By hiring the right person at the right time, you can save time, effort and money.
But rushing the decision to hire can cause more problems than solutions.
So, how do you make this critical decision?
Start by considering these four things, you can make good decisions that will help grow your business.
1) Work out how many extra sales it will take to cover the wage of that employee.
Determining the extra sales required to cover a new employee’s wages is an essential first step. Every business has a break-even point, and adding an expense increases your break-even target. Knowing this number gives you an idea of how easy or hard it is to cover the increased wages.
2) Work out if you can afford half of their wages.
Rather than worrying about the full salary, consider if you can afford at least half of it. Stop thinking about the “Can I? Can’t I? Do I? Don’t I?” If you are confident that you can afford the half then it should not be a problem. The right employee can contribute to covering the other half once they start working.
3) Have a buffer.
Building a buffer to cover initial wages is a smart practice when bringing on a new employee. Ideally, you should set aside three months’ worth of their wages. This buffer gives you time to test and train the employee during their probation period without the risk of hurting your business. The buffer can be one, three, or six months, but generally, a good rule of thumb is to have three. If the new employee doesn’t work out, then you can let them go without having a huge financial impact.
4) Consider the different ways that you could hire someone
There are a lot of ways now which give you options on how to hire people. Consider if you need a full-time employee or if alternatives can meet your needs. Choices like part-time, casual, or contractors can give you the help you need while freeing you up. Considering different options to free up your time can help you identify exactly what you need.
These four things will enable you to be confident in making the decision of when to hire your next employee.
And by doing this, will enable you to have more time to focus on other parts of your business so you can grow.