At what point should I hire an employee?
For a growing small business, it’s hard to pinpoint the right time to tack on the expense of a paid employee. Are you receiving a lot of complaints of slow, or lack of, service? Do you have the revenue to afford a new hire? Have you identified any weaknesses in your existing employees’ skill sets? Over the course of this post, we will highlight some of the telling signs that you should hire an employee as well as look into the possible negative ramifications of hiring the wrong person or making a hire too early.
What are some of the signs that it is right to hire? When is it wrong to hire?
There are a plethora of reasons why hiring an employee could be right for your business. That being said, having a few tell-tale signs is key. In an article for Inc.com, Jessica Stillman outlines the three most pressing questions you should be asking yourself.
- Are you turning down work?
- When the workload is simply too much for one person to handle, it is probably time to look for help. Be careful, just because you’re turning down some work doesn’t mean you necessarily will have enough work for the new hire. This goes hand in hand with having the ability to pay said employee. If the workload and cash flow is there, it is probably time.
- Have you identified a possible new revenue stream?
- This case is best explained through an example. Say you have a successful retail store in Downtown Toronto but zero online If the opportunity is there, it may make sense to hire an employee to be fully responsible for creating and managing the e-commerce side of the business.
- Are you receiving complaints?
- Customer complaints can benefit your business believe it or not. They show you where you need to improve and often by how much. If they are complaining about slow service or lack of responses to Emails for example, this can be seen as a clue to start the hiring process.
If you answered no to all these questions, then it is probably the wrong time to hire. The overall health and security of the business should always be your main concern and putting the business at unnecessary risk in order to hire an employee is ill advised. However, if you feel hiring a new employee will help facilitate new business that in turn will generate added revenue, there are many small business financing options that could help you build the team you need.
What should you be looking for in a hire?
Ask any Human Resources manager this question and you’ll get different answers. There are hundreds of hard and soft skills the hire should have in relation to the position they will be filling. Filtering out the ones who aren’t qualified is the easy part. It’s once you’re left with a pile of qualified applicants and have to choose one that things get interesting. During the interview process, try and find out what type of person they are aside from their experiences. The goal is to see how well they will fit in to the business’s vision and culture, not just if they can accomplish the needed tasks.
What are the ramifications of hiring an employee too early?
Zappos CEO Tony Hsieh says it best “hire slowly, fire quickly”. It can be easy to bring in new people to your business, but if the timing isn’t right there will be serious ramifications, especially financially. Keep in mind, a bad hire doesn’t refer only to the employee themselves being a bad fit for the company but the company not being prepared to take on the employee as well. As soon as a bad fit is identified, it should be taken care of ASAP. According to a study done by fastcompany.com, 41% of the businesses surveyed said a bad hire cost them at least $25,000 while 25% said is cost them at least $50,000. Aside from the financial loss, the time spent training the employee as well as the entire hiring process is time that could have been spent on more beneficial business activities.
If you find that you are missing out on business opportunities because you are understaffed, a Merchant Cash Advance or a small business loan from Evolocity can help you get the capital you need now. Don’t turn down business because you can’t afford more qualified staff. Contact Evolocity today to find a solution tailored to help your small business.