Can You Afford Your Next Employee?
As a small business owner, it’s often difficult to navigate the “when” and “how” of hiring another (or your first) employee. Often, the financial calculations related to hiring are overlooked. Owners frequently wait too long to hire, ignoring the potential financial boost, or they hire too fast without considering the cost.
Hiring employees works best if you plan ahead. Understand what events may trigger the need to hire, like having sales at a certain level, you and/or other employees at or beyond capacity, and client services/opportunities missed or delayed. These are all points where hiring might be considered.
Before you hire, consider the following:
Are there tasks my staff is doing that could be streamlined, saving time?
Are my processes documented, so on-boarding a new employee will be smoother and take less time?
How much will it cost me for a new employee? Consider the following costs:
Employer Payroll Taxes
Additional Monthly Software Costs
Computer, monitor, desk, cell phone costs (one-time costs)
An Employee Cost Calculator can help with calculating basic wages, taxes, and benefits.
Can I afford to hire?
We suggest setting aside money for the upfront costs of onboarding and one month’s salary for the employee. This will help ease the transition for your business.
Can I afford not to hire?
Finding the right person can often expand the opportunities for your business with increased bandwidth and additional skill sets.
Can I hire for micro positions?
Sometimes hiring for a very specific task a few hours a week can open up time to devote to high-earning activities. Here’s a great podcast explaining a little more about this option and how to take advantage of it.
Do you have questions about hiring and the finances necessary to take that next step? Reach out to see if we can help.