When Is the Right Time to Add Staff?

Balancing the right number of staff can be tricky. Not enough staff and you could be losing out on additional revenues and profits. Too many staff and you erode the bottom line. While there is no magic formula for when to add staff, there are some basic rules of thumb you can use to determine when it’s to your benefit to hire.

How is your time being allocated? When business starts to pick up, you may find you suddenly are spending a lot of time on fairly routine tasks rather than on the things that really matter, like developing new business, managing clients and racking up billable hours. Consider how much your time is worth in sales and billable hours versus the cost of adding a staff person to handle those routine tasks. If the scale is sinking toward the value of your time (and maybe your sanity), you probably should add staff.

How much business are you losing? It’s easy to fall into the trap of confusing being busy with being profitable. If you had another person on staff, how many more projects could you take on, how many more hours could you bill, or how much more product could you sell? Sometimes in the long run the cost of not hiring someone far outweighs the cost of adding staff.

Are you facing a crunch or experiencing growth? Admittedly, this one can be difficult to assess, especially if business has been slow for some time. If you are seeing a seasonal surge in demand, you probably are better off outsourcing some tasks, engaging freelance contractors, using temp labor, or, depending on your needs, taking on an intern, even if the cost is somewhat higher in the short term. On the other hand, if you have been working on growing your business and are starting to see the fruits of your efforts, now may be a good time to add staff so that you can get them up to speed and not lose momentum. Some additional things to consider are how the local economy, especially the real estate market, is doing, the outlook for your potential clients’ financial prospects and job security, and how general economic factors like employment, the stock market, interest rates, mortgage rates, and inflation rates are trending. If the forecast is positive, you probably want to add staff now, before you get overwhelmed and the cost of hiring increases.

Before hiring that new staff member, take some time to review your business plan and budget. Adding staff involves some costs, in addition to increasing payroll and benefits. You may need to adjust your cash flow projections to accommodate them.

Plus, you have to expect some disruption to your business while you conduct a search, interview and screen candidates, orient, and on board the new employee. Depending on the type of position, the entire process can take weeks and even months. You want to try to time your hire in order to minimize the disruption as much as possible, both for your sake and that of the employee. Otherwise, you’ll get distracted and the employee will not be properly integrated into your business operations, which can cause problems down the road. An improperly timed hire can end up being worse than not hiring at all.

If you would like clarity on how to scale your business, schedule a complimentary quick call and we’ll direct you to the best resource for your situation.

Photo Credit: Dana McGrath

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Gail Doby Coaching & Consulting

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