How to Know If You’re Ready to Take on An Employee in Your New Business

Running a business can be exciting and thrilling. The benefits of being your own boss, of setting your own goals, and choosing how and when to work can be hugely liberating. There comes a point however, when decisions must be made about expanding the business. By looking at performance versus goals and key performance indicators (KPIs), as well as income versus expenditure, and looking at market conditions, entrepreneurs are able to assess whether or not to take on new employees.

There are many benefits to hiring new people.

1. Bringing in new expertise into the organisation
2. Increase capacity for work
3. Increase specialism in the workforce
4. Share workload improving employee mental health and engagement
5. Grow company revenue

There are of course challenges to bringing on new staff, in particular into a small organisation, in particular around training and cultural fit but there are many guides available to support effective recruitment.

But how does a small business owner know that it is time to recruit?

1. You are turning down work

You may have a steady stream of work to do for existing customers, but if you find yourself in the position where you have to turn down a new customer, this is a clear sign that it is time to expand. This set-up means that the business has reached maximum capacity, and runs the risk of stagnating. Turning down business is also a bad sign, as the work being done to attract new customers is wasted if the business does not have the capacity to take them on. The costs of attracting a new customer far outweigh the retention costs.

2. Potential for new products or new markets

From an initial product or service, businesses often grow and diversify. A one man-band will only have so much capacity, and may have ideas of expanding, but will be limited by what one person can successfully do. Without hiring new staff, you limit yourself to what you are doing now, and may find that in a couple of years, the demand for what you are providing is not there; so not only have you missed out on potential new revenue streams, you have also doomed your business to failure.

3. Customer service and client satisfaction is suffering

It is estimated that only 1 in 26 customers will actually complain; the rest will simple leave to a competitor if they are unhappy. That 1 provides an opportunity to address any issues. If you have complaints about the quality of what is delivered, or the time taken, then it is a clear sign that more hands are needed to keep up with demand.

4. No time for admin

No one likes doing the admin required to run a business, but it has to be done. Accurate records need to be kept of income, revenue, spending, taxes and so on; falling foul of this can cause innumerable issues with the IRS and lead to substantial fines, often enough to close down a fledgling business.

Key considerations when recruiting

1. Admin

One of the main things to ensure is that the employee has their Employee Identification number. This is vital as the business owner, also an employer, needs to send tax declaration to the IRS to ensure that the government, employee and employer claim the right tax.

2. The job itself

What is the purpose of the job? Is it to fill a specific skills need, or simply to carry out some of the grunt work to free up more strategic time for the owner? This needs to be considered before advertising and will determine the salary and expectations.

3. Can this be automated?

Thanks to advances in technology, there are now many jobs that can be automated. While this isn’t always the best solution – human employees are obviously priceless – workforce automation can be a reliable, cheap tool to help your business’s efficiency and growth.

4. Background checks and eligibility

All employers have a responsibility to ensure that the person they are hiring is who they say they are, and to ensure they have the legal right to live and work in the USA.