Can You Afford to Hire a Team Member?

Your business is growing and the need to hire a team member is becoming apparent. However, you’re hesitant to start your search because you’re stuck trying to answer this one simple question- “Can I afford to hire a team member?”

It is a common and very nerve-racking question for small business owners. It’s also a very important question to answer before you add the expense of a team member because if you add a team member you cannot afford, you can quickly drain your financial resources.

Whether you can afford to hire a team member means more that evaluating if you can cover the cost of their pay. It also takes evaluating that position’s impact on your company.

So, can you afford to hire a team member? Here are some of the important things to consider as you determine what is best for your business.

Team Members are An Asset

One common misconception business owners have about their team members is that they are simply an expense. They focus on the line item financial cost and not what they do to benefit the company.

Yes, team members are an expense. However, they are also a resource and an asset. Each team member should bring more to the table than they are costing your company.

They save you time, they allow you to create more products or serve more clients, they bring their knowledge, and so much more. Because you add team members, you increase your company’s capacity and you are able to do more.

In addition to determining if you can afford the pay that will go out, evaluate what impact the position will have on your company. The expense can be worth it when the benefit is more than he cost.

Team Members Impact Revenue

All team members within your small business should impact revenue.

When you hire the right team members, your business should have a positive return on the investment. This means that you company earns more money because you now have that person on your team. Moreover, the increase in revenue your company earns is should be more than what you are paying that team member.

This happens because all team members have the ability to impact revenue directly or indirectly.

Some positions will be responsible for directly bringing in revenue. For example, a sales team member will bring in revenue with each sale they make.

Other positions will have no direct ties to revenue. Instead, they will indirectly impact your ability to bring in more revenue. For example, an assistant will free up your time. As a result, you can use the time you gain to make more sales. 

You’re stuck in the cycle of having enough work to be successful but not enough time to grow your business.

You know you need help but you’re not sure what help is best.

You need the three-part method for finding the right person who will save you time and earn you more by getting the right work off your plate.

Not Hiring Has a Cost Too

While hiring does come with a cost, so does not hiring.

As your business continues to grow, you won’t be able to do it all. You have a personal capacity and staying within your personal capacity limits your company’s ability to grow.

When you don’t hire when your business needs to the help you:

Cannot expand – you don’t have the time to serve new clients, create new products, open a second location, or do anything beyond what you’re doing today.

Lose customers – customers want good customer service levels. When your clients have to wait longer than normal for a response, they will start to consider taking their business elsewhere. In addition, you can lose customers by having them turn to your competition in the time it takes for you to respond to their initial inquiry. A new team member can help you keep your current clients happy and respond to new inquiries quicker.

Spend time instead of money – you have a choice. You can spend your time to complete something yourself or you can spend your money to have someone else do it for you. When you spend your money, they task can be handed off to an expert who do it better or faster, and you can spend the time you gain on higher value tasks.

The Cost of Onboarding and Training

When factoring if you can afford to hire a team member, don’t forget that you have to train your new team member.

While the exact length of training and onboarding will differ for each position and company, know that a new team member will not have a positive financial impact on your company starting with day one. It takes time for a team member to become fully assimilated into the role (yes, even those who are highly experienced), and sometimes it takes even longer for you to start seeing a revenue impact.

On average, it takes three to six months for you to the financial impact of the position. This means, that you have to be able to afford a position for three to six months based on your current revenue levels. After that time, as mentioned above, the position should be paying for itself with the revenue it directly or indirectly helps the company earns.

Not sure if you can afford this time based on your current revenue?

The good news is that it doesn’t mean that you can’t afford to hire a team member. Instead, you might just need to start planning how you can adjust things to give you the budget you need.   

Ask yourself the following questions to see what adjustments you can make.

Can the position be adjusted? Instead of hiring a full-time team member, a part-time team member or a contractor might be a good start. Or, maybe hire a more junior team member instead of a highly experienced expert.

Can you reduce expenses? Are there systems, tools or other expenses you can cut either temporary or permanently to give you the budget you need?

Can you take home less pay for a short period of time? A temporary cut could be worth it if it will allow you to earn even more within a few months.

Can you save until you have enough within the business? Do you have extra money within your business that you can stock away until you have enough in reserve to afford the team member?

By answering one or all of these questions, you may find pockets of costs that can be redirected into your new hire a new member fund.

You Can Afford to Hire a Team Member. Now What?

Are you realizing that you can afford to hire a team member for your small business? Your next step is to make sure you’re filling the right position. Learn my three easy steps for finding the right person who will help you take your business beyond what it is today by grabbing your free worksheet here.

You’re stuck in the cycle of having enough work to be successful but not enough time to grow your business.

You know you need help but you’re not sure what help is best.

You need the three-part method for finding the right person who will save you time and earn you more by getting the right work off your plate.

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