Running a business properly means always having the right resources to work effectively, and having people in your team who can carry out all the tasks required without stress.
So when is the right time to bring new people in? Some key points:
- Sometimes you need to hire more staff to meet your businesses demands, but this isn’t always the best option.
- A helpful accounting rule of thumb is that your staff costs should be between 45-55% of your turnover.
- Talking to an accountant is an effective way to understand whether or not you should hire.
Should we hire?
Being an efficient business owner means using data to inform your decisions – whether that means driving efficiency through forecasting or KPIs, or new technology. Hiring should be a well thought out decision you can easily afford as a business.
Let’s think about what your business needs – and make sure you make the right kind of hires by asking yourself these questions:
When do you need more help?
Is there a time of the year when you’re busier than others? Do you have staff often turning in later shifts than they should be? Is your work seasonal?
These are some of the questions you should ask to determine your needs. They’ll help you identify an apparent reason for hiring. If, on closer examination, you realise you’re ticking away nicely with everyone doing their jobs in their allotted hours, with minimal strain throughout the year, you’ll know that new hires aren’t necessary.
What kind of help do you need?
Are you not meeting specific requirements? Is your team lacking expertise? Is there a clear skills gap? Do you want a more diverse workforce?
Asking these questions will help you understand what you need from your next hire. Could you bring someone in as a part time worker? Or look at contracting? Again, if you have a clear need for something that isn’t being filled, recruitment could be a viable option.
Can you back up your decision with data?
Backing up your decision with numbers is always a safe bet in business. If you can demonstrate your points with precise data, you’ll better understand whether to hire or not.
If you record data from your business CRM’s productivity tools, and clock in/clock out system, you’ll have information you can use to help you with your decision making.
Some examples and solutions:
- You’ve got more projects than you have hours available in your team – you’ll need to bring someone in to help tackle the extra work
- Some of your team are pulling all nighters every week to get through their work, whereas others are clocking off early – you need to change how your team works, delegating the work out more evenly is a better option than hiring.
- You sent out a survey, and your team are unhappy and demotivated – work on employee engagement, make sure your team enjoy coming to work, or you could find yourself having to replace existing talent before long
Financial data will prove the most vital. Ultimatley, looking at a balance sheet will tell you whether you can afford anything in your business.
If you’ve got enough work coming in but not enough manpower, the numbers maylead to a new hire being financially viable.
But there may be other options to explore first, like making efficiencies in your process or changing your focus to maximise profitability. People are an expensive asset, and we’d always advise analysing where you want to go as a business before making a reactive hire – speaking to an accountant will help you understand this.
What’s the impact of not hiring?
When it comes down to it, this is the most crucial question. Will the business miss out on opportunities by not hiring? Or are there competitive disadvantages to having less staff?
These are the questions you should be asking yourself. If you can back them up with data and encourage discussion with the right team members, you’ll be at the right place to make the right decision for your business.
Talk to us today – we’ll help you understand whether you should hire more staff.