, or it may be altogether unnecessary. Before you make such an important decision, be sure to consider all of these points.
