Business is booming, and you’re having trouble keeping up with customer orders. Should you hire more employees to help? While it would be wonderful to delegate some of the more time-consuming tasks, like bookkeeping, to a new hire, don’t post that job ad just yet. Think before you hire, and make sure the answer to each of these questions is a resounding Yes!
1. Can you afford it?
A new hire’s compensation and benefits package alone will cost you a good chunk of change — and don’t forget about the amount you’re required to pay toward Social Security, Medicare, and federal and state unemployment taxes. It all adds up, but it’s absolutely worth every penny if you hire the right person for the job.
Take action: Create a budget that factors in all the costs associated with hiring a new employee. According to the United States Bureau of Labor and Statistics (BLS), it’s a good idea to budget an extra 30 percent on top of the wages you plan to pay your employee. That quickly takes a new $14.00-per-hour hire up to $18.20 out of your pocket.
2. Is it the right time to hire?
A sudden rush of business might tempt you to add to your team, but make sure the increased workload will last long enough to justify hiring new employees.
It may be that you can handle some tasks internally more easily than you think. An example: Do you really need a full-time bookkeeper, or could you enter numbers into an accounting system and have an accountant review the work?
Take action: If you’re not sure whether you have enough work to keep a full-time employee busy, here are some very effective, little-to-no-cost staffing alternatives.
- Hire temporary employees: Temp staff can often get the work done, without the long-term cost or commitment.
- Hire part-time workers: Ask them to work more or fewer hours in any given week depending on how much work you have.
- Tap into automated tools and software: Work smarter without having to hire somebody new. For example, you can use an automated bookkeeping tool like Quicken to create a budget and track expenses. Accounting and bookkeeping software can be be a bit of a hurdle to get set up, but it often pays dividends down the road in time savings.
3. How will you find the best person for the job?
If you want to find the best person for the open role, you’ll have to invest in the recruiting process. Do you have the time to sort through hundreds of resumes and interview top candidates? How will you prepare for hiring fluctuations throughout the year and still be able to focus on your core business?
A bad hire can cost you thousands of dollars and cause morale and productivity to suffer, so it’s crucial to put effort into the recruiting process.
- Start by conducting a job analysis to document 1) why you need this new position on the team, 2) how this person will support other roles in your company, and 3) what skills he or she will need to do the job.
- Then use that information to write a job description that clearly defines the demands, goals and expectations of the new position.
- After that, think about ways you can bring in top talent, such as implementing an employee referral program.
- Or consider outsourcing your recruiting to find and place candidates fast and save time — and save money in the process. Deluxe Talent Management can help you make fast work of the hiring process by letting you post to multiple job boards and social media sites in one click.
4. Should you hire or promote from within?
Take a close look at your staff — the person you need may already be in front of your nose. Promoting from within could lead to lower hiring costs, less time dedicated to training and an employee who already fits your company culture.
Still, some positions may not be easily filled without outside applicants. To help you decide when to look outside or within for your next employee, the Society for Human Resource Management (SHRM) offered these pointers for when to look outside and when to look at your current team:
Look outside when:
- You need somebody with a specific skill set that’s not readily available within the organization
- Your company culture welcomes fresh ideas and multiple perspectives
- There are processes in place to support on-the-job training and integrate new employees
Look within when:
- Your current employees have the skills needed to excel in the job
- It’s hard for outsiders to fit in with your company culture
- Your company doesn’t have a formal training plan to get new employees up to speed
Keep in mind that if you promote from within, you’ll need to fill that person’s previous role, too. Lighthouse Sounds, an Alton, Illinois, recording studio featured on Season 3 of Deluxe’s Small Business Revolution – Main Street series, needed a bigger staff to bring in more revenue. But before they could hire new employees, owners Jay “Hart” Stanley and Alex St. Cin had to review their own job descriptions to ensure both the practical and creative aspects of the business were covered. Stanley would be the business manager of the studio, responsible for marketing and accounting. St. Cin, on the other hand, would be the lead engineer and technical expert and handle light gear repair. Once the two business owners had ironed out their roles and responsibilities, they were better positioned to bring on new talent.
Take action: Create an effective job description that sets clear expectations for your new employee-to-be, and then focus on hiring the right person for the job. On top of the skills needed to do the job, look for a person who:
- Has a positive attitude
- Is a great communicator
- Is collaborative
- Is calm and flexible
- Is dependable
- Is organized
5. Will you need to move?
Can you accommodate more employees without moving into a larger, more expensive space? Maybe, if you plan to expand or reorganize to make better use of your space. If your office is crowded, you can create staggered work shifts or allow part of your team to work from home. If your store isn’t big enough to display all your merchandise, try showcasing it on the web instead.
At Lighthouse Sounds, Stanley and St. Cin had just moved their recording studio into a bigger building. They had space reserved for a retail shop, but after taking a closer took at their revenue model, they decided to reallocate that space and turn it into another room to make music — and generate more revenue. Because their retail shop was one of the only places in town offering rock band merchandise, it could be set up in a different part of the building. Stanley and St. Cin also set aside some space for a reception area to take care of clients and give off a cool vibe. (Watch Deluxe’s Small Business Revolution – Main Street to learn more about how they maximized their space.)
Take action: If a crowded office is affecting productivity, it’s time to rearrange your floor plan. Try free programs and apps, such as Room Sketcher or Magic Plan, to get ideas about how to make the most of your space.
If you have to find a new home for your business, look for a place that offers perks like a bigger parking lot, more street visibility and lower taxes. And remember to create a business budget to ensure you can cover any costs associated with the move.
6. Is your payroll in order?
You’re already wearing so many hats to keep your business up and running — do you really have the time to give payroll the attention it deserves? You can set up your company’s payroll system, but it’s time-consuming to keep up with changes in tax laws, manage time-off requests, print, sign and distribute paychecks, and so on. Don’t risk issuing a late paycheck or incurring penalties for filing payroll taxes incorrectly.
Instead of taking a chance, consider what Alicia Jeffreys of Alton’s Shampooches Dog Grooming did to solve the payroll dilemma for her business in Season 3 of “Main Street.” Jeffreys was looking to hire another groomer, but she wasn’t sure how to set up a payroll structure for her business. She enlisted the help of Deluxe Payroll Services — an easy-to-implement solution that allowed her to devote more energy to her shop while ensuring her staff would be paid on time and in accordance with state and federal laws. Jeffreys is relieved now that direct deposit has been set up for her employees, and all of the state and federal tax filing has been taken care of.
You want to pay your employees on time, as well as protect your company from tax errors and IRS penalties. But if there aren’t enough hours in the day to do it all, it’s time to look for help.
Take action: Outsource payroll to a professional service like Deluxe, which can take care of direct deposits, tax filing, 401(k) plan administration and other important tasks with speed, accuracy and legal compliance. Then breathe a sigh of relief, knowing that you’ve got financial experts in your corner.
7. What’s the cost of not hiring?
It’s okay if your employees put in some overtime to handle a short-term spike in production demands, but paying them 1.5 times their regular working hour rate on a regular basis can get expensive. What’s more, frequent overtime can lead to burnout, kill productivity, cause quality to suffer and drive those overworked employees right out the door.
Take action: If you’re turning business away because your staff is struggling to keep up with customer demands (and it’s not slowing down anytime soon), then it may be time to hire.
But before you do, run through these questions:
- Can you really afford it, and do you have the budget to prove it?
- Is it the right time to hire permanent staff, or can temporary workers get you through the crunch?
- Should you promote from within or look outside your company?
- Are you prepared to put your time, money and energy into finding the perfect hires?
- Can your space accommodate more employees, or will you need to move?
- Is your payroll system ready to handle the new hire?
- What are the costs of not hiring someone now?
Taking the time to answer these questions will help you get your company in hiring shape.
For more information about when to post that job ad, stay tuned for Small Business Revolution – Main Street Season 4, to learn how the owners of a coffee shop, a woodworking business and a restaurant made plans to grow their staffs.