It’s not always easy to know when you should hire new employees and start expanding your business.
Perhaps you’re running a small business and are still trying to become profitable. Maybe you have a large company that’s growing rapidly and requires outside help to keep up with customer demand. You might even be running a one-person startup and another person’s insight to effectively scale it.
Regardless of your situation, it’s not always clear when to hire an employer.
If you’re on the fence about putting up job ads and recruiting new employees, keep reading. This guide discusses some factors that influence when to hire, as well as tips on how to balance growth and profitability.
What Factors Influence When to Hire as an Employer?
If you feel confused about when to hire as an employer, you’re not alone. Lots of business owners struggle with this issue. If you’re not sure whether or not to start hiring new employees, consider the following factors:
1. Company Growth
Businesses that have experienced steady financial growth for several months are in a better place to expand than businesses that have performed less consistently.
Before you think about bringing on more team members, consider your business’s past performance and how likely it is that you’ll continue to grow. If you’re steadily growing, you can likely handle bringing on a new employee (or employees).
2. Current Employee Capacity
If you have employees already, consider their ability to keep up with their current workload. Are they struggling to keep their heads above water, or are they managing to keep up without a lot of stress?
You can evaluate this factor even if you’re a solopreneur, too. Can you keep up with your workload? Are you burning the candle at both ends?
3. Overtime Increases
If your employees are being stretched beyond their limits, they might be working overtime more often to get everything done.
Are you getting frequent overtime approval requests? Are your employees are logging more and more overtime hours?
If so, a factor that into your decision to hire new team members.
4. Opportunities
In addition to looking at business growth from a financial perspective, you should also consider growth from an opportunity perspective.
Are you receiving opportunities to expand your offerings? Do you have a chance to branch out into a new market?
Consider the opportunities your business is receiving to help you determine whether hiring new employees makes sense.
5. Skill Shortages
You might need to hire for small business growth if your company is lacking employees with certain skills. For example, if you and your current team don’t have the skills to effectively run an eCommerce store or build a social media following, those shortages are going to hinder your ability to grow.
6. Employee Morale
What is morale like at your company? What kind of energy have you cultivated within your business so far?
If employee morale is low, your business’s performance and profitability may suffer. This might be an indicator that you need to think about bringing on new team members — especially if some of the other factors on this list are also applicable.
7. Incoming vs Existing Work
Another crucial factor to consider when deciding whether or not to hire new employees is the relationship between incoming and existing work.
Do you have so much existing work that you’re struggling to keep up with requests from new customers or clients? Are you having to turn people away because you know you can’t meet their requests?
8. Areas Affecting Revenue
If you’ve noticed that revenue is declining, you might need to look more closely at your business and figure out which areas are contributing to the decrease in revenue.
For example, if you’re spending so much on marketing that it’s eating into your revenue, that might mean that you need to look at growing your marketing department.
9. Product or Service Quality
It doesn’t matter what kind of products or services your business offers. You should strive to keep the quality as high as possible.
Otherwise, you’ll start losing customers and your company will stop growing.
Evaluate your products are services and consider their overall quality. Does it meet your standards, or is it starting to slip?
If the latter is true, you ought to factor that into your decision about hiring new employees.
If you want to grow a small business — or any business, for that matter — you also need to think about customer service.
Are you able to respond to customer questions quickly? Can you solve problems right away? Are you getting lots of negative reviews?
Your answers to all of these questions should influence whether or not you decide to hire additional team members.
5 Internal Signs That You Should Hire as an Employer
Sometimes, after evaluating the factors discussed above, it’s obvious that you need to hire for small business growth or to keep your large company running smoothly. If you’re still on the fence, though, assess your company internally. Here are the top 5 internal signs that you need to think about hiring:
1. Your Employees Are Overwhelmed
Talk to your employees and ask them how they’re keeping up with the requirements of their jobs. Are they feeling overwhelmed or exhausted?
Encourage your employees to be honest about their capacity.
If they acknowledge that they’re struggling, it’s your job as a business owner to find solutions — including hiring new employees to evenly distribute the workload.
2. Your Employees Are Frequently Working Overtime
In addition to talking to your employees directly, you can also look at their time cards.
Are they frequently working overtime? Are you spending a lot of money paying time-and-a-half for those overtime hours?
If it seems like overtime work is getting out of control, bringing on new employees could help you save money and prevent employee exhaustion and burnout.
3. You’re Experience High Turnover Rates
If your employees are overworked, they might be more likely to quit their jobs altogether and look for work elsewhere. This is especially true if they’re not getting paid overtime or don’t feel they’re being paid fairly.
If you’ve noticed a higher turnover rate at your company, you might need to consider bringing on new employees.
4. Your Revenue Has Stagnated
Ideally, your company’s revenue will continue to increase month after month.
If your revenue has stagnated or has even decreased, that’s a major internal issue that should be addressed immediately.
Bringing on new employees might cost more in the short term, but it could help you boost revenue and become more profitable in the long term.
5. You Don’t Have Time for Daily Operations
Are you and your existing team struggling to keep up with daily operations? This includes tasks like payroll, paying bills, and basic filing/organizing.
If these tasks are slipping through the cracks, you could end up with more serious problems later. Bringing on new employees can help you run a tighter ship and prevent small issues from escalating.
5 External Signs That You Should Hire as an Employer
In addition to the internal signs mentioned in the previous section, you can also look for external signs that it’s time to hire employees and grow your business. The following are 5 of the most noteworthy external signs to watch for:
1. Your Customers Can’t Get in Touch with You
Are you having a hard time responding to phone calls, chat messages, or emails from customers?
Does it take hours or days to get back to someone? Are some people never getting responses at all?
If your customers can’t get in touch with you, they will likely take their business elsewhere. Hiring new employees could help you prevent this from happening.
2. You’re Receiving More Customer Complaints
Your customers might also leave more complaints and negative reviews if you aren’t getting back to them or can’t address their issues promptly.
Increased complaints and negative reviews will damage your business’s reputation. This, in turn, hinders your ability to run a profitable company.
Consider bringing on new employees to improve customer service and minimize the number of complaints you receive.
3. Lots of Tasks Are Done Out of House
Have you outsourced a lot of business tasks?
At a certain point, it might make sense to stop outsourcing and hire new employees so you can bring some tasks in-house.
This is especially true when it comes to more complex tasks or aspects of your business that you want to keep a closer eye on.
4. Your Competitors’ Businesses Are Growing
Have you noticed that your competitors are growing and expanding their businesses? If so, you might need to bring on some more employees.
This will help you improve specific aspects of your business and ensure you can keep up with other businesses in your industry.
5. You’re Receiving New Opportunities
As you grow a small business, you’ll likely start receiving opportunities to expand.
This might include opportunities to collaborate with other businesses, as well as opportunities to offer new products or services.
Are you learning about lots of growth opportunities for your company? If so, you might want to think about hiring more employees so you can accept some of the opportunities coming your way.
5 Tips on Balancing Growth and Profitability in Your Business
It’s important to know when to hire as an employer. However, you also need to know how to balance growth and profitability. The following tips can help you make the best decisions for long-term sustainability and success:
1. Make Sure You Have Enough Cash
One of the first steps to balancing growth and profitability is making sure you have enough cash on hand.
Ideally, you’ll have enough cash in the bank to sustain your business for 6-12 months.
This helps you manage short-term losses and continue to pay your bills (and your employees) on time while you scale.
2. Tap into Your Existing Client Base
In general, it costs more money to hire new employees than it does to retain existing employees.
One way to strike a balance between these two ends of the spectrum is to tap into your existing client base.
Encourage them to refer their friends and family to your business so you can increase sales without overspending.
3. Create a Detailed Plan
When it comes to sustainably growing your business, you can’t wing it and hope for the best. You need a detailed plan.
Sit down and write out a plan for how you’re going to recruit new employees, how those employees are going to help you grow the business, and how you’re going to measure growth over time.
4. Don’t Be Afraid to Go Slow
If you want to strike a balance between growth and profits, it’s best to proceed with caution.
Remember, it’s okay to slowly and steadily grow your business. Small changes can add up and produce impressive results.
Even if you only bring on one or two new employees, that could help you significantly increase productivity and revenue.
5. Set Goals and Regularly Measure Progress
When you’re making a plan to hire new employees and grow your business, be sure to set clear goals regarding revenue, productivity, customer service, morale, etc.
Identify key performance indicators (KPIs) that you’ll use to measure these factors. Then, check in regularly to see how your company is progressing.
Is It Time to Hire Employees for Your Company?
After reading through this guide, do you feel more confident in your ability to know when to hire as an employer?
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Millions of job seekers from across the globe rely on GrabJobs, so it’s easy to find the right fit for your company. It also provides you with a helpful applicant tracking system (or ATS) so you can keep track of resumes, schedule interviews, and more.
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