Determining the right time to hire a new employee can be tricky. Wait too long to start hiring, and you risk stalling business growth. Hire too soon, and you may take a hit to your bottom line. There are various factors to consider as you weigh bringing on a new team member. Here are some questions to answer as you decide whether or not to hire.
[Read more: 6 Hiring Tips for When Your Business is Growing]
Do you have the cash flow?
Labor is likely to be one of the biggest line items in your budget. However, hiring a new employee costs more than the regular payroll and benefits expenses. There are recruitment costs that you’ll need to account for as well.
“There’s a rule of thumb that the cost is typically 1.25 to 1.4 times the salary, depending on certain variables. So, if you pay someone a salary of $35,000, your actual costs likely will range from $43,750 to $49,000,” wrote the Small Business Administration.
Once you’ve found the right person and brought them on board, you’ll need to budget for payroll, taxes, benefits, and even employment insurance. Make sure you have the cash flow to support these expenses during and after the recruitment process.
Are your employees experiencing burnout?
If there are signs that your existing team is struggling to keep up, that’s a good sign to bring on a new team member. Look for signs of burnout, such as increased absenteeism or employee sick days. Get feedback directly from your team to see if they’re feeling unable to keep up with their tasks. An overworked staff can actually cost your business more in lost productivity and motivation than the cost of bringing on someone to help.
How much support do you need?
There are alternatives to bringing on a new full-time employee. Your business could hire seasonal employees to help with the holiday rush. You could try fractional hiring to bring on an executive to lead your team through a growth period. Or you could find a gig worker to complete a specific task, like redesigning your website. Determine if there’s a specific business need that your team needs help with, and then design a hiring plan that balances your finances with your workload.
[Read more: Hiring Part-Time vs. Full-Time Employees: 4 Things to Consider]
A great way to determine whether you’re ready to hire someone new is to start by putting a dollar value on your time.
Monster.com
Is your customer experience suffering?
If you notice a rise in customer complaints or negative reviews, it could be a sign that your team is overstretched—and unable to provide the standard of service your customers have come to expect. Customer service plays a crucial role in retention, which, in turn, drives profitability and other key outcomes. If customer service is falling through the cracks, it’s a good sign your staff is struggling to keep up and might benefit from some additional team members.
Are high-value employees spending time on low-value tasks?
Pay attention to how your team members are spending their time. If you see your managers bogged down with administrative tasks rather than activities that will improve your business, it’s a good sign it’s time to hire.
“A great way to determine whether you’re ready to hire someone new is to start by putting a dollar value on your time,” wrote Monster.com. “Even if you’re the owner and you’re not paying yourself much of a salary to begin with (perhaps you’re even in significant debt), you should have an understanding of your highest value.”
The more experience and knowledge a team member has, the more time they should be spending on tasks that add value to your company. Try to avoid a situation where your CFO is checking expense reports, and instead hire a new team member who can start at that level and grow with your company.
Are you turning down new business?
New employees will empower you to say yes to new opportunities. If you find yourself saying no to a lucrative contract or an exciting partnership, that’s a good sign you need to bring on some help. Remember, you don’t need to hire a full-time employee. Consider part-time or seasonal assistance that can enable you to take on the next exciting opportunity.
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