Hiring Tips for Small Business Owners: Can you afford to hire employees?
When it comes to being a business owner trying to grow a business, one of the biggest hurdles when it comes to scaling your operation is the inability to be everywhere at once, doing everything yourself.
If you find yourself in this position it may be time to consider hiring employees or expanding your current team.
But how do you know if your small business can afford it? After all, nobody has money to waste on an investment that doesn’t work out.
This is a predicament that many business owners struggle with but with the right strategy in place and by asking yourself the right questions, you’ll be able to make a more informed decision about the future of your business and your hiring strategies.
How do you define a small business?
The Small Business Administration (SBA) defines a small business as any business with less than 500 employees. This means that if you have 499 employees or fewer, you’re considered a small business.
There are different types of small businesses which are classified by their size and industry. The type of small business you operate will also play a role in how much money you need to spend on things like employee salaries.
For example, a manufacturing company will have different expenses than a service-based company.
How to know if your small business can afford to hire employees
Ask yourself these questions:
- Do I really need to hire someone or can I automate or outsource what I need?
- Do I have an employee onboarding strategy ready?
- Am I in a position to provide training, mentorship, and guidance?
If the answer is yes to these questions, then you’re likely ready to start the hiring process.
Determine the roles you need to fill for your small business
The first step in hiring employees is to determine what roles you need to fill. This will help you create a job posting that attracts the right candidates.
Some common roles that small businesses need to fill include:
- Customer service
- IT/tech support
- Office administration
Research average salary ranges for different roles in your industry
Once you know what roles you need to fill, the next step is to research the average salary ranges for those positions. This will give you a ballpark idea of how much it will cost to hire an employee.
You can do this by Googling each role or by checking out this Annual Salary Guide that lists salary ranges and industry insights across Tech, Digital Marketing, and Creative positions.
Don’t forget the total cost of hiring an employee
Salaries are only part of the equation when it comes to pricing out the cost to hire an employee. There are other factors you need to consider, such as:
- Employee onboarding costs
- Training costs
- Recruiting fees (if you’re using a staffing agency)
- Technology needs (laptops, software licenses, etc.)
- Office space needs
- Additional equipment needs
In general, the Small Business Association says that the cost is typically 1.25 to 1.4 times the salary. For example, if you pay someone a salary of $40,000, your total cost will range from $50,000 to $56,000.
Check your cash flow for your small business
Once you have a good idea of how much it will cost to hire an employee, the next step is to check your cash flow. You can do this by looking at your business’s bank statements from the past few months.
Are you making more money than you’re spending? Do you have enough income to cover the salary plus a 3 to 6-month runway for all your other expenses?
If things feel too tight financially, it may be best to wait. However, if you’re feeling good about the numbers, you can begin to move forward with the hiring process.
Consider hiring contract workers for your small business
If you’re not ready to hire a full-time employee, another option is to hire contract workers.
This can be a great way to get the help you need without the financial commitment of a full-time employee.
Contract-to-hire may also be a suitable solution if you’re not sure if you can afford to keep someone on full-time or if you want to try out a role before making a long-term commitment.
Think about working with a staffing agency to find talent for your small business
If you decide that hiring employees is the right move for your business, working with a staffing agency can be a great way to find qualified candidates.
Staffing agencies have access to a pool of talented job seekers and can help you find the perfect fit for your business. They can also handle all the screening, interviewing, and onboarding for you.
This can help reduce the chances of getting a bad hire since this is their area of expertise and they can help to guide you through the process.
While there is a cost associated with working with a staffing agency, it can save you time and money in the long run.
Can your small business afford to hire employees?
Ultimately, expanding your business will require some level of risk. However, if you’re feeling good about the numbers, now might be the time to move forward with hiring employees or expanding your team.
If you decide that hiring employees is the right move for your business, working with a staffing agency can be a great way to find qualified candidates and remove a lot of the guesswork when it comes to hiring top-tier talent.