While many companies around you may be downsizing or keeping a lean staff, your business is producing more work than you can handle. Now may be the time for your business to take the next step and hire an employee. If you're concerned about the expense and responsibility of expanding your staff, you're not alone.
According to Craig Jennings, president of Powhatan Consulting, hiring is all about being an entrepreneur.
"Taking on a new expense, like hiring an employee, is simply an investment on which you expect a return. People who are successful return 10 to 20 times over on their investment," Jennings said.
Here's some food for thought as you calculate the cost-benefit ratio of adding a new employee.
What is your time worth? — Entrepreneurs who start their own businesses, large or small, are used to taking on all the responsibility. That, according to Jennings, is costing them their "CEO" time.
"My job as a coach is to invite entrepreneurs to take an hour a day for CEO time. If you can hire somebody to do the $15-an-hour work, then you can do the $300-an-hour work," Jennings said.
The classic issue for small-business owners is that they are too busy doing employee work.
"They don't want to do the really good stuff because the easy and urgent stuff is much easier. However, the work that's important is where all the profit is," Jennings said.
Jennings recognizes that there are capable people who can put out the fires so that entrepreneurs can work on growing their business.
"The only thing you should consider is what the payoff is. If I hire somebody to do the bookkeeping , for example, we have a good person doing the work. Secondly, your time is opened up to do things that you're good at," Jennings said.
Don't limit yourself to full-time employees. — If your business is still small, consider a virtual employee or a contractor . Melinda Emerson, a small-business coach, encourages small-business owners to start off small when it comes to adding help.
"If you can hire somebody for projects, you get a few hours here and there to get things off your plate. As long as you have somebody helping you when you need help, you will be a lot better off," Emerson said.
Emerson points out that there are people who work virtually per project or on a monthly retainer. Even if you do decide to hire a full-time employee, you should only hire on a trial basis to make sure that the employee can help you grow your business.
"It makes it a lot easier to get someone fairly quickly that has all of the skills you want them to have. It's not all about benefits anymore," Emerson said.
She also encourages small-business owners to think about what they want to do and decide whether hiring an employee is best for the business.
"Hire because your revenue shows that there's demand in your business. If your cost-benefit analysis shows that hiring someone gives you more time to sell, then you should do it. For example, if you spend more time selling, then you can increase your revenue by 40 percent," Emerson said.
Look at the long term.— Do you know what it means to be an employer? Barbara Weltman, founder of Big Ideas for Small Business, encourages entrepreneurs to recognize the amount of responsibility that comes with hiring a permanent employee.
"It's not just the cost. It's payroll tax, human resource laws and filing. You have to be mentally prepared for that challenge," Weltman said.
Weltman said that small-business owners should look into the future when making hiring decisions.
"There are practical and financial considerations. When you hire, you make a long-term commitment to an employee and their families. Unless you can foresee that kind of long-term need, it doesn't make sense to hire a permanent employee. From a financial standpoint, it costs more than just a base salary to put someone on the payroll," Weltman said.
You shouldn't be hiring unless your sales and revenue can support the new employee.
"If you're still struggling, regardless of the economy, then you don't need someone. If your business has an uptick and you're optimistic enough that it will continue, then go for it," Weltman said.
Consider the costs of not hiring. — Finally, if you are still can't let go of the busy work (and the purse strings), consider this.
"Running a lean staff is like running an engine with the minimum amount of gas. Sometimes, running in neutral is the right thing to do. But sometimes you can't manage in normal traffic without using gas," Jennings said.
If you're being very careful with your money, consider what your competition is doing. Will you be at a disadvantage if you drive in neutral? Are they taking a risk? If you need to get ahead, it's time to stick your neck out.