Knowing When to Hire Employees Can Be Make or Break
Knowing when to hire employees can be a lot more challenging than you might think, especially for smaller business owners who don't have a lot of flexibility within their budget. The challenge doesn't just lie in figuring out when new employees are needed--not hiring employees at the right time could put you behind on important tasks, preventing growth when there's an opportunity for it. Being understaffed can also result in your current employees becoming overworked and overstressed, possibly impacting the quality of their work.
What’s more, hiring employees at the wrong time can deplete your budget and cause your company to go under. Even if it's not the end of your business, hiring employees when you don't need them will result in paying for employees who have nothing to do. Keeping that in mind, the following are ten important questions that you should ask yourself to determine when to hire employees.
1. What is Your Vision For Your Business?
What is your long-term goal for your company? Some business owners want to grow their business as quickly as possible, while others want to keep their company small. There are numerous reasons for limiting growth. By keeping a business small, the owner can retain more control over it--the bigger it becomes, the more help they will eventually need in running it. Some owners may want to grow their business eventually, but want to do so only after establishing their brand. Their plan is to generate brand awareness and build a solid reputation for their company before beginning to increase its size.
If your goal is to increase the success of your company to the point where you can sell it for a profit, you'll want to have an infrastructure in place. Having enough employees in place to run the company without you will make your business more attractive to potential buyers since the future success of your company will be less dependent on your presence. Essentially, it means that the buyer will have to worry less and do less work to continue your company's success without you.
2. Will Hiring Generate More Revenue for Your Business?
If demand is growing for your products or services and you can identify this trend over time, then hiring more employees will likely help you satisfy that growing demand more effectively. The increased business generated by the addition of new employees will not only help to pay for those employees, but it will also increase your revenue. If you're getting to the point where you're having trouble taking on more customers as a result of a lack of employees (or even have to turn down new customers), then you know it's time to hire more employees. The last thing you want to do is turn down potential customers because of an undersized staff--doing so effectively increases your customer acquisition cost.
3. Is a New Revenue Stream Presenting Itself?
It's not uncommon, especially for relatively new businesses, to discover new potential revenue streams, the possibility of which may not have been accounted for when the business was first established. For example, a local business may find that there is a stronger demand for their product in another state. Setting up an e-commerce page on their website would make sense for allowing new revenue streams to come in as a result of long-distance sales. If this happens, your current staff may not be able to handle the additional work, which means you would need additional employees.
Does This Require a Specific Skill That You Don’t Have?
You may think that your current staff can handle the work presented by the potential of new revenue streams. However, while you may have the manpower to handle the additional work, your staff may not have the skill set. Addressing the previous example, your employees may have the ability to handle more customers, but they may not have the expertise required to set up and run an e-commerce page. New employees with different skill sets will be required to take advantage of this potential revenue stream.
4. Can You Afford it in The Long Term?
Consider the overall costs of taking on just a single employee. Short-term costs may include things like paying to have the employee trained or to equip them with the tools, software, or hardware required for them to do their job. You may determine that you can afford this, but consider the long-term costs of taking on a new employee.
Besides their salary or wages (and potential overtime and commissions), you will also have to pay for employee benefits, payroll taxes, and insurance.
5. Can you Manage More People?
You may determine that you will benefit from the use of additional employees because of increasing demand for your services or because of the discovery of new potential revenue streams. However, the success of your hire will depend largely on your ability to manage your employees.
Do You Have the Ability to Make Good Hiring Decisions?
Besides knowing that you need additional employees, you also need to know how to identify employees with the right skill sets for the job. If you aren't sure what you're looking for, then you may end up hiring employees that don't have the required expertise to do the tasks you want them to do. If this is the case, you'll end up with a poor-quality staff that's still not able to meet your customers' demands even though, on paper, you should have enough employees to handle the job. If you aren't sure what you're looking for in an employee, you may need a hiring manager.
Do You Have a Set Plan For The Specific Tasks the New Hire Will be Doing?
Say you do have an instinct for hiring high-quality employees. Their skill sets will go to waste if you don't have a plan for how to use them. You need a plan for how to onboard them to your company's specific processes and you need to know exactly why you're hiring them. If you don't have a specific workload in mind, there's a good chance that you'll hire employees who don’t know what they're supposed to do--and therefore who will not be productive.
Do You Have the Time to Weed Out Applicants?
When hiring employees, you need to have the time to actually go through applications. You'll want to weed out problematic applicants, such as those with a poor performance record or those who do not have the skill sets or experience needed. If you don't have the time to do this, you won't be able to identify the best candidates for the job. You don't want to just hire the first few applicants you see, after all.
6. Is Your 24-Hour Day Getting Shorter and Shorter?
If it seems like your days are getting shorter and there's simply not enough time in the day to get the work done, it's typically a sure sign that you need additional help. The following are a few more questions you should ask yourself if you feel like your days are getting shorter and shorter as time goes on:
Can You Still Do The Back-end Work?
If you're struggling to find the time to do back-end work, such as accounting, inventory, human resources tasks (to name a few), because all of your attention is focused on sales, marketing, and customer support, then you likely need to hire administrative staff to help with those areas of your business.
Can You Still Take A Vacation?
It's common for business owners to forego a vacation in the first year or so that they've launched their business. However, going without a break from work for longer than that is simply not healthy. If you've gone without a small vacation for a long period of time, then there's a good chance that you are spreading yourself too thin. It's important for people in general to have the time to take even just a small vacation to get some much-needed rest.
Don’t Hire When You’re Stressed Out And Desperate
Even if you're struggling to get back-end work done and haven't had time to take a vacation in some time, you shouldn't hire employees out of desperation and stress. Take the time to figure out if you can afford new employees and exactly what you need them for before you begin the hiring process. Making panic hires is usually not a good strategy.
7. Can You Still Connect With Your Customers?
Closing sales and meeting customer demand isn't the only customer interaction that's important--part of running a successful company requires that you build actual relationships with your customers. This means that you need to have the time to address customer concerns, questions, and feedback in a timely manner. If you're unable to do this because your staff is spending all of their time on other facets of your business, your customers will feel like their needs aren't being addressed and that they are not being properly appreciated or valued as customers.
Are Complaints Rolling In?
If you're not only having trouble finding the time to connect with your customers, but you're getting more and more complaints about your lack of customer interaction or customer service, then you know you have a problem.
8. Are The Quality Of Your Products And Services Suffering?
If you're getting complaints from customers concerning the quality of your products and services, then there's something wrong with the production of your products or the execution of your service. This may be the result of a team of overworked employees that needs help, or you need someone to handle quality assurance to prevent poor quality products or services from reaching your customers.
9. Are You Losing Focus On Your Business Growth?
If your day-to-day operations require so much of your attention that you are unable to focus on potential areas of growth, then you definitely need more employees. Running a company successfully requires you to have one eye on the future. If you don't have the time to plan out a strategy for growth or to look for new business opportunities, then you're putting your company at risk.
10. Are You Ready To Let Go Of Some Control?
Having complete control over the business you built from the ground up is certainly nice, but as your company grows, it will become more and more difficult to control every aspect of your business. In fact, attempting to maintain complete control over a business as it expands will only cause you to lose more and more control. If you have reached this point, it may be time to begin entrusting responsibilities to other employees. Hiring employees to handle specific tasks regarding the control of your company (such as a hiring manager or a project manager, for example) can actually improve the quality of your business.
Weigh Out Your Options
If it's gotten to the point where you're seriously considering taking on new employees, weigh your options before you begin the hiring process. Here are some of the things to consider before you begin hiring:
Do The Advantages Outweigh The Disadvantages?
Make a list of advantages vs. disadvantages of taking on new employees, such as the potential increase in revenue vs. the cost of taking on a new employee, or the ability to address difficulties with time management vs. giving up some control in some aspects of running your business. Compare everything on the list to determine whether the advantages outweigh the disadvantages.
Try Modifying Your Existing Work Processes To Make Them More Efficient.
If you're having trouble meeting customer demands, your products or services are beginning to decline in quality, or your employees are becoming overworked and stressed out, then evaluate your existing work processes. There's a chance that improvements in your work processes could eliminate some inefficiencies and improve productivity and quality.
Consider Investing In New Training For Your Existing Staff.
If you're considering hiring a new employee to address a task that requires a specific skill set, consider whether it's more cost-effective to simply train existing employees to perform the task you need done. Just keep in mind that you don't want to overburden your existing employees with work or the quality of their work will begin suffering.
Test It Out By Hiring A Project-based Or Contractual Staff Member
If you need additional help, you may not necessarily need to hire a long-term employee. In this case, you could hire a freelancer or a contractual staff member for a certain period of time or for a specific project. This will allow you to address the need for additional help without having to take on the long-term costs of a long-term employee. If you decide to do this, you can always offer a long-term position. Just make sure to ask yourself the following two questions:
Is This Contractor Helping The Company Or Holding You Back?
Pay attention to their job performance to determine whether the contractor or company you've hired has done what was required of them and has benefited your company.
Can You Use This Position For The Long Term?
There's no point in extending the contract to a long-term position for a short-term employee if you don't have a need for the position over the long-term.
This blog is intended for informational purposes only and does not constitute legal advice. No attorney-client relationship is created between the author and reader of this blog post, and its content should not be relied upon as legal advice. Readers are urged to consult legal counsel when seeking legal advice.