Let’s start with a riddle:
Without these, your company will never be able to grow. Yet entrepreneurs are so hesitant to acquire them that only some 13% of small business owners had plans to increase employment in August - while only 10% thought it was a good time to expand.
We’re talking, of course, about employees.
If a business is like a body, then employees are the blood that sustains the business and helps it grow. But if that much is true, why do you — and so many other entrepreneurs — feel so darn skittish about adding new help? And how do you know when the time is ripe to hit the recruiting trail and start trying to hire new employees?
It’s a question of timing. In other words, it’s not easy. But there are a few indicators you can look for if you want to hit the recruiting trail at the right time for your business, striking while the iron’s hot so that you squeeze the most potential growth out of your enterprise:
Getting Past the Initial Challenges
Let’s be honest: hiring new employees is not an easy proposition if your bottom line leaves you little margin for error. Here are some of the most common worries:
Ending up with too many people on hand — and not enough work
Eating into profits by spending it all on new salary/taxes…with little to show for it
An economic downturn forcing tough decisions to be made — having to fire an employee not long after hiring them
Getting past these challenges can mean looking at your company’s bottom line and making a decision on numbers rather than instinct. Bill Peppler, a managing partner at an award-winning staffing firm, told Zip Recruiter: “Establish key metrics so that there is more of a formula approach rather than a gut feel.”
But entrepreneurs want to know what the signs are that point to a new hire being a viable strategy — and it’s not all simply in the numbers.
When New Clients or New Growth Are No Longer “Good News”
Do you remember that first big client you landed? You were thrilled with the news of all of the additional work you could take on, because it meant that you would be generating an income for your business. And because your company wasn’t busy, you had plenty of time and resources to handle the job.
As an entrepreneur, there are few better feelings than the first big order.
But how have you felt about new work lately? Is new business making you excited for the future, or are you at a point in your business where new business is more of a hassle than anything else?
Zip Recruiter lists this as one of the points at which you should know it’s time to hire, putting it simply: “New business isn’t making you smile.” If new business isn’t filling you with the same excitement you once had for new business when you could handle the capacity, then maybe it’s time to start outsourcing some of the work in the form of hiring an employee who can help you expand and grow.
When You’re Unable to Meet Customer Demand
But forget for a moment all of that stuff about smiling. What if you’re simply unable to meet customer demand?
According to the New York Times, James Simon of PeggyBank had struck a deal with a website to offer discount coupons for his company’s offerings. The problem? It worked...a little too well. Orders came in and Simon’s employees were forced to work overtime to meet the new demand.
As Bill Engvall might say, “Here’s your sign.”
Simon knew that he needed to hire help simply by looking at the time it took to fill new orders. When that time increased more than twofold, he saw the problem — as well as the obvious solution: hiring help.
When You’re Ready to Reinvest in Your Business
The concept of reinvesting in your business is a principle so time-tested that it goes back even beyond the days of Andrew Carnegie and the steel boom. If your business is successful enough that you have enough cash on hand to consider rewarding yourself for your hard work, it might be time to think about reinvesting that money.
There are, of course, about a million ways to reinvest profits. You could spend it on advertising. You could buy a new website. You could upgrade your office space.
But if you really want to grow your company’s true work capacity, reinvesting that money in new employees can be a wise move. Entrepreneur recommends looking at your revenue as a cue: if it’s above your target and you expect that trend to continue well into the future, then you might just have the leeway to reinvest in a new hire.
Where to Start
As a business, you started with your customer’s need and built your product around that singular concept. It should work the same with hiring: define your need and set about creating a clearly-defined role for a new employee to fill.
If you’re hiring for the first time, check out the SBA’s guide to hiring your first employee, which will guide you through concepts like federal income tax withholding, obtaining an employer identification number, and more.
If you’re not hiring for the first time, try to remember your previous hires and identify the key points that made employees successful. Look to find similar traits when you begin recruiting. It’s not always easy to discern which employees will succeed, but your experiences should inform your decisions in the future.
Beware of False Signals
Knowing when to hit the recruiting trail can be just as important as knowing when not to. Look out for some of the common signs that many entrepreneurs use to start hiring, even though these don’t necessarily indicate that recruiting is a good idea:
Looking for that “extra body.” As Entrepreneur notes, it’s important to hire someone for their specific skill set and assign them a role in your company that actually fosters growth. An undefined role for someone in your company simply because you need some “more help” isn’t enough: you should be able to put your finger on what it is that you need.
Swelling ranks of job seekers. Simply because there are new employees available to hire doesn’t mean that it’s the right move for your company. Sure, there may be instances when your interests are aligned with increased demand for jobs; but it’s not a symbiotic relationship by any means.
A strong economy. Many entrepreneurs are skittish to hire employees because of a lagging economy. Applying the same logic, however, would mean that a strong economy means you should always hire new help. Try to separate “the economy” from what you’re doing in your own business — the stock market is not your bottom line, after all.
Striking While the Iron Is Hot
If any of the above indicators suggest to you that your enterprise is ready to start expanding, then it’s time to look for the kind of help that can boost your business. Avoid hiring for hiring’s sake and make sure to hire when you need it. And don’t put it off — the future growth of your company will thank you.