For most small business owners, the decision to hire their first employee is not a small or easy one. Many small business owners are hesitant about adding a new hire to their team, according to the 2014 Small Business Success Study. It’s understandable. It’s a big decision and there are a lot of things to consider. We thought we’d help with the process by offering up five key questions to ask yourself before deciding to add a new member to your small business family.
1. Can I take on this extra work myself?
When your business starts taking off and your nine-hour day is getting stretched, the thought of hiring an employee can easily pop up. But before you start posting job descriptions, ask yourself: “Can you handle the work yourself?” The reality is that starting and running a small business always comes with a few sacrifices. Having to work a little harder, and above-and-beyond early on, is one of them. If you’re only working a few extra hours, with a few additional tasks, a new hire is maybe not the best idea.
Are you starting to burn out on 16-hour days? Then yes. Hire someone.
2. Can this extra work be covered by a part-timer or freelancer?
Often, as your business starts to take off the extra work you face, doesn’t really require a full-time employee. Additional tasks—especially administrative—can be easily outsourced to a freelancer or contract worker. Make sure you consider this more affordable option—as long as it covers your business needs—before spending money on your first 9-5er.
3. Is there enough work to justify a full-time employee?
You don’t want to spend a full-time salary on an employee who doesn’t actually have enough work to be busy full-time. As a small business owner, it’s important to make sure every cent you pay is worth it. Take a moment to think about what and how much work this hire would be doing. Is it enough to keep them busy Monday to Friday, 9-5? Then it’s a good idea to add an employee to your team. If not, you may want to step back and consider Question No. 2 above.
4. How much will an employee cost me in total?
An employee costs more than just their salary. There are expenses like computers and office supplies to factor in. There’s also employment insurance, social security and Medicare tax, to consider. That all adds up. To understand the real cost, a good rule of thumb is to add anywhere from 18% to 26% to an employee’s potential base salary. At that point, you need to ask yourself, “Can I afford this?” before hiring someone.
5. What do you want a new hire to bring to your business?
When deciding to hire an employee, don’t do it based on a vague sense of need or a feeling of “Wouldn’t it be nice?” Make very clear to yourself why you need an employee and what you expect them to do for your business. Write it down. This will help confirm (or not) that you really do need an employee. It also has the added perk of outlining the job description that you might have to eventually write. Spelling out very specifically what your expectations are for your new employee, will then help you find your dream candidate.
Next Steps: Are you looking to manage your employees more effectively but don’t have time to keep up with the latest research and trends in talent management? We’ve got you covered with the weekly Small Biz Ahead Newsletter. Sign up today and start receiving the weekly newsletter chock full of the latest tools and resources to help you run a successful business.