How Do You Know When It’s Time to Hire?

You know that your people are your most important asset and that getting the right team in place is critical to allow your business to scale, but how do you know when it’s time to hire? Whether it’s your first employee or you’re considering adding to your team, here are some key factors to consider before you move forward with that hire.

First, do you have the revenue to support the cost of the position? And, do you have enough cash reserves set aside to continue covering payroll if you have a temporary dip in revenue or some payments come in slower than you were expecting? Do not add to your team unless you can afford the position.

Second, are you utilizing the capacity you currently have? When you’re small, there may be tasks you don’t necessarily love doing and you may think there is a better way to use your time. While this is likely the case, as long as you or your team have the capacity to keep up with those tasks. Over-hiring is a common mistake small business owners make, especially when scaling. It’s common to want to separate tasks by roles and departments and hire for every position. The problem is, when you’re small, you don’t need a full-time person to fill every role and you’ll wind up with a lot of unused capacity. While some capacity is good to prepare for growth, too much is bad for business. Before you hire, make sure you’re using the capacity you already have.

And, finally, consider optimization. Maybe you are at or near capacity with your current volume of work, but if you implemented a new system for order processing, you could open up 50% capacity. Or, maybe you could automate some of your accounting tasks, so you don’t need to hire that bookkeeper just yet. Perform an audit of your processes and roles and identify areas to streamline. This helps to open up additional capacity without making additional hires. This is a great time to review your SOPs (or create them!) and refine and streamline your processes.

Before you post that job, think about what you really need in your business and consider the above to make sure you are ready to hire. It’s better to grow a little slower, optimizing as you go, than hire too fast and cut into your profitability by overstaffing.