Ready, Set, Grow
How To Know When It’s The Right Time To Hire Someone In Your Business
Emma Bowdler
I’m a cheerleader for women and an accountant bursting with personality.
Whether we are small business owners or sole traders, we often wear all the hats, juggle all the balls and keep all the plates spinning in the air. But no matter how talented we are (and women are incredibly talented), sometimes we just need to put the circus to the side for a moment and let someone else in on the act.
The decision to *stop doing all the things* and bring on staff or outsource can be one of the most important decisions you can make in business.
For solopreneurs, this big step means you’re about to go beyond ‘party of one’ and get fierce in your business. For small business owners, it often marks an exciting time because it means your business suddenly has huge potential to scale and grow.
Recruitment can also be fraught with fear – ‘who do I hire?’, ‘how will I afford them?’, ‘what will they do?’, ‘do I need to change my company structure?’. These are all questions we’ve heard from our clients who are looking to be brave and bold in business.
Hiring, Go Lightly
To be sure, hiring is an investment. If you do it too early, it can be costly and time-consuming. Do it too late, and you might have missed the boat and be too burnt out to onboard them. Do it wrong, it can impact company culture, your brand, your motivation and your bottom line. But do it right and it might just take your business to the next level, scaling and growing in a way you’ve always dreamed of but never thought was possible.
Around here there’s no hot air – just hot tips, so strap in and let’s answer your five most frequently asked questions when it comes to the right time to hire someone else in your business.
1. When Is The Right Time?
We don’t want to be those people, but we’re going to answer this first question with another question: when is the right time to start a business / have a baby / get married / get divorced / fire someone? There’s no perfect time to do any big life thing, is there?
When it comes to hiring someone, think of it this way: if you are turning down work because you’re too overwhelmed or burnt out, you are not producing quality work, you’re losing out on solid business opportunities, or you’ve hit your ceiling with a particular skill or function, and you want it to be different going forward – it’s time to expand.
2. Is There A Wrong Time To Hire?
The flip side of finding the ‘right’ time, is that there must be a wrong time to bring people on. And there definitely is. It’s always a good idea to consider what ducks you will need to have in a row to bring on someone new. Hiring can be expensive and take a while to find the right fit, so you will need a financial buffer, a clear plan and job description and enough energy to onboard them. It might also be worth asking yourself whether you can afford (both energetically and financially) if things don’t work out, or if it takes you several months to find the right fit.
Read the tea leaves: if you are consistently selling out of stock or booked months in advance and you want it to be different, it is time to hire.
3. How Do I Make Sure I Can Afford It?
Worrying about whether or not you can afford to bring on someone new stands in the way of many a business owner taking the next step in their business. Again, this question can be best answered with a question: can you afford not to? Can you afford, both financially and emotionally, to be in this same position in six months time, one year’s time or five year’s time? If you’re reading this, the answer is probably a big fat ‘no’. So, here’s what you do: get forecasting. [Text Wrapping Break]
Work with an accountant or get your spreadsheets out and devise a scenario where you have hired a new person. Total up all of the additional costs that you might expect for an employee in their first few months – from listing and advertising the position to paying their salary, super, and any other training and support costs. If the numbers add up, then go for it. If you’re not sure what the numbers tell you and you still want to test the waters, set up a transfer to a savings account to cover the costs of what that additional employee would cost for a few months and see how it affects cash flow.
If your business has been steadily growing its revenue over the course of several months (or years), that’s great – but at some point it will reach a ceiling. If you want to continue the pace of growth, the chances are that you need to scale up your business by hiring new staff.
The reality is, almost every business is restricted by the amount of money it generates, and by the amount of time and effort you can realistically put in. And in our experience, when you have another person’s family relying on you to pay them, you’ll find a way to make it work.
4. Do I Need To Change My Company Structure To Be Able To Hire People?
Absolutely not. You can employ someone in any business structure. However, if you start as a sole trader and then want to take on a partner or employee, it might be a good idea to register as a company.
When you hire someone, you will also need to ensure you are registered for PAYG and lodge payroll data through Single Touch Payroll and pay any amounts owing to the ATO either monthly or quarterly. Then there’s Workers Compensation insurance, employment contracts, public holidays, and superannuation to think about.
Learn more about whether your current company structure is the right one for you
5. Should I Hire An Employee Or Am I Better Off Using Contractors?
This one is a tricky one and the answer is a whopping: it depends what you need. Genuine contractors don’t incur super and you are not liable to pay their PAYG. However, if a ‘contractor’ is really an employee, then you are putting yourself at risk of a significant wrap over the knuckles from Fair Work.
Contractors can be excellent stop gaps when you really need a professional or expert in their craft for a specific project or function. However, if it’s looking like you need plenty of ongoing support, you want someone who can do a whole host of things in your business, you want a little more control over ‘how’ the role or function is done, and you think you will benefit from having another human in your business by your side, perhaps investing in hiring and training an employee is the way to go.
A word of warning on mixing up the two – we have seen clients paying a staff member as a ‘contractor’, and when things went south and the employee left, they contacted Fair Work saying they believed they were an employee. The outcome? The business owner was liable for $40K in unpaid superannuation, leave entitlements and penalties. Ouch.
Take a moment to find out whether someone is an employee or contractor on the ATO website.
Avoid Falling Into The Trap Of ‘Once Bitten, Twice Shy’
We’ve seen too many business owners become ‘once bitten, twice shy’ when it comes to expanding their business. They’ve tried it, it failed, they never want to do it again.
But this fear of failure or fear of making a ‘wrong’ decision can be more prohibitive than any hiring decision you make.
Some final thoughts: if you’re finding you are consistently being bogged down by time-consuming, simple, ‘outsourceable’ tasks such as data-entry, administrative tasks, social media management, IT operations – bite the bullet and hire/outsource. It will save you money (and headaches) in the long run.
If you’re finding you need help in an area that requires an expert skill set for a specific period of time, project or task like copywriting, building a website, bookkeeping, or graphic design, you may want to seriously consider hiring either a freelancer or contractor. This can be a great option if you want to dial up or dial down investment in your business alongside cashflow.
However, if you have a constant need for dedicated expertise, you want to have the right person for the job always at hand, and you want the chance to train and grow someone in all of the ins and outs of your business, to help it function without you and give you a well-earned holiday – hire an employee (or multiple employees) on a part-time or full-time basis.
Need More Help?
Questioning whether or not you need more staff ultimately means your business is growing. Congratulations! That is what most business owners want.
If you want support to decide whether or not now is the right time to hire, or you need a little help with your financial forecasting – book a free growth strategy session with The Women’s Accountant today!
Feast or Famine: Dealing with the Ebbs of Business Cash Flow
Feast or Famine: Dealing with the Ebbs of Business Cash Flow Cash flow lumpier than your mother-in-law’s gravy? You’re not alone. Let’s talk ‘feast or famine’ cycle and how to manage your cash flow. Emma BowdlerI’m a cheerleader for women and an accountant bursting...
Budgeting 101: How To Nail Your Numbers with the Bottoms Up Budget
Budgeting 101: How To Nail Your Numbers with the Bottoms Up Budget Emma BowdlerI’m a cheerleader for women and an accountant bursting with personality. Let’s face it, you read the word ‘budget’ and immediately, your eyes glazed over. We don’t blame you. Hardly the...
Why We Need To ‘Invest In Women’ All Year Round
Why We Need To ‘Invest In Women’ All Year Round Beyond International Women’s Day, five practical ways to create change in our businesses and lives, for gender equality and women’s economic empowerment. Emma BowdlerI’m a cheerleader for women and an accountant bursting...