You know you need to hire – but can you afford it?
As you grow your business, the time will come when you need to hire an employee.
An employee is a much bigger commitment than an outsourced contractor. When you do not have the work, you do not have to pay your contractor, this is not the case when it comes to your employee, they get paid their agreed salary until notice is given, regardless of work completed.
So, why hire an employee instead of continuing with the contractors?
Commitment and loyalty. The relationship that is built between and employer and employee is a lot stronger than that of customer and contractor. You will need this commitment and loyalty when scaling your business so that you can trust the day to day is being completed while you focus on growth.
However, without planning and forecasting it can be difficult to know when the time is right to act.
You may already be using contractors for some of your low-ticket items. As your business grows and you can see the workload increasing outsourcing may no longer be working as smoothly as it once was. This might be because:
- The contractor does not have any additional hours to give to you as they have other clients they work for.
- You want to develop the workload and the role and your contractor does not want to do this
- The number of hours needed, the higherr contract rate no longer makes sense.
Development of Role
The role has now developed into something that you want to build on and get expert help in. For example, you may want someone to develop your marketing strategy rather than outsource your content writing and social media management.
By hiring an employee, you can outline exactly what you want the employee to focus on and build on without having to micro manage at each step. The marketing strategy still takes on the values and ethos of your business, but you now have an expert that you can develop and invest in for your business.
The biggest fear when hiring an employee is the financial commitment needed. Therefore, this decision cannot be made in isolation of your numbers. Your finances should take priority in making your decision. When your business has a stable income, you can begin considering the need for employees
An employee is someone you take on for the medium to long term. Even if it doesn’t work out that way, when deciding to take on an employee the vision for the role must be for at least two years. Remember, the new person will have to commit this to you too, so you can both build a strong relationship.
If you don’t know you can afford to make this decision, you need to find out.
Building good forecasting tools and cash reserves are key to making the best decision for you business.
As a Management Accountant, I help business owners reach the best decisions for your business. Extracting the right information from your numbers give you invaluable information unique to you, so you can answer:
- Is now the right time?
- Do you have enough financial resources?
- Is this the best decision for my business?
Often setting up your Monthly Management Accounts can seem a bit overwhelming at first, let me help you navigate the process and make life easier to use the knowledge from your business to make the best business decisions. contact me, I would love to hear about you and your business and how we can make your business work for you.