For new business owners, one of the most challenging milestones is knowing when it’s time to hire your first employee. Hire too early, and you risk cash flow issues and earning a poor reputation as an employer. Hire too late, and your clients may feel the effects of you stretching yourself too thin.
The decision to hire that first employee means different things for different businesses. However, there are a few things you can consider to see if you’re ready to take that next step in your business.
Are You Turning Down Work?
This is a big indicator, especially in the service-based industry. Before you hire a new employee, you want to make sure that there is enough work for them to do.
If you find yourself turning down business (and money) because you simply cannot take on any more clients – it may be time to hire part- or full-time help.
A word of caution here: There is a huge difference between hiring because you are too busy, and hiring because there is more opportunity. The work you have for your employee should contribute to your revenue, not to simply take things off your plate.
Is the Investment Worth the Return?
In order to scale your business, you’re going to need to hire new employees. However, timing is critical. Cash flow issues are one of the biggest contributors to small business failure. Part of that comes from entrepreneurs who don’t understand the true cost of hiring a new team member.
Do your research. What will you pay the employee? Can you pay a fair wage? Will you be able to afford health benefits, tax payments, insurance payments, and other requirements? You need to understand exactly how much you will need to invest into that employee, and set expectations for the return on that investment.
If the numbers don’t work out, you may not be ready.
Do I Know Enough About My Business to Train an Employee?
This one can be tough for many entrepreneurs. You may think you know your business and your industry, but do you know it enough to teach someone with potentially limited experience? Do you know it well enough to educate an experienced professional on your brand?
Success with a new employee is highly dependent on your ability to effectively train them.
Are you ready to be a leader?
For more information about hiring your first (or one hundredth) employee, be sure to tune in to Wright Stuff Radio!