3 October 2016
When planning for growth, one thing that will often weigh on a business owners mind is the question, “When is the right time to recruit new staff?”
Do you wait until you land that big new contract and then look for the staff you need? Or, do you take the risk and take on the staff first, so when new contracts come you can cope with the upturn in business?
It can be a tough choice to make especially when you need to balance factors like cash flow, training, productivity and the consistent quality of output.
However, there are some things to consider which might make that decision clearer. Here are five questions to ask yourself to help determine whether or not you should be recruiting new staff.
Are the skills you need for business growth being met?
If you find in your business there is a gap in a particular skillset – for example, the need for specialised management expertise or digital marketing knowledge – it might be time to recruit to give you the competitive edge. Recruiting someone with specialised knowledge and experience in that missing area will fill the gap and expand the scope of delivery your business is able to offer to clients.
Do you have the capacity to take on new work right now?
If the answer is no, then it could be the ideal time to look at recruiting. If you do land that big new account, the last thing you want to be doing is scrambling to recruit and train up new staff while trying to meet the demands of an increased workload. This situation could have a detrimental effect on the business and any potential profit from new customers could soon be swallowed up by increased costs such as employing agency workers and rectifying potential mistakes.
Are your current employees overworked?
Overworked employees are bad for business. They make a greater number of mistakes, take more sick leave and will have a higher turnover, which in the long run is very costly to the business. To compound this further, if your current workforce is already at capacity, taking on new work will be challenging. Consider increasing your workforce before reaching this critical point, enabling your workforce to scale in line with client demand.
Can you afford to finance the additional cost to your payroll?
It’s always important to conduct an assessment of the business finances before making any decisions to recruit. However, it’s worth noting that being able to financially manage additional cost does not mean you need to have the money sitting in your business bank account; just that your forecasting demonstrates that you will be able to afford to bring a new person on-board.
When calculating the cost of an additional employee it is important to remember that this cost is not just their salary, but needs to include all the additional statutory costs (national insurance, pension contribution etc), potential additional benefits (company car, healthcare, life assurance, bonuses) plus the additional overheads needed to maintain the new employee (software licenses, training, computer and IT costs). At face value it may seem cost effective to recruit a new employee, but it would always be advisable to consider all of the costs involved before committing to a decision.
Do you have the administrative capacity to support future growth?
Being able to manage new hires from an administrative standpoint is one of the most vital things in recruitment and growing a business. Before you consider recruiting, it’s important to make sure that you update all necessary employee paperwork, check that your HR systems and procedures are in check as well as develop and implement a structured induction procedure to make sure the new team member stays for the long term.
Could you benefit from management and leadership development?
Employees are not told what to do anymore. These days, you influence their choices and assist them in reaching their goals. Gone are the days of dictatorship; you inspire and win the team over to your point of view. But the chances are that you never set out in business with the vision of running a large team and it’s likely that whilst you’ve picked up skills and coping mechanisms over the years, you’ve probably never truly focused on leadership skills development. If this resonates with you then it may be worth investing time into further developing your skills as a manager and an inspirational leader. Investment in this area will likely pay you back tenfold into the future as your team grows and your management reach increases.
When all is said and done, deciding when it’s the right time to grow your team, is ultimately up to you as the business owner, as you know your business better than anyone else. However, if you want to grow your business and make sure it maximises its efficiency, consider the above questions next time you’re doing a growth assessment and don’t forget about the free support available from your local growth hub when making these big business decisions.
Richard Thompson – Business Adviser (Velocity Growth Hub)Back