Does Your Business Need To Hire An Employee? How To Decide.

Making the decision to take on an employee for your small business or startup requires a palpably strong commitment. Get it right and you could make giant strides in helping push your business into  exciting new levels of profitability – after all, the smaller the company, the bigger the impact that each additional employee hired should have on it. Get it wrong however, and it could become a crippling and expensive mistake.

Here are some questions, ideas and considerations in helping you determine if now is the time to take someone on:

  • What are your reasons? Analyze your own motives for taking on a new staff member. Is it because your company is experiencing prolonged, long term growth that an additional employee will be able to help leverage? Or is there a short term crisis that requires an extra hand until it’s solved? Has there been a short term surge in orders that is eventually likely to peter out? Inexperienced small business entrepreneurs often take on staff for entirely the wrong reasons, which can lead to problems later on. 
  • Can tweaking your existing processes eliminate the need for another strain on the payroll? It’s important to make sure that you’re not taking on another worker to help eliminate additional workloads created by a bottleneck in your business operations. If that’s the case, consider parlaying some resources towards treating the illness within the process, rather than employing someone to address the symptom of additional workload.
  • Absorb new skills and experience into your business. A good reason to take on a new employee is to bring in key skills and experience that could bring immediate and long term business rewards. Not even the best entrepreneurs will be masters of everything, and getting the right person can help your business reap real rewards.
  • Can you afford it? Take a look at your books and your key metrics. How comfortable is your working capital? Is your company inherently profitable? You may want to take on a new worker with the best of intentions, but if your company is struggling and gasping to break even, how exactly will another four figure a month outlay help? Remember also that hiring an employee on the books can be an expensive activity. Aside from their salary and physical cost (you’ll possibly need to assign them a work-space/resources) your company will need to pay national insurance. Take a look at the HMRC site on some of the practical considerations in taking on new staff.
  • Are you hiring to grow or to service a non-profitable arm of your business? If you’re taking on new staff to service a side of your business that’s barely breaking even, or even in decline then you may want to rethink the decision. Often, it can make more sense to cut back those areas and costs of your business that aren’t delivering worthwhile revenues and profits, rather than betting yet more money on a dead horse.
  • Should you consider outsourcing instead of a permanent hire? If you need someone on a short term basis, or if the task(s) can be outsourced – it can often be a far more cost efficient and result-centric way of meeting your objectives. Read our article on outsourcing tips for small business to get it right the first time.