It's frequently estimated that the cost of recruiting, hiring and training a new employee can cost a business $4,000 (or more), which is often anywhere from 25 percent to 200 percent of annual compensation for that new worker.
As industrious and multi-talented as you may be, if your goal is to grow your business, and have a life outside of it, the reality is that you can't do it all. At some point you need to assess when the benefits of hiring another person will outweigh the cost of doing everything yourself.
There's plenty of legal, financial and individual preparation that goes into adding another mind, body and personality to the operation of your business, but let's start with assessment. How do you know when it's time to hire your first employee?
Determining When To Hire Your First Employee
If you run a boutique, bakery or restaurant, it's probably important for you to be open, selling, producing or serving your goods, six to seven days a week. Thus, many small business owners must hire their first employee right out of the gate.
"You can't do everything yourself" and keep your sanity, insists Jennifer Thomas of Jet Clothing, especially when you have a storefront that needs to be open seven days a week.
Erica Lurie of Garnish Apparel echoes this sentiment. "I knew it was time to hire my first employee when I first opened my shop and decided that I wanted to be open seven days a week, but didn't want to work seven days a week," she says. "Since an article of clothing is a comparable price to a day's wages, on any day of the week someone might come in and make a large purchase that covers your payroll for several days. So, I figured that until I had enough data to analyze accurately if there was a day of the week that was consistently not profitable, I ought to be open seven days. As it turned out, it makes sense financially to be open every day."
Bill Horton, a small business coach at BizFix and educator for Mercy Corps NW, says determining when to hire your first employee "is a challenging topic for small business owners and most of the answers come from asking a few key questions." He recommends asking yourself the following:
- Look at an average day at your business: What do you spend your time on? Make a list of what you do, and how much time it takes.
- Are you spending your time developing your business and finding new clients or doing all the routine tasks that could be done by someone else?
- Are you spending your time on tasks that generate revenue?
- Are you still wearing all the hats? Could you delegate some tasks, like hiring a bookkeeper?